To Be Diverse or Die? That Is the Real QuestionBy Fabrice Serfati | Mon, 02/21/2022 - 09:00
Today, everything has to do with inclusion and diversity; you can read and hear about them everywhere. They are becoming buzzwords either to sell products and services or to attract media coverage instead of really looking into the benefits that they bring to societies and eventually to businesses.
Let me start by saying that diversity is recognizing the real conformation of our society and mirroring it in organizations. In doing so, leaders will be opening the door to organizational mechanisms that will recognize the individual needs in a company and provide ways for people to perform at their best.
Greater workplace diversity, either in startups or big corporations, should not be a marketing strategy, or something that is hyped. It should be recognized for what it really is: a good business decision. The latest report on the subject from McKinsey shows that companies with more than 30 percent women executives were more likely to outperform companies where this percentage ranged from 10 to 30 percent, which, in turn, were more likely to outperform those with even fewer women executives, or none. A substantial differential likelihood of outperformance — 48 percent — separates the most from the least gender-diverse companies.
Data like this should be enough to make us think about the role that diversity has vis-a-vis leadership. Clearly, it’s not enough to have a diverse organizational composition; the important reflection is how diverse the management team is, or the person making decisions about the company. This is where the magic (the real value and power) of diversity is.
Sadly, it’s often the companies that are already doing fine, that are growing, or even in the process of becoming unicorns, where the founding team might be too busy growing and finding investment, that are just not interested in building a diverse organization. As the old saying goes: “If ain’t broken, don’t fix it.” That may just prove to be a bad long-term planning decision. Growing a company without an inclusive leadership plan may in the long run turn into a handicap, if not a huge liability.
One of the most relevant aspects in building a company, either as a founder or as CEO, has to do with its culture. In today’s world, given massive flows of information, the ability that customers have to immediately access products and services and the low switching cost, companies may not have second chances in building up the customer relationship. This is where having a rich, diverse culture comes in play.
What do I mean? Let me give you an example, I’ve been a VC investor for 15 years. I have had the privilege to see many companies grow. One of them, which is really close to my heart and one of the fastest-growing companies in our portfolio, used to have an all-male team. That was fine: they were growing, they were showing results. However, when looking at the composition of their customer base, we found out that 80 percent of their clients were men and just 20 percent were women. What was happening? Why did they not have women clients? The management team of the company was composed of men only. In hindsight, it may seem obvious — a product built by men only may alienate in many ways a huge part of the market (at least 50 percent of potential women customers) not only in product design but also in the way they communicate with the market. The result was a poor conversion rate when it came to female consumers. Fortunately, the company saw that and changed, but it became a cautionary tale for me.
Finally, just to be really clear, diversity and inclusion are not only about gender. Just having more women on your team will not do the trick. Building an inclusive and diverse team requires a wider scope. It is about having a team that has an LGBT+, multicultural, multi-age, multi-ethnic and multi-socioeconomic background. I understand that it is not easy, especially in our region, where the talent needed for a startup may be more available in privileged male candidates. But, still, all companies, regardless of their growth stage, should have a plan regarding how to source the most diverse team available because it is not only about who works for you, it is about building the culture and the identity of your company and in some ways, as a founder, of your legacy.
As Ben Horowitz says in his book, “What You Do Is Who You Are,” it is easy to hire people that think like you and who are similar to you. But as a leader, understanding that you need people who are different but still can be part of your company culture and who buy into your company purpose will make you all stronger.
As a leader, do you have a diverse team? How are you ensuring that you hire diversity?