The Chief Diversity Officer as a Driver of Innovation
 
Frans Johansson
 
It is often said that one of the strongest business cases for diversity is that it fosters innovation. But is this assertion true? And if it is – what are the implications for the role of the Chief Diversity Officer? The stakes are high because corporations across the world feel tremendous pressure to innovate. If, indeed, diversity drives innovation then the CDO could have a significant impact on a company’s growth prospects., In fact, he or she should be an essential part of a corporation’s innovation strategy.
 
Well, it is true. Diversity does drive innovation – particularly groundbreaking innovation, the type of innovation that companies are desperate for. This section will provide a concise overview of why, and what this means for the Chief Diversity Officer.
 
Why Diverse Teams Are Better at Innovating
Why, exactly, do diverse teams tend to be more innovative? To understand this we must understand how new ideas are generated in the first place. Diverse teams are better at innovating because of two basic facts about innovation:

All new ideas are combinations of existing ideas – but not all combinations are created equal. If the concepts combined are closely connected then the resulting idea tends to be unoriginal. But if the concepts combined are far apart the resulting idea tends to be groundbreaking. In other words, combining Latin music with the brand MTV Latin America is obvious and unoriginal, while combining Latin music with Country Music Television is intriguing and, if the combination works, potentially a significant new growth opportunity. A diverse team, then has a far better chance of generating such unlikely idea combinations because people from different cultures and backgrounds approach any given challenge from different perspectives.
 
The most innovative teams are the most productive teams – and some teams are more procutive than others. Diverse teams have a far better chance to create more ideas than homogeneous ones. If managed right they will, in fact, generate exponentially more new and unique idea combinations (the so-called Medici Effect*). Since the strongest correlation to innovative success is quantity of new and valuable ideas diverse teams tend to be more innovative. The highly diverse Quantum Lab at Hewlett-Packard, for instance, (the team consist of 30+ researchers from 13 different countries and 4 different continents) is one of the highest patent-generating labs in the country.
 
Diverse teams, in other words, play a crucial role in fostering innovation throughout the enterprise. What does this mean for the Chief Diversity Officer?
 
Implications for the Chief Diversity Officer
Although most people think of people in Research & Development, New Product Development or Marketing when considering issues around creativity and innovation it is time to add another person to that list – the Chief Diversity Officer. Most companies are woefully lacking in 1) generating the diversity necessary for innovation and, 2) leveraging what diversity they do have. The Chief Diversity Officer is in a unique position to address these problems and to create an environment ripe for innovation if they do the following:
 
1. Understand the process of innovation
The Chief Diversity Officer must both understand and speak the language of innovation if they are to be effective and convincing in creating an environment that fosters it. A CDO that understands how and why diverse teams have a better chance at innovation can communicate and strategize successfully with executives and managers in R&D, product development, business development and marketing. Although many Chief Diversity Officers tend to have little experience in this area it is a relatively easy problem to rectify through education and training.
 
2. Staff for innovation
The most common unit for innovation in a company is teams. In order to form diverse teams a manager must be able to draw from a diverse talent pool of employees at all levels of the company. From an innovation-perspective, then, the CDO should not just increase the level of diversity across the entire enterprise they should also facilitate and encourage the formation of diverse teams. That is where a company’s diversity can be best leveraged. In other words, having diverse employees and suppliers only provides a foundation for innovation. Managers that wish to maximize their chances in generating groundbreaking ideas must then form diverse teams from this talent pool. CDOs can facilitate such team formations, both locally and globally.
 
3. Take advantage of new organizational structures
One of the most effective ways for a company to enhance its innovative efforts is to create new units, divisions, offices or even spin-offs. These types of separate entities can pursue interesting ideas with fewer constraints – constraints that often hamper innovation within larger enterprises. CDOs must be aware of all such new structures and be prepared to take advantage of them. They provide remarkable opportunities to staff for innovation right from the start. Such young entities are more eager to maximize their chances for innovative success and have less rigid hierarchies and structures to contend with. In addition, they can provide excellent models for the rest of the organization on how to staff for innovation and leverage diversity.
 
4. Ensure managers get to experience the power of diverse teams
Steve Miller, the former Chairman and CEO of Royal Dutch/Shell has said that even though one may understand that diversity drives innovation, managers will usually hesitate to act on such an idea – unless they have experienced this effect themselves. Every executive I have spoken to agrees. The CDO should therefore ensure that rising employees within the organization 1) get opportunities to work on and with diverse teams and experience “the Medici Effect” first-hand; and 2) that managers understand that it is in their best interest to join diverse teams if they wish to maximize their chances to successfully innovate. In addition, the CDO must provide managers with the tools and experience to leverage a team’s diversity. Simply putting together a diverse team is not enough to innovate. If the team is managed incorrectly it can generate more problems than ideas.
 
5. Must be in a position to work effectively across the corporation
In order for a CDO to work effectively with executives and managers across departments, divisions and offices he or she must be a full member of the C-suite and not a sub-division of the HR department. The CDO must be able to discuss innovation strategies with the heads of research, new business development at HQ and around the world as a person of similar rank and power.
 
6. Must search for opportunities to foster innovate
Although one of the CDOs primary goals is to create a corporate environment that fosters innovation they can not just sit back and wait for it to happen. Successful CDOs will actively search for opportunities to leverage the existing diversity within their company. Not only do structures such as networking (or affinity) groups hold a great untapped potential for cross-cultural idea fertilization – the observant CDO can find opportunities everywhere. Rosalyn Taylor O’Neale has for instance been able to introduce new ideas for programming at MTV Networks by suggesting combinations of different cultures to executives at different cable channels. And Kevin Clayton, the head of diversity for Russell Corp., actively searches for new markets and products at the intersection of different cultures. His department struck a $10+ million deal by making the connection between Russell’s traditional retail line and historically Black colleges and universities (HBCUs). Clayton points out that there had been a number of employees at Russell that had graduated from HBCUs, “but none of them saw this opportunity.” It was not until Mr. Clayton actively searched for connections between people’s experiences, backgrounds and approaches that it became apparent that they were sitting on a tremendous opportunity. He is convinced that there are countless similar opportunities, both domestically and internationally, just waiting to be discovered. The CDO is in a perfect place to discover them.
 
Chief Diversity Officers have a unique opportunity to add a completely different dimension in a company’s quest for groundbreaking innovation. They should take it.
 
* The Medici Effect refers to the exponential increase of unique idea combinations created by a diverse team or an individual with a diverse background. It refers to the remarkable burst of creativity enabled by the Medici banking family in Renaissance Italy.
 
Frans Johansson is an author, speaker and entrepreneur. His book The Medici Effect: Breakthrough Insights at the Intersections of Ideas, Concepts and Cultures is published by Harvard Business School Press.