How to drive innovation with cultural diversity

How to drive innovation with cultural diversity

by Felicity Menzies
In today’s volatile, uncertain, complex and ambiguous (VUCA) business environment where past methods cannot solve new problems, driving innovation with cultural diversity is essential.

Innovation is a two-step process: (1) unlocking access to diverse perspectives and sources of information (idea generation), and (2) the merging or integration of these ideas in new or novel ways (elaboration and transformation). To promote the first step— eliciting diversity of thought—many leaders deliberately foster a culture of workplace debate. As an example, one of Amazon’s leadership principles is ‘have backbone; disagree and commit’.

There is no doubt that decision-making benefits from workplace debate. Decision-making research shows that group decision-making leads to better outcomes than individual decision-making if the group is operating in a context that discourages groupthink. Groupthink refers to sub-optimal thinking that results from the tendency of a cohesive group to avoid critical scrutiny of ideas for the sake of social harmony. The potential for groupthink is reduced when workplace culture encourages the challenging of different opinions.

However, there is a flaw in Amazon’s approach. By promoting a culturally biased workplace, Amazon’s ‘purposeful Darwinism’ may be driving greater homogeneity at management level, ultimately threatening its innovative potential. Seventy-five percent of Amazon’s leaders in the United States are white males. While a lack of diversity is a problem that plagues the tech sector, Amazon’s leadership is the least diverse of its peers. White men comprise 68 percent of leaders at Apple, 65 percent at Google, and 51 percent at Facebook, according to a recent Recode report.

How Amazon’s confrontational culture stifles diversity

There are notable cross-cultural differences in preferences for assertiveness. Amazon’s ‘have backbone: disagree and commit’ culture is at odds with a preference for social cohesiveness and harmony that characterises many Asian cultures. Members of these cultures hold a high concern for ‘face’ (social standing) and avoid public confrontation. In these cultures, indirect speech is preferred to direct speech and members value detached and self-possessed conduct. Asian cultures display a greater respect for hierarchy and tenure at work compared to North Americans. Publicly confronting superiors is socially unacceptable and frowned upon. In these cultures, groupthink is countered by private debate among individuals. Meetings are held after consensus has been achieved to ratify decisions made at an earlier time.

All individuals, irrespective or their cultural orientation, seek to maintain a positive view of themselves and to experience a sense of worth and positive well-being. Individuals are motivated to engage in behaviours that lead to the fulfilment of these needs. Actions that the individual perceives will support a positive view of themselves, a sense of worth and positive well-being are more likely to be adopted than behaviours that do not support self-motives. Self-evaluations are heavily influenced by cultural values. Cultural values are standards or preferences for a desired mode of conduct or being. They are represented in the self and influence one’s self-concept. When an individual behaves in a manner or achieves a state congruent with their cultural values, self-concept is positively affirmed and the individual experiences a sense of worth and positive well-being. Those positive emotions reinforce and promote the behaviour.

In contrast, when an individual’s behaviour or state of being is incongruent with their cultural values, the individual’s self-concept, self-worth and well-being are negatively impacted. The emotional dissonance experienced when an individual is required to act in a manner, or even observes activity inconsistent with his or her cultural values, acts as a demotivating force that discourages the behaviour.

Cultural value mismatch may explain Amazon’s dismal Asian representation at leadership level. Amazon reports a mere 6 percent of its leadership are Asian. This compares to 32 percent at Twitter, 20 percent at Google, and 18 percent at Facebook. The industry sample average for Asian leadership is 15 percent.

Innovation potential is limited without diversity

Amazon’s ‘purposeful Darwinism’ may rob the company of one of its biggest potential strengths. Although there may be increased debate around the leadership table, employees left standing at a senior level are likely to share similar perspectives, knowledge and ideas. Studies show that diverse teams supported by inclusive contexts outperform homogenous teams in decision-making, problem-solving and creative innovation. The greater variety of knowledge and experience that accompanies a diverse group increases the breadth of solutions available for problem-solving, promotes more critical information processing, supports innovation and creativity, and improves chances for identifying opportunities for gain in an increasingly complex and diverse global business environment.

McKinsey’s latest study of diversity in the workplace, Delivering through diversity, reaffirms the global relevance of the link between diversity—defined as a greater proportion of women and a more mixed ethnic and cultural composition in the leadership of large companies—and company financial outperformance. The new analysis expands on the management consulting firm’s 2015 report, Why diversity matters, by drawing on an enlarged data set of more than 1,000 companies covering 12 countries, measuring not only profitability (in terms of earnings before interest and taxes, or EBIT) but also longer-term value creation (or economic profit), exploring diversity at different levels of the organization, considering a broader understanding of diversity (beyond gender and ethnicity), and providing insight into best practices.

In the original research, using 2014 diversity data, McKinsey found that companies in the top quartile for gender diversity on their executive teams were 15 per cent more likely to experience above-average profitability than companies in the fourth quartile. In their expanded 2017 data set this number rose to 21 per cent and continued to be statistically significant. For ethnic and cultural diversity, the 2014 finding was a 35 per cent likelihood of outperformance, comparable to the 2017 finding of a 33 per cent likelihood of outperformance on EBIT margin; both were also statistically significant. The correlation between gender and ethnic diversity and financial performance generally holds true across geographies.

I am left wondering, what potential is left on the table by insisting on assertive workplace debate?

Capturing the innovative potential of diversity

A concern commonly voiced among Western managers working in Asia is how can organisations elicit diversity of thought in a cultural context with a strong preference for social harmony and cohesion? This question is also relevant for multicultural work settings. A multicultural workgroup offers a greater variety of thought than a monocultural group, but capturing the value of that diversity in thinking relies on the sharing and integration of the ideas of all cultural groups.

Fortunately, innovation studies in China have shown that eliciting diversity of thought is possible in a collectivist context, but it requires a different approach. Countering groupthink and unlocking innovation in collectivist cultures is achieved through a cooperative approach to conflict, in contrast to a competitive approach.

Whereas a competitive approach to conflict involves a win-lose context, a cooperative approach to conflict involves a win-win context that emphasises collective goals and success and supports relational harmony. In cooperative conflict, group members share their ideas, take the perspective of others, confirm their commitment to resolving the conflict for mutual benefit and integrate diverse perspectives to create new solutions. A cooperative approach to conflict is less likely to trigger relationship conflict than a competitive approach. It is also an effective strategy for reducing avoidance tendencies that threaten open discussion in collectivist cultures.

One approach that was suggested to me by a colleague at INSEAD, which I have subsequently adopted in collectivist settings involves employees jotting their ideas down anonymously on post-it notes that are placed around the room’s perimeter for colleagues to read. The manager then facilitates a group discussion of the ideas noted in the context of looking for the best way to integrate those ideas to achieve the group’s shared objectives. This can be contrasted to a competitive workplace culture where colleagues compete against one another to deliver the winning solution. In a competitive workplace, individuals are recognised and rewarded when their unique idea succeeds. In a cooperative workplace, groups are rewarded when their collective idea succeeds.

Studies report that cooperative conflict management strategies are more effective than competitive strategies even in individualist contexts. This raises questions about the usefulness of an aggressive culture of debate in any cultural context and supports cooperative conflict management as an effective strategy for multicultural groups.

In today’s global business environment, companies that can successfully elicit a diversity of thought from their culturally diverse workforces have an enviable competitive advantage. But, as with any management practice, the ‘how’ requires careful consideration of cultural nuances and constraints.

Felicity Menzies is CEO and Principal Consultant at Include-Empower.Com, a diversity and inclusion consultancy with expertise in inclusive leadership, unconscious bias, cultural intelligence and inclusion, gender equity, empowering diverse talent. Felicity is an accredited facilitator with the Cultural Intelligence Centre and the author of A World of Difference. Felicity has over 15 years of experience working with and managing diverse workforces in blue chip companies and is a Fellow of Chartered Accountants of Australia and New Zealand. Felicity also holds a Bachelor of Commerce and a Bachelor of Arts in Psychology.