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Proof That Diversity Drives Innovation

Donald Fan is senior director in the Office of Diversity at Walmart.

In a State of the Union address, President Barack Obama mentioned the word “innovation” nine times, more than any other president ever has, according to Fareed Zakaria. This highlights a key point that in this new era, rife with volatility and ambiguity, innovation is critical in sustaining organic growth and securing success in a globally competitive environment. We know that there exists a strong connection between innovation and diversity and inclusion; our challenge is to help our leaders and fellow professionals understand that connection. By exploring scientific research, corporate practice and personal observation, this article aims to connect those dots. While business lore tends to link innovation with a creative drive that is exclusive to the top and brightest talent, true innovation thrives in an inclusive culture that values diverse ideas, leverages unique perspectives and invites everyone to achieve collaborative breakthroughs across the entire organization.

A Diverse Workforce Is a Valuable Source of Innovation

The vital foundation for innovation derives from a diverse workforce. Diversity of talent, by definition, provides more ideas and perspectives into driving for the best business solutions. Diversity becomes a valuable resource for innovation through a diverse workforce that reflects today’s marketplace through consumer insights and “wisdom of the crowd” that can lead to creative betterment.

People see problems and solutions from different perspectives. These perspectives are accompanied by the heuristics that define how individuals search for solutions.

When confronted with a problem, we encode our perspectives and then apply our particular heuristics to explore new and better resolutions. Diverse teams often outperform teams composed of the very best individuals, because this diversity of perspective and problem-solving approach trumps individual ability.

Research confirms that diversity is a valuable resource for innovation. Prof. Ron Burt of the University of Chicago conducted an empirical study indicating that people with more diverse sources of information generate consistently better ideas, as the graph below mentions.

In the graph, the vertical axis shows management assessments of a series of employee ideas related to supply-chain management. The horizontal axis measures the level of diversity in an employee’s internal connections. As you move to the right, you see employees who are more insular in their connections. They lack diversity of input in their day-to-day world.

The graph indicates that higher diversity of connections also translates to the perception of higher quality ideas, which is a fundamental component of innovation.

Many companies today are becoming more intentional about leveraging diversity to spur innovation.

For example, Walmart continues to build a diverse global workforce by recruiting world-class talent through creative approaches, such as the Junior Military Officer recruiting program and the Women in Retail initiative, and through increased community and campus outreach efforts.

An Inclusive Culture Is an Incubator for Innovation

In addition to cultivating a diverse workforce, we must also foster an inclusive work environment where creative ideas can germinate and grow. Common characteristics of an inclusive work environment include:

BELIEF: Trusting and empowering employees to make a difference in continuous business improvements

ATTITUDE: Respecting a predisposition toward collaboration and diversity of thought

KNOWLEDGE: Knowing how to think creatively to solve problems and capture opportunities

BEHAVIOR: Valuing and leveraging differences

Walmart strives to build an even more inclusive culture to connect and engage the associates by encouraging them to bring up more intelligence, insight, imagination and intuition to solve complex business problems and to serve customers better. This inclusive culture serves as an incubator for creative thinking through the following efforts:

1.     Developing Mavericks (Freedom of Thought)

Constructive mavericks have the vision and passion to pursue an idea and bring it to fruition. They challenge convention and initiate new ways to solve problems. At Walmart, leaders are empowered to be catalysts through mentoring and sponsorship programs and other developmental opportunities that provide avenues for associates to unlock their full potential.

2.     Advocating Collaboration (Cross-Pollination)

Break silos by inspiring people with different backgrounds and experiences to share their unique perspectives and work in different functional areas. Becoming a matrix organization, Walmart spurs on the horizontal flow of skills and information transcending functional areas. Cross-functional projects, enriched career opportunities and global assignments are examples of the company’s commitment to developing associates through collaborative opportunities and roles that expand their knowledge and experiences.

3.     Swimming Upstream (Ingenuity)

Challenge conventional wisdom by going the opposite way. This can elevate the opportunity for success, simply because little energy is currently invested there. A freedom from conventional thinking can unleash a pleasant surprise and unexpected amazement, similar to the Zen principle of “Breaking from Routine.” For example, when Walmart founder Sam Walton first pitched his idea to start a chain of discount stores in small rural communities, he was told the idea would never work. Walton responded by forming a dedicated team with different backgrounds and capabilities that complemented each other, who, through collective endeavors, turned the idea into an unprecedented business success.

4.     Strengthening Cultural Intelligence (Competency)

In today’s global economy, it is essential to build cultural intelligence in order to succeed and lead in innovation. While examining what neuroscience is revealing about the difference between individuals and businesses that succeed and those that fail, Prof. Ying Yi Hong and Dr. David Livermore introduced the Four Cultural Intelligence (CQ) capabilities at the 2010 NeuroLeadership Summit: When we seek to strengthen cultural competencies, we advance the effectiveness, creativity and adaptability of today’s culturally diverse workforce. Efforts such as cultural-heritage celebrations, offering cultural-assessment tools, cross-country leadership summits and cultural-competency training all contribute to strengthen cultural intelligence.

CQ DRIVE (Motivation)

Our level of interest, drive and motivation to adapt cross-culturally. Be curious and seek differences.

CQ STRATEGY (Meta-Cognition)

Our level of awareness and ability to plan in light of our cultural understanding. Draw a blueprint of how to leverage differences.

CQ KNOWLEDGE (Cognition)

Our level of understanding about cultural issues. Take time to understand the merits of differences and shared values.

CQ ACTION (Behavior)

Our level of adaptability when leading and relating cross-culturally. Look for innovative breakthroughs by embracing differences.

5.     Enabling New Ideas (Outcome)

Create an environment where great ideas can surface and grow. Walmart uses different channels to solicit ideas, including a monthly Town Hall Meeting hosted by the CEO, an annual Associate Opinion Survey, an Open Door process and more. The ability to act on diverse ideas has shaped the growth of the company and helped customers save money and live better. A couple of game-changing examples include:

Money Center Walmart offers millions of unbanked and underserved customers a series of low-cost financial services through in-store Money Centers (check cashing, bill payments, money transfers, MoneyCard, etc.)

Direct Farm This global program focuses on driving agricultural sustainability. In 2010, Walmart China successfully engaged more than 470,000 farmers in the Direct Farm program. Additionally, the company endeavors to reduce produce waste by 15 percent while upgrading 15 percent of Direct Farm program products from Green to Organic certified; and to increase participation rates to 2 million Chinese farmers by the end of 2015.

‘Fertile Soil for Seeds of Innovation’

Steve Jobs said, “The source of wealth and capital in this new era is not material things … it is the human mind, the human spirit, the human imagination and our faith in the future.” When we enlighten and inspire our people to harness their creativity to generate value in an inclusive culture, we nurture fertile soil where seeds of innovation can blossom into opportunity of sustained future growth.

1 Comment

  • Absolutely, diversity drives innovation. All one must do is think relatively – two good heads is better than one good head, three is better than two, etc. And, the variable of greatest importance is “good”. Auto retail is my area of emphasis, and the legacy of this industry sector is decidedly non-diverse proportional to the amount of diversity evident its worldwide client base. As an industry that lacks history of pulling together good people from multiple cultural dynamics, the ability to transition during a most substantial shift in the sales delivery channel from a physically driven to a virtually driven process has been stymied. I’d hope, the affected individuals – many of whom are operating 3rd and 4th generation businesses recognize the importance of diversity as it pertains to innovating their operations. Otherwise, they will yield to attrition as the traditional dealering model cannibalizes.

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