The most innovative businesses tend to be the most diverse.  Innovation today is largely a recombinative process whereby ideas are borrowed from disparate fields and mashed together in creative new ways.  A great way of achieving this is having a veritable melting pot of backgrounds, classes, nationalities and perspectives in your workforce.

Whilst diversity is undoubtedly a good thing, it does require higher levels of coordination than more homogeneous teams.  Recent research suggests that highly diverse teams can sometimes struggle to coordinate their activities and all pull in the same direction.

This is compounded by the intense efforts by so many organizations to build a robust and clearly defined culture.  Such efforts often create an identikit employee that fits in to the way things are done in that organization. That kind of homogeneity can be great for efficiency, but it can strangle creativity at source.

So an ideal middle ground is required?  Maybe not, at least according to new research from Berkeley Haas, which suggests that organizations can have both a multiplicity of ideas at the same time as having cultural alignment on organizational values.

Cultural diversity

The study proposes a fresh way to think about the kind of diversity we have in our teams and our workforce, whilst attempting to reconcile this basic dichotomy between having a homogeneous yet productive team, or a diverse and innovative one.

The researchers tapped into data science to help them measure and analyze organizational culture.  They accessed data from the Glassdoor website to try and explore some of the fundamental differences between organizations, as shared by people on the inside.

They utilized natural language processing and machine learning to group the 500,000 or so comments left by current and former employees at 492 firms between 2008 and 2015 into a few hundred topics surrounding corporate culture.  These were then used to train an algorithm to identify clear patterns in words.

The idea was that by identifying both the number of topics mentioned in reviews for each company, the frequency with which those topics are mentioned, and the commonality that existed between the reviews themselves, the researchers would be able to gauge whether the company had a diverse or uniform culture.  For instance, a company might be classed as divided if there was rarely any overlap in the topics used in reviews.  By contrast, if most reviews touched on the same few topics they were considered to be unified, if rather homogeneous.

Finding the sweetspot

So what was the ideal mixture of uniformity and diversity?  The researchers propose that the companies that got it right were those in which a wide range of culture-related topics were discussed in the reviews, with this diversity strongly linked to higher market valuations.  These firms also appeared to produce more patents, which in turn were cited more frequently.

This should perhaps comes as no surprise, as last year a study from North Carolina State University highlighted the innovative boost diversity can provide.

The researchers crawled the MSCI ESG STATS dataset, which provides the diversity policies of the 3,000 largest publicly traded companies in the US.  They then cross-referenced this with patent data from the US patent office, whilst also collecting data on product announcements from the Capital IQ Key Development database over a fifteen year period.

“Basically, once you get through all the statistical jargon, we found that a company that checks all of the diversity boxes would see about two new additional product announcements over 10 years,” the team explain. “Given that most firms produce an average of two new product announcement per year, that’s significant. On the other hand, it shows that improving diversity policies won’t lead to overnight improvements in innovation. It may take time to reap the benefits.”

Diversity and innovation

It’s a finding that consultancy firm Accenture confirmed in a recent report on equality in the workplace.  It found that workplaces with a strong culture of equality were five times more likely to have an innovation mindset than those with less equal cultures.

The study, which suggested that 95% of executives thought continuous innovation important, revealed that equality was more important than practically any other factor, be that industry, country or other forms of workforce demographics.

Accenture suggest that an empowering environment is crucial for innovation to flourish, with American companies with a culture of equality seven times more likely to report that no real barriers existed to innovation in their companies.

There remains a lot of work to do before such cultures exist however, with an attitudinal gap between executives and workers a major barrier to achieving this.  The authors report that in the most equal cultures, innovation was supported by things such as ample training, flexible working arrangements and good work-life balance.  If this is coupled with a genuinely diverse leadership team and workforce, then innovation can really thrive.

“Accelerating equality in the workplace has never been more critical for driving innovation,” Accenture say. “If people feel a sense of belonging and are valued by their employers for their unique contributions, perspectives and circumstances, they are more likely to advance and feel empowered to innovate.”

Perhaps concerns about coordinating diverse workforces has been one more mental barrier to overcome in promoting diversity, whether of thought, class, nationality, gender or race.  The Berkeley Haas analysis suggests those fears may not actually be justified, meaning there really is no excuse not to build as diverse a team as you can.