Does diversity drive innovation?

Is there a link between diversity and inclusion for better innovation?

Reading Time 15 minutes

About: Is there a link between diversity and inclusion and better innovation results? The Insight articles explore why and how that might be the case.

Value:  A summary of the evidence for increasing diversity and three practical ways innovation managers can benefit.


Photo by Mario Purisic on Unsplash

There’s a view that the creativity that innovation relies on is helped by selecting a more diverse team.

The trend in society is to select and recruit a more diverse workforce as a corrective to societal ills which I don’t need to expand on here.

This Insight Article aims to unpack the link between workforce diversity and innovation results.

And give you some ideas about practical steps you might take.

I want to do that by exploring several articles from the business press and a couple of academic papers.

I’ll give you several actionable insights to take on and improve innovation results through team diversity.

Does diversity lead to better business results?

For the self-aware, our lived experiences will tell us the answer is Yes.

Let’s start with some surprising and not-so-surprising facts.

An article in The Guardian from 2019: “Crash-test dummies based on the ‘average’ male are just one example of a design that forgets about women – and puts lives at risk.”

Going into the financial media, one report lays out the case of the non-diverse workforce.

  • “Only 10% of directors of FTSE 100 companies are from ethnic minority backgrounds, and ethnic minorities make up only 6% of top management positions across all UK companies.”
  • And, “Only 19.7% of employees on company boards are women, and for every 100 men promoted to managerial roles, only 86 women are promoted to the same roles.” By Freshminds.

Despite years of hit-and-miss activity, there remains a gender diversity gap.

The Wall Street Journal ranked corporates in the S&P 500 for diversity and inclusion of population minorities. It concluded, “Diverse and inclusive cultures are providing companies with a competitive edge over their peers.” Forbes magazine January 2020.

These articles assert that greater diversity leads to better business results. It feels that increasing workforce diversity is a step in the right direction.

The case for Diversity, Inclusion and Innovation results

Deloitte has started to put down results for innovation outcomes. They found that companies with inclusive cultures are “six times more innovative and agile”.

And “Companies spearheading diversity are also 35% more likely to achieve better business returns.”

A Harvard Business Review article of 2013, reported that “diverse companies enjoyed better overall financial performance. EBIT margins for companies with diverse management teams were 10% higher than for companies with below-average management diversity.”

From a consumer perspective, women control 51% of U.S. wealth (40% globally), and women make or influence up to 80% of all purchases.

This tells me, that there is enough evidence of intuition about diversity in business to give serious consideration about the lessons to be learned for innovation leaders.

But what are the reasons behind the social forces at work?

The first reasoning emerges that “this is not because minorities are intrinsically more innovative. It is because having a workforce with diverse perspectives brings unique information and understanding to the table, which allows blind spots to be called out and spurs creativity.”

Katherine Philips of Columbia Business School puts it like this; “Diversity jolts us into cognitive action in ways that homogeneity simply does not.”

She says there is overwhelming evidence that gender heterogeneous teams produce higher quality technical and scientific outputs.


What do we mean by diversity?

Let’s go on with some definitions and a hypothesis.

The hypothesis is that “more diversity leads to better innovation outcomes.”

But what about the definition?

Sylvia Ann Hewlett, Melinda Marshall, and Laura Sherbin’s 2013 article identified two kinds of diversity: inherent and acquired.

Inherent diversity involves traits you are born with, such as gender, ethnicity, and sexual orientation.

Acquired diversity are the traits you gain from experience: Working in another country can help you appreciate cultural differences.

This makes for a two-dimensional portrait loved by management consultants.

They assert that this 2D diversity unlocks innovation by creating an environment where “outside the box” ideas are heard.

Factors in their diversity study include gender, culture, ethnicity, country of origin, geographic location and disciplinary diversity.

As innovation managers, we need to be clear about where we are looking at diversity. At the company-level management or in the innovation teams.

In one study conducted using a sample of 7,600 London-based firms, researchers found that “companies with diverse management were more likely to introduce new product innovations than are those with homogeneous ‘top teams.’”

In Spain, a study found that “gender diversity is positively related to radical innovation.”

The Talent Pool Matters

This seems to be partly about creating a deeper pool of talent in the company which then helps us recruit the innovation teams.

A Boston Consulting Group study in 2018 modelled the impact of six components of diversity on innovation team performance. 1,700 employees in 8 countries from Austria to India to the USA, examined perceptions of diversity components at management level (gender, age, the nation of origin, career path, industry background and education).

Two features are noteworthy.

  • First, a statistically significant correlation was found between innovation performance and the diversity of management teams across all six diversity indicators giving approximately 20% improvement in innovation revenues.
  • Second, the most pronounced impact driver was the nation of origin of Team Members. Nationality matters because of cultural factors. Specific cultural knowledge can be deployed to assess and solve problems in different ways.

They concluded, that the more varied an innovation team is in terms of country of origin the greater the impact.

But we know that team dynamics are a major factor. More on this later.

Hiring widely, despite the global trend, matters if you want the option of better innovation results.

What are the 6 dimensions of national culture?

A mainstay of many MBA programmes is the book Managing Worldwide by Geert Hofstede. National traits are broken into six main factors.

  1. Power distance index
  2. Individualism vs collectivism
  3. Uncertainty avoidance
  4. Long-term orientation vs short-term orientation
  5. Masculinity vs femininity
  6. Indulgence vs restraint

Could it be that the high individualism in the US favours the innovation fuzzy front-end? Or the high collectivism of Japan in its implementation?

There are limits to Hofstede.

Think about the variation of individual styles WITHIN a nation. Perhaps it works as a starting point for innovation managers to prepare for managing national cultures.

How do individual traits factor in?

Carl Jung’s work in the 19th Century has spurred several profiling tools such as OCEAN, DISC, Myres-Briggs and Belbin, to name a few.

Here are the four in a nutshell.

OCEAN is a validated one and predictor of personalities across gender, age, culture and language. It strongly predicts work behaviours across cultures. The so-called Big 5 personality factors are,

  • Openness to experience (imaginative, inquiring, artistic).
  • Conscientiousness (responsible, organized, dependable).
  • Extraversion (sociable, assertive, ambitious).
  • Agreeableness (friendly, trusting, cooperative).
  • emotioNal stability (control, calm, secure).

Belbin looks at behaviours and skills around three centricities: thinking, action and people orientation and builds out to nine specific role types.

DISC is a variant of Jungian psychology looking at Dominance (in approach to problem-solving), Influence (approach to people), Steadiness (pace and attitude to change) and Compliance (procedures, standards).

Finally, the MBTI partitions four main trains of Introvert/Extrovert, lifestyle (Judging/Perceiving) and functions of Sensing/Intuition and Thinking/Feeling.

I know from my profiling in corporate life that I exhibited an INTJ profile (aka The Architect)

Although Belbin and MBTI assessments provide pointers for the assembly and successful working of cross-functional teams, for innovation-centric programs the Four Sight Thinking Profile has gained popularity.

It uses four fundamental forms of thinking for the tasks used in creative processes including clarification, ideation, development and implementation. It gives guidance about how team members should interact in a better way.

For innovation managers, we should put our teams through a personal assessment. They will benefit from knowing themselves and supporting us in forming and managing teams.

Why might diversity work for better innovation results?

From an external perspective, greater cultural understanding means customer’s needs are better understood. It leads to more targeted Innovation impulses.

From a team dynamics perspective, diversity could enable more novel thinking and adaptability that innovation requires.  But it has to be done with good creative team selection and management. See my articles on the importance of the creative leader.

Thinking about a workplace environment we want one that supports a diverse workforce and exemplifies best practices for an engaged healthy culture.

Conclusions and Implications for Innovation Managers

We need hiring that accounts for the factors of diversity; gender, age, the nation of origin, career path, industry background and education. This provides a pool of talent from which to draw.

Knowing our interpersonal working styles and differences, we have a chance to form teams for the emotional, cognitive and cultural intelligence that differentiates good innovation teams.

The role of the creative team leader – like an exceptional sports team coach – is critical to taking this potential and turning the outputs into gold.

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Want to know more?

Rob Munro delivers strategic innovation services to companies, universities and government agencies giving business and innovation leaders the practices, tools and confidence to achieve best-in-class innovation results. Please get in touch with me to discuss ways to bring greater effectiveness to your innovation processes.

Read more about my service to organisations for innovation planning in improving innovation results.



  1. The deadly truth about a world built for men – from stab vests to car crashes, The Guardian, 23.02.2019
  2. Power in perspective: how diversity is driving innovation, Freshminds, 21.05.2023
  3. Diversity Confirmed To Boost Innovation And Financial Results, Forbes, 15.01.2020
  4. How Diversity Can Drive Innovation, HBR December 2013
  5. Cultural diversity drives innovation: empowering teams for success, International Journal of Innovation Science, 1.10.2020