Business strategy is a multifaceted discipline that relies on getting a wide number of things right. What makes the field so interesting is that it is a complex, infinitely variable puzzle that you have to solve and you don’t have all the information at your fingertips. You have to make calculated assumptions, and projections based on what you think might happen – all within an uncertain problem space.
To make the right decisions here and set yourself up for success, you have to be able to see all the angles and direct the business accordingly. If you get caught up in one line of thinking or one form of reasoning – you are going to blind yourself to reality and find yourself on the wrong side of things.
This is one of the most common mistakes that companies make when planning and executing on long-term business strategy. They are too homogeneous in their thinking and they are unable to consider alternate points of view because they are already married to the ideas that they already have. This rigidity is why we see great organizations get stuck after a while, eventually to be disrupted by new players who aren’t weighed down by the status quo.
We need more diverse thinking in strategy.
Ilana Rosen, speaking at the Strategy Fest, nailed this point in a soundbite that hopefully will resonate with you:
“You want a completely diverse group of people that can push one another to get better outcomes and to challenge one another. We don't want an echo chamber.” - Ilana Rosen
Diversity in Society
Diversity, of course, has become a major talking point in recent years as we’ve started to look more critically at how our society functions. The ills of the past created a system where certain groups of people just simply didn’t have the opportunities that others did because of their race, gender, sexual orientation, and the like. We are slowly dismantling these one by one, and we still have a long way to go, but the trend is in the right direction.
This stems from the discussion about human rights, but what makes this even more of a no-brainer is that it unlocks all this talent and potential that previously was untapped. When we can draw insights, ideas, and energy from everyone – we put ourselves in a really good position to move forward strongly. We can empower everyone regardless of background to contribute to the cause or mission that they believe in.
This trend is one that shows no signs of slowing down and we are taking the steps required towards a world where diversity is celebrated and recognized as the competitive advantage that it is.
Distribution of Google's Leadership in the United States in 2020, by ethnicity
Data Source: Statista
The Dangers of Homogeneous Thinking
It’s easy to find yourself in a position where you look around the boardroom and only see people who look, think, and sound like you. As humans, we have a natural inclination to group together and look for commonalities – and so that subconscious pull plays a role in hiring, networking, and all aspects of business.
Without even meaning it maliciously, your key personnel can resemble carbon copies of each other before you know it. This is often because we gravitate towards people who believe in the same things as we do and can validate our ideas because they come from a similar background. It’s much harder to swallow our pride and appreciate the people who disagree with us and can raise good counterarguments to whatever we believe.
As such, you can find yourself going down a slippery slope where you build an echo chamber for yourself and you only hear what you want to hear. This is extremely dangerous for any business because once you get yourself into this position, it’s difficult to see the reality of the ecosystem you’re operating in. It’s difficult to relate to a diverse customer base and truly understand the nuances in all your different customer segments. It’s difficult to see the disruption coming to your industry because you are complacent about your position in it.
Without diverse thinking, your strategic decision-making is not robust. It might work for a little bit but eventually, the ground underneath you is going to shift and you won’t have the tools available to make the required adjustments. And you’ll be rendered irrelevant before you know it.
Why Diversity Matters
It’s worth noting at this point that while the connotations around diversity often come down to race, that is just one aspect of a much larger conversation. You want diversity across every spectrum you can imagine – race, gender, background, skills, specialization, age, point of view, etc. The list could go on and on.
At the end of the day, you’re looking for diverse thinking for your strategic planning. Matt Ryan, speaking at the 2021 Cascade Strategy Fest, said:
“It’s really good when you can have a diversity of people at the table, a diversity of perspectives. And I’m not just talking about the usual definitions of difference. I mean diversity in every sense of the word.”
Matt Ryan
Source: vervoe
Building on his talk and some of the larger patterns we saw throughout the festival, here are some of the key reasons that diversity can be powerful:
- Relating to Customers. We’ve written before about how strategy must be the voice of the customer and if you take that idea seriously, then you’ll make customer knowledge a big priority in your organization. When you do so, it’s almost inevitable that you will find that your customer base is much more diverse and nuanced than you previously realized. It’s likely that you’ve got some image in your head as to what your target audience is. However, when you engage with customers more proactively and look at the data, you’ll realize that there is a wide spectrum of different customers. As such, your strategic planning needs to reflect that customer base so you can relate to them and effectively serve their needs. If you don’t have that, there are entire groups of potential customers that you are alienating because you don’t have that perspective at the table.
- Disruptive Thinking. Having different perspectives at the strategic table is incredibly valuable for being able to spot potential disruption ahead of time. Running a business is always a competitive affair and you have to keep evolving and adapting as the world changes if you are going to stay relevant over time. The moment you remain static is when you’re in trouble.
Diverse thinking helps to challenge lazy assumptions, incorrect projections, and bring new ideas to the table that keeps things fresh and in-tune with what’s happening on the ground. It’s only through an open-minded, wide-ranging session that you can discover disruptive threats to your organization as well as opportunities for you to disrupt as well. You’re looking for an edge here over your competitors and often it comes from the most unexpected places. But you only gain access to those insights if you give them space to breathe and you nurture a culture of speaking up from all corners of the room.
- Street Smarts. Typically, the sorts of people who get into strategic decision-making positions tend to be those who have gone through high-pedigree educational institutions. The major universities and business schools carry a significant cache in modern society and (rightly or wrongly) those graduates tend to find themselves in the higher echelons of these organizations. The downside of this is that you get a very specific type of thinking that dominates these discussions. One that is built on case studies, financial models, and PowerPoint presentations. This is very useful of course, but on its own, it can lack the real application on the ground.
You want diversity in function when you’re planning strategy so you can leverage the on-the-ground wisdom of those who actually interact with customers and suppliers day in and day out. This alternate perspective can be a wonderful complementary addition for executives who are too far away from that world to have any real insight.
- Untapped Talent. We’ve alluded to this above but there are a number of different groups of people that haven’t had the opportunity to contribute at this level before and by bringing them into the discussion, you can unlock a unique and enhanced perspective. People tend to rise to the level of expectation and so when you give them an opportunity to make an impact – most will take that and run with it. One of the more common examples we see in this vein relates to age. Boardrooms tend to be filled with older people because they have the experience and time in the industry to make wise decisions – that makes a lot of sense. But if you are only relying on that experience and you’re not tapping into the young talent at your disposal, you’re missing out. Not only can you gain great insight into the new generation of buyers that you’re hoping to sell to, but you also can inspire and motivate those young people to be a part of your long-term mission.
- Robust Decision Making. In the realm of strategy, every decision can have wide-ranging consequences and is often one of high stakes. That’s just the nature of the beast. As a result, mistakes can be very costly and potentially existential in some cases. In order to guard against these, you want your decision-making process to be as robust as possible. Any good system will have checks and balances in it to protect against errors and your strategic planning should be no different. Having people around the table who are willing to poke holes in your plans and point out inconsistencies is incredibly valuable because then you can take the necessary steps to correct those before you put them into action.
You don’t want a room of yes-men who are just going to go along with whatever is being proposed. You want a diverse range of people who can all look at things from their point of view and identify ways to improve things. This collection of opinions serves as your company’s immune system protecting against bad ideas. The wisdom of the crowds is a real thing here, as long as your crowd is as diverse as the customer base you serve.
Those are just a few of the reasons why diversity can be such a competitive advantage for an organization. On a strategic level, it makes a lot of sense to prioritize this and do whatever you can to bring those diverse ideas to the table. So you can work systematically through them and arrive at a plan that is nuanced, holistic, and robust. If you do this well, you’re then off to the races.
Building the Environment for Diverse Thinking
It’s very easy to say that you value diversity, but it’s much more difficult to actually put that value into action. Diverse thinking doesn’t just emerge on its own. You have to build the internal environment that encourages it and allows it to thrive – if you are to benefit from it.
This environment-building is something that takes time and often requires a mindset shift, so we thought we’d end this piece by looking at some of the key principles that matter when you’re trying to allow diverse thinking to contribute to your strategic planning and execution.
- Management Buy-In. The first thing that has to be in place for this to work is that it needs to have buy-in right from the top. If your key decision-makers are not open to other ideas then you’re never going to get this right. It takes a certain level of ego dissolution to acknowledge that you actually might not know everything and others might have valuable insights to contribute. Everyone at the top of the organization needs to believe in the power of diversity and demonstrate that so that it feeds throughout the organization.
- Empowerment. The next step is to empower your people within the organization to actually speak their minds. In a typical business environment, the hierarchy tends to create power dynamics that inhibit honest and candid feedback. When someone’s job and livelihood are in the hands of their boss, it’s very difficult to speak up about something that they disagree with. As such, you want to go above and beyond to empower your people to speak their minds. When you empower them to speak up and you show them it is not only accepted but its celebrated, you’re going to have many more people rising to the occasion and making their mark on the company. Once people feel that they are making a difference, you’ll find a whole new world of insights comes bubbling to the surface.
- Tolerate Failure. One of the major reasons that companies lose their competitive edge is that they stop tolerating failure. When things get to a certain scale and the stakes get high enough, it’s easy to slip into a company culture where failure is not tolerated and every single idea is expected to be a home run. When this happens, people start shying away from out-of-the-box thinking and they stick to what they know because that is what is getting rewarded in the organization. To encourage diverse ideas you have to be willing to tolerate failure. It’s only by letting people think more widely and test drive various innovations that you open the space for true disruption.
This is not to say that you have to stick with bad ideas for the sake of it. But rather, that you are willing to experiment and try a wide variety of ideas – iterating as you go and learning from your mistakes. - Have Fun. This might sound counter-intuitive, but having fun actually plays a big role in encouraging creativity and diverse thinking. Strategy can feel very serious, and it is, but there is something to be said in seeing it like a game every now and then. This is especially true when you are brainstorming the long-term mission and you have the ability to craft your own destiny. By drawing from your passion for the business you’re in and letting that fuel your strategic sessions, you can access a level of creativity and diversity of thought that just isn’t possible when you’re taking yourself too seriously.
We hope that you can see just how powerful diversity is for strategic thinking and execution. If you can make this a priority for your organization and co-create the right environment for it to flourish, it might just be the most powerful competitive advantage you have.
Diversity is a superpower. What are you doing to leverage it?
