When making investment decisions under uncertainty (and in pension design) group-think is one of the most harmful things that can happen. There are different tools we can use to deal with it, but all tools require diversity in thinking. It is no surprise that diversity is high on the corporate agendas.
Representative diversity is based on observable attributes such as such as gender, age, religion, nationality or skin colour. This is relatively straight-forward to implement in recruitment and anti-discrimination policies. But there is a more challenging form of diversity in a knowledge-driven economy: attracting and maintaining people who bring diversity in thinking.
Representative diversity has positive effects
There are clear benefits of representative diversity. A good balance between men and women in senior positions helps to prevent, or transform, unhealthy corporate cultures.
By establishing stronger connections with clients and other stakeholders, representative diversity helps an organisation improve its sales and relationship management.
From a purely talent perspective, however, representative diversity is not sufficient. Firms that are actively looking for top talent often experience representative diversity as a natural by-product.
Intelligence is normally distributed
I believe that intelligence is evenly distributed across gender and geographies. There are, of course, local differences in how intelligence is nurtured and fostered into different types of talents and skills. Perhaps even more importantly we are shaped by our past experiences and we will continue to be shaped by our future experiences.
Let’s do the following thought experiment. Let’s take a group of young highly talented men and women from all over the world and enroll them in an ivory league university as undergrads after which they follow the PhD program in economics. Will this group of young people be diverse in their thinking? The answer is far from it, since they will most likely think and speak with one voice.
What really matters in a team is diversity in thinking. The way someone thinks is formed by personality and past experiences, not superficial attributes of the individual. It is pointless to stereotype someone based on gender, age, skin colour or any other easily observed factor since top talent is characterised by a growth mindset supported by high IQ and EQ.
In top teams diversity is often a natural by-product
The pool of exceptionally talented and skilled people is small. If we are really looking for talent, diversity will come as a by-product. With a very small list of candidates, we cannot afford to reject a ‘beautiful mind’ just because of its ‘physical package’.
The further to the right of the talent distribution we are searching, the less picky we can afford to be. A consequence is that teams that hire top talent with diverse thinking also, in most cases, become representatively diverse.
There might be rare occasions where a team is very diverse in thinking, but not representatively diverse. If I had to choose I would argue that diversity in thinking is more important, but this should never be abused to justify non-diversified mediocre teams.
Guts and intrinsic drive
Aren’t we all looking for people who have intrinsic drive, are highly adaptive and are not afraid of doing new things? When searching for those personality traits, we cannot afford to ignore a large self-selected group that has already demonstrated both intrinsic drive and guts.
Take someone with a foreign background. That person had the gumption and courage to leave the security of their social and cultural networks behind and build a new future for himself or herself in another country.
In a hiring situation, which of the two candidates do you expect to score well on guts, adaptiveness and drive? A woman in her late twenties who left her country to attend a foreign university when she was 18, or a local man in his late thirties still living at home with his parents?
Managing talented people
Today, most companies are aware that representative diversity is a hygiene factor. But diversity in thinking is not for every firm and, even worse, in many its value is not recognised. How often have we not been told – “think differently, but not too different” or “this is not the way we do things over here”?
Managing a group of highly talented people with diverse thinking and intrinsic drive is much more difficult than managing clones of ourselves. In addition, many of these top talented people are adaptive (like chameleons) to the current corporate culture.
If we do not actively cherish and encourage diversity in thinking, we are at risk of streamlining the thinking in our own businesses. If that happens, people will not share their best ideas and the firm will not get access to the diverse thinking that could push the envelope.
Can we afford to ignore diversity?
Are you working somewhere that lacks representative diversity and is not particularly diverse in its thinking? Well, this could be an indicator that you are working for a mediocre organisation. Perhaps it is time for you to start looking around?