When companies improve their diversity, stock prices jump (Neale, 2018). The theory is that people in diverse groups work harder, share information more broadly, and consider a wider range of views than groups that are more homogenous in terms of race, culture, gender, socioeconomic background, experience, or area of expertise (Phillips, 2014). Diversity is also shown to enhance creativity and productivity when collaboration is effectively managed (Cox and Blake, 1991).
However, working through different perspectives often requires more time and creates discomfort and tension. Therefore, diverse networks across an enterprise that enable informed and creative decision making must be designed, not left to chance.
Though there is a lot that has been written about diversity and inclusion strategy, this really comes to life in the “activation” phase of your organization design and change work. While integration mechanisms can be planned for in the design work, it is the activation of the operating model that builds the bridge between design intention and observable performance.
With activation there is learning and adjustment that can only come through leaders in their new roles engaging horizontally across boundaries and then analyzing and reflecting on outcomes. Our activation framework outlines three principles – right connections, right conversations, and right leaders – for bringing an operating model to life. Here’s how to build diverse perspectives into each.
- Right connections
Reward connections that surface tension and diverse thinking
Cross-boundary networks that purposefully include diverse perspectives surface more tension than homogenous networks. Tension, when managed productively, creates value and better decision making. Rewarding behaviors that facilitate connections with diverse teams incentivizes collaboration and thoroughness before going to market.
Cross-functional product development teams are an excellent way to bring the voice of the customer to life. Consumers are increasingly demanding products that reflect the voice of a diversifying consumer base (Licsandru and Cui, 2019). This is not just a marketing problem; no one part of the organization has the sole remit to address changing consumer demographics. Rather than optimize handoffs between functions to meet changing customer requirements, many companies are finding that staffing these teams from diverse functions and perspectives better reflects the customer’s voice in product design.
- Right conversations
Embracing diversity and expressing individual opinion are not mutually exclusive
History points to groupthink as a generator of poor decisions (Hart, 1991). While openly discussing disparate views reduces groupthink, this often results in conflict. To avoid the discomfort of conflict, some company cultures opt for compromise or reward quick alignment.
However, one of the most powerful outcomes of good organization design is to bring the right voices to the table in key governance and decision-making processes. Forums staffed with a cross-section of organization, customer, and community perspectives can elevate governance processes from rote bureaucracy to strategic debate and idea sharing. Before forums are created, consider creating charters that specify the value of the meeting and the type of pressure testing expected from each group. With clear expectations set, you gain both formal accountability and trust across the group.
Intentional design and then supported practice in making hard trade-offs builds decision making muscle. It avoids the danger of the group sacrificing good ideas to preserve likeability. Design and activation build a culture of psychological safety where people can disagree with conventional thinking or raise alternative perspectives.
- Right leaders
Move top talent across the organization
Creating diverse leadership is more than just hiring for diversity. Effective business leaders understand how to create connections across an organization’s business model because they know at which intersections and nodes value is created. Leadership development like rotation programs that cycle top up-and-coming talent throughout a business are typically designed to benefit the individual through a broad set of experiences. From an organization design point of view, they are also highly effective ways to instill systems thinking in the organization’s future leadership.
Cross-boundary careers allow leaders to “walk in different shoes” and see issues from different perspectives, regardless of their personal background. A pricing, quality, customer, or product design issue look different from a corporate staff position, a product role, or a market-based job. Many CEOs – from Walmart’s Doug McMillan to Disney’s Bob Iger – credit their holistic understanding of their business to their cross-functional experience within their organizations (O’Keefe, 2015) (Whitten, 2020).
To effectively embrace diversity, leaders must consciously embed diversity mindset into their operating model fabric, and bring it to life through the activation framework. Form the right connections by building diverse networks and teams. Frame the right conversations by embedding diversity into governance and decision-making forums. And enable leaders to gain diverse organizational perspectives and consider these in staffing and development processes. Building these practices into operating model activation will cement diversity and inclusion as core organization values and improve performance at the same time.
Jacob Spangler, Senior Manager, Accenture Operating Model & Organization Design
- Cox, Taylor H., and Stacy Blake. “Managing Cultural Diversity: Implications for Organizational Competitiveness.” Academy of Management Perspectives, vol. 5, no. 3, 1991, pp. 45–56., https://doi.org/10.5465/ame.1991.4274465.
- Hart, Paul’t. “Irving L. Janis’ Victims of Groupthink.” Political Psychology, vol. 12, no. 2, 1991, p. 247., https://doi.org/10.2307/3791464.
- Licsandru, Tana Cristina, and Charles Chi Cui. “Ethnic Marketing to the Global Millennial Consumers: Challenges and Opportunities.” Journal of Business Research, vol. 103, 2019, pp. 261–274., https://doi.org/10.1016/j.jbusres.2019.01.052.
- Neale, Margaret. “Do Investors Really Care about Gender Diversity?” Stanford Graduate School of Business, 17 Sept. 2019, https://www.gsb.stanford.edu/insights/do-investors-really-care-about-gender-diversity.
- O’Keefe, Brian. “The Man Who’s Reinventing Walmart.” Fortune, Fortune, 16 June 2021, https://fortune.com/2015/06/04/walmart-ceo-doug-mcmillon/.
- Phillips, Katherine W. “How Diversity Makes Us Smarter.” Scientific American, Scientific American, 1 Oct. 2014, https://www.scientificamerican.com/article/how-diversity-makes-us-smarter/.
- Whitten, Sarah. “A Look at Bob Iger’s Legacy at Disney as He Steps down as CEO.” CNBC, CNBC, 25 Feb. 2020, https://www.cnbc.com/2020/02/25/disney-ceo-bob-iger-steps-down-a-look-at-his-legacy.html.