Igniting innovation: how hot companies fuel growth from within

Assemble and unleash a diverse workforce

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Diversity can improve an organization’s performance by enhancing creativity or team problem-solving.

Most large corporations today have a diverse workforce that is scattered all over the world, and the enormous diversity of culture and viewpoints is fertile ground for innovation.

Researchers at Stanford University and Cornell University have shown that by “stirring the pot” in positive ways, diversity encourages the intellectual debate and conflict that lead to innovation.

Other research supports these findings:

  • In a study of 28 teams, heterogeneous teams solved complex tasks better than homogeneous teams. The diverse teams exhibited a higher level of creativity and a broader thought process.
  • In a study conducted in Germany, higher levels of innovation and R&D correlated with higher levels of cultural diversity.
  • In a study of 45 teams from five high-tech firms in the US, teams composed of people with different functional specialties worked more effectively with other internal teams and showed a higher product innovation rate.
  • Where innovation is critical, companies should construct teams with equal proportions of men and women so that they can benefit from the most diverse talent pool.

It’s no coincidence that effective leaders look to diverse perspectives to produce exceptionally creative thinking that may not occur otherwise.

Intercultural conflict could lead to better long-term solutions

Nancy J. Adler, a scholar of organizational behavior and one of the world’s leading researchers on cultural diversity, cites the example of a Swedish pharmaceutical firm that benefited from intercultural conflict.

Adler quotes a company executive as saying:

“We traditionally carried out product design at our Stockholm headquarters. Once, by accident or design, we brought in an international team to discuss the design of a new allergy product.

Due to extreme differences in opinion on what constitutes good medical practice, the team designed the new product with maximum flexibility to suit the requirements of each country. We later discovered that the greater flexibility was a huge advantage in developing and marketing a wide range of internationally competitive products.”

Most large corporations today have a diverse workforce that is scattered all over the world, and the enormous diversity of culture and viewpoints is fertile ground for innovation.

Leading companies have shown that innovative products, services and business models result directly from leveraging a diverse and global workforce. For example:

  • The 1,100 employees at Google’s facilities in India come from a spectrum of religious backgrounds and speak several Indian languages in addition to English. This diversity has resulted in Google Finance, Google’s first innovation born in a foreign R&D center.
  • PepsiCo has 50% hiring requirements for women and minorities; has an India-born woman, Indra Nooyi, as its CEO; and attributes one percentage point of PepsiCo’s 7.4% revenue growth, or about US$250 million, to new products inspired by diversity efforts.
  • HP developed its new Latex Printing Technology through teams consisting of 120 engineers working together in four countries; the company believes that diversity of teams was critical to the project’s success.
  • As of 2008, Procter & Gamble had delivered, on average, 6% organic sales growth since the beginning of the decade, virtually all of it driven by innovation from diverse teams.