We have a saying in AKF Partners that “an incident is a terrible thing to waste”. When things go poorly in a firm, stakeholders (shareholders, partners, employees) pay a price. Having already paid a price, the firm must maximize the learning opportunity the incident presents. Google wasted such a learning opportunity by failing to capitalize on an incredible teaching moment with the termination of James Damore (the author of the sometimes called “Anti-Diversity Manifesto”). While Google seems to have “done the right thing” by firing Damore, it is unclear that they “did it for the right reason”. The “right reason” here is that diversity is valuable to a company because it increases innovation and in so doing increases the probability of success. Further, diversity is hard to achieve, takes great effort and can easily be derailed with very little effort. Companies simply cannot allow employees to work at odds with incredibly valuable diversity initiatives.

Diversity Drives Innovation and Success

My doctoral dissertation journey introduced me to diversity and its beneficial effects on innovation, time to market, and success within technology product firms. Put simply, teams that are intentionally organized to highlight both inherent (traits with which we are born) and acquired (traits we gain from experience) diversity achieve higher levels of innovation. Research published in the Harvard Business Review confirms this, indicating that diverse teams out innovate and out-perform other teams. Diverse teams are more likely to understand the broad base of needs of the market and clients they support. Companies with very diverse management teams are 35% more likely to have financial returns above the mean for their industry. Firms with women on their board on average have a higher ROE and net income than those that do not.

Differences in perspective and skills are things we should all strive to have in our teams. As we point out in The Art of Scalability, these differences increase beneficial cognitive conflict. Increases in cognitive conflict opens a range of strategic possibilities that in turn engender higher levels of success for the firm.

We have for too long allowed the struggle for diversity to be waged on the battleground of “fairness”. The problem with “fair” is that what is “fair’ to one person may seem inherently unfair to another. “Fair” is subjective and “fair” is too often political. “Success” on the other hand is objective and easily measured. Let’s move this fight to where it belongs and embrace diversity because it drives innovation and success. After all, anyone who can’t get behind winning, doesn’t deserve to be on a winning team.

Achieving Diversity is Hard

While the value of diversity is high, the cost to achieve it is also unfortunately high – especially within software teams. As my colleague Robin McGlothin recently wrote, the percentage of computer science degrees awarded to women over the last 25 years is declining. Most other minorities are similarly underrepresented in the field relative to their corresponding representation in the US population.

As in any market with high demand and low supply, companies need to find innovative ways to attract, grow and retain talent. These activities may include special mentoring programs, training programs, or scholarships at local universities meant to attract the group in question. These approaches may seem “unfair” to some, but they are in truth capitalism at its best - the application of market forces to solve a supply and demand problem. When a skill or trait is under high demand and short supply, the cost for that skill goes up. The extra activities above are nothing more than an increased cost to attract and retain the skills we value.

Companies desiring to achieve success in innovation through diversity MUST approach it in a steely, single-minded fashion. Any dissent as it relates to outcomes detracts from the probability of success. How many people with diverse backgrounds will leave or have left Google because of Damore’s missive? How many candidates won’t accept offers? Losing even one great candidate is an unacceptable additional cost given the already high cost to achieve success.

The Bottom Line

Structuring organizations and building cultures that tap the power of inherent and acquired diversity pays huge dividends for firms in terms of innovation, time to market, ROE and net income. While the rewards are high, the cost to achieve these benefits are also high. Success requires a steely, single-minded pursuit of diversity excellence.

The successful company will allow no dissent on this topic, as dissent makes the firm less attractive to the ideal candidate. Given a constrained supply under high demand, the candidate can and should go to the most welcoming environment available.

Put simply, Google did the right thing in firing Damore. But they failed to fully capitalize on the unfortunate event. The right answer, when asked about the reason for firing, would look something like this: “We recognize that diversity in experiences, background, gender and race drives higher levels of innovation and greater levels of success. Our culture will not tolerate employees who are not aligned with creating stakeholder value.”

Interested in driving innovation and time to market in your product and engineering teams? AKF Partners helps companies create experientially diverse product teams aligned with business outcomes to help turbo-charge performance and team innovation.