Diversity has become a central topic in organizations. As an avid podcast listener it is nigh impossible to listen to more than a few episodes from HBR IdeaCast or Intelligence Squared or LSE Public Lectures without encountering a podcast focusing on some aspect of diversity.

In the last 50 years the prevalence of the word “diversity” in books has increased by over 300%. [1]

A 2011 survey by Forbes of 321 large global enterprises – companies with at least $500m in annual revenue – showed 85% agree or strongly agree that diversity is crucial to fostering innovation in the workplace [2].

Before we carry on, let’s explain what is meant by diversity in this context. Simply, it is people who differ in one of more of these respects: personality, nationality, ethnicity, gender, sexual preference, education, age, and many more.

These differences often lead to a state of conflict on what is to be done and how it is to be done. This conflict is not necessarily a bad thing. In fact, Pamela Hinds’ work shows that organizational outcomes are improved when there is a moderate level of conflict. Moderate conflict is better than no or low conflict and better than high conflict [3].

But, it is conflict nonetheless and most of us don’t like conflict. Not only do we not like conflict, “we like people who are similar to us” [4]; in other words, our natural tendency is for similarity rather than diversity. This is nicely illustrated by the following experiment.

Social scientist Randy Garner mailed out surveys to strangers with a request to return them. The request was signed by a person whose name was either similar or dissimilar to the recipient’s. Those who received the survey from someone with a similar-sounding name were nearly twice as likely to fill out and return the packet as those who received the surveys from dissimilar sounding names (56% compared to 30%) [5].

Besides for our preference for liking people like us and our desire to avoid conflict, in his recent article Koen Smets mentions that “Diversity is not a free add-on: it comes at a cost” [6] and Katherine Phillips says that “The mere presence of diversity in a group creates awkwardness” and “generally speaking, people would prefer to spend time with others who agree with them rather than disagree with them” [7].

So, is diversity worth the effort?

For now, let’s put aside the moral argument and focus purely on whether decision making is improved by diversity.

Katherine Phillips ran an experiment [6] where groups were tasked to solve a challenging puzzle. After five minutes they had a newcomer join their group. This newcomer was either an “in-group” person (another friend of the group) or an “out-group” person (a stranger to the group). The group continued to work on their puzzle and submit their answer. The experimenters then measured the accuracy of their answer. What did they find? The out-group newcomer drove up the performance of the group by 1.5x relative to an in-group newcomer, i.e. on average the groups achieved a 40% success rate with an in-group newcomer, but a 60% success rate with an out-group newcomer.

Phillips explains: “the mere presence of diversity in a group creates awkwardness, and the need to diffuse this tension leads to better group problem solving” [6].

Interestingly, homogeneous groups (those with an in-group newcomer) reported higher confidence in their decisions, even though they were more often wrong in their conclusions.

Another example of the value of diversity comes from The Good Judgment Project [7] which convincingly won the IARPA forecasting tournament, even outperforming intelligent analysts who had access to classified information. The Good Judgment Project was led by Phil Tetlock, who I have mentioned before in these articles (Natural frequencies, An inability to Forecast). Tetlock has studied and applied forecasting techniques for decades and one of his most important conclusions is “if you take a large crowd of different people with access to different information and pool their predictions, you will be in much better shape than if you rely on a single very smart person, or even a small group of very smart people” [8].

If you’re thinking, this is about “the wisdom of the crowds” you are quite correct, although Tetlock’s approach does far more too. The first of four criteria for getting wisdom from crowds is to “have diversity within the crowd: Many different disciplines, perspectives, and areas of expertise must be represented” [9].

So, for better strategic decisions, it seems the prescription is clear: embrace diversity.

Closing with the words of the great industrialist, Alfred Sloan: “If we are all in agreement on the decision - then I propose we postpone further discussion of this matter until our next meeting to give ourselves time to develop disagreement and perhaps gain some understanding of what the decision is all about”

References:

[1] GoogleBooks Ngram Viewer, with search on “diversity” in time period “1958-2008”. Note: more recent data is not available.

[2] https://www.theguardian.com/sustainable-business/2015/apr/28/three-questions-every-organization-should-ask-about-diversity

[3] https://profiles.stanford.edu/pamela-hinds

[4] “Influence”, Robert Cialdini

[5] “What's in a Name? Persuasion Perhaps”, Randy Garner

[5] “The diversity trade-off”, Koen Smets

[6] “Better Decisions Through Diversity”, Katherine Phillips et al

[7] https://en.wikipedia.org/wiki/The_Good_Judgment_Project

[8] http://www.npr.org/sections/parallels/2014/04/02/297839429/-so-you-think-youre-smarter-than-a-cia-agent

[9] “The Art of Critical Decision Making”, Michael A. Roberto. Roberto is referencing Surowiecki’s “The Wisdom of Crowds”.