Diversity and Performance
Explaining Cultural Diversity’s Outperformance
As McKinsey’s research and other studies show, the impact of cultural diversity on organisational outcomes may be magnified relative to other sources of diversity. Cultural diversity is most likely to involve differences in perspectives, knowledge, and experience necessary for optimal information processing, decision-making and innovation, and for understanding the needs and concerns of different consumer segments and diverse stakeholders at home and across borders.
Simply put, cultural diversity involves a broader diversity of thought than other diversity dimensions.
Gender and Diversity of Thought
Culture and Diversity of Thought
Across cultures, however, 90% of our differences are psychological, while only 10 per cent are tangible or visible differences.
The iceberg provides a useful analogy.
The small ‘tip’ of the iceberg that can be seen above the water level represents visible cultural elements. Visible cultural elements include artefacts, symbols and practices such as: art and architecture; language, colour, and dress; social etiquette and traditions. However, although they are the most obvious, visible cultural differences like dress, language and rituals make up only ten per cent of our cultural identities.
The 90 per cent of the iceberg that remains unseen below the surface represents the hidden cultural differences. Hidden differences are mental concepts like values, assumptions and beliefs. Although we are often fixated on the tangible elements of culture like dress or language, most of our cultural differences are differences in the way we think.
Differences in thinking across cultures were demonstrated in a study in which Americans and Japanese were asked to take a photo of a person. Whereas Americans displayed a preference for taking close up photos (left), the Japanese photos gave relatively greater weight to the person’s context (right).
In another study, researchers asked participants to report whether the flower at the bottom of the picture below was more similar to the group of objects on the left or the group on the right. East Asians were more likely to match the target flower with Group 1, and European Americans were more likely to match the target flower with Group 2. The East Asian participants perceived the target object in a holistic fashion, in which the target flower shares a number of features common to the group of objects on the left when considered as a whole. In contrast, the European Americans analysed the individual features of the flower and allocated the target to Group 2 on the basis that all items shared a straight stem.
Those studies, along with others, show while Westerners exhibit object-orientated attention in which greater weight is given to understanding the property of discrete objects, Easterners exhibit context-sensitive, holistic attention in which the relationships among elements are important. Westerners display an analytical thinking style that focuses on salient objects independent of context, whereas Asians exhibit a holistic thinking style that considers the relationship of the object to its context.
This diversity of thinking styles across cultures is a tremendous advantage in terms of optimal decision making and innovation. Analytic thinkers pay close attention to the details of a problem without considering contextual influences, whereas holistic thinkers consider the background elements. Analytic thinkers break a problem down into smaller parts and focus on the individual components, progressing from the micro to the macro. Holistic thinkers start with the big picture, considering the whole first and the interconnectedness of elements. Whereas analytic thinkers make decisions using logic, holistic thinkers use intuition or emotion to make decisions.
Today’s business problems are new and complex. They require novel solutions. A diversity in decision-making style encourages the consideration of alternative solutions and supports creative problem-solving. Organisations that can successfully elicit and integrate the diversity of thought accompanying culturally diverse workforces are best positioned for breakthrough innovation.