Why Do Companies Lose Out On Innovation?
A survey conducted in the US by the Center for Talent Innovation (CTI), a leading global talent think tank has found that as much as 78% companies that fail to realize their full innovative potential because their leadership lacks the inclusive behaviors needed to effectively “unlock” the innovative potential of an inherently diverse workforce.
The findings are part of a study titled “Innovation, Diversity and Market Growth” that was conducted to bring out the correlation between diverse companies and market outcomes.
So what is it that drives serial innovation? CTI research reveals that the engine for innovation is a diverse workforce that’s managed by leaders who cherish difference, embrace disruption, and foster a speak-up culture. Inclusive leader behaviors effectively “unlock” the innovative potential of an inherently diverse workforce, enabling companies to increase their share of existing markets and lever open brand new ones. By encouraging a proliferation of perspectives, leaders who foster a speak-up culture also enable companies to realize greater efficiencies and trim costs—another way that innovation drives bottom-line value.
CTI chair and CEO Sylvia Ann Hewlett says, “Leaders have long recognized that an inherently diverse workforce ‘matches the market’ and confers a competitive edge by recognizing the unmet needs of consumers and clients like themselves. But ideas from outliers too often are ignored or squelched because their originators don’t resemble the paradigms of corporate power.”
The survey findings show that innovation draws on diversity in two ways: employees with inherent diversity best understand markets and end-users that companies today are most keen to reach; and leaders with acquired diversity are best equipped to unlock the insights of these employees.
At companies that harness both inherent diversity in their workforce and acquired diversity in leadership (“two-dimensional” diversity), employees are 75 percent more likely to have had a marketable idea implemented than employees at companies that fail to harness these drivers.
The study states that leaders who have acquired diversity are much more likely to behave inclusively than leaders who lack it. Behaviors include:
o Ensuring that everyone speaks up and gets heard (63 percent vs. 29 percent)
o Making it safe to risk proposing novel ideas (74 percent vs. 34 percent)
o Empowering team members to make decisions (82 percent vs. 40 percent)
“Leaders have long recognized that an inherently diverse workforce – one that’s inclusive of women, people of color, and gay individuals – confers a competitive edge in selling products and services to diverse end users,” says Hewlett.
According to her, one of the most pressing issues in the coming year will be a new war for talent. “Not yesteryear’s broad-based need for all top talent but an increasing demand for the right kind of talent. For leaders, this means a new urgency in targeting, nurturing, and advancing top talent in their organization,” she says.
The report also includes case studies that show how companies use diversity to drive bottom-line results. Companies like Cisco, EY and Time Warner have leveraged the acquired diversity of their leaders to extract innovation from functionally diverse teams. These firms have realized significant revenues from their diversity, as a result.
“It isn’t enough for companies to incorporate diversity for diversity to have impact; companies must take added steps to unlock the multicultural capacity they’ve invested in,” states Lauren Leader-Chivée, CTI president. “By showing how companies go about this—even as they stumble, regroup, and learn from their mistakes—our case studies suggest best practices for industries in all sectors.”
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