At one time, the issue of diversity within business was only discussed within the most generously staffed HR departments, and even then, was often relegated to the ‘nice-to-have’ category and promptly forgotten about. Nowadays, however, the issue of diversity is taking front and centre stage within even the smallest of organisations as more leaders realise that diversity is far more than a ‘nice-to-have’ – it’s a ‘need-to-have’ to guarantee business success. Here’s why:
Diversity allows you to understand all of your customers
With the joint forces of globalisation and technological change weighing heavily on Australian businesses, small business owners and entrepreneurs can no longer be satisfied with vague attempts to understand and reach their target market. Herein lies one of the most important benefits of diversity – the ability to deeply understand your customer’s perspectives, based on the lived experience of your team.
Tech startup Outcome.Life CEO Gerard Holland found this point resonated particularly well with investors in the company’s most recent seed funding round, where the organisation successfully raised in excess of $500,000. Speaking about the importance of diversity within his small team of six, Gerard says:
“Our business is all about helping international students, so I couldn’t very well go to investors and say ‘invest in us – we understand international students!’ without actually having international students in my team who could truly understand those experiences. I think investors saw that in us – they saw that our diversity made us really customer-centric.”
“Having founders who differ in age, career background, and gender does wonders for our business strategy on an almost daily basis – we naturally challenge each other and bring different perspectives to the table."
It also helps to unlock creativity and innovation
Creativity and innovation are also important bi-products of diversity. Great minds may think alike – but this will rarely lead to the deluge of new and innovative ideas that are required at a small business level.
Speaking about his team, Gerard also agrees that diversity leads directly to innovation, in that: “Having founders who differ in age, career background, and gender does wonders for our business strategy on an almost daily basis – we naturally challenge each other and bring different perspectives to the table. From there, all of our great ideas are born.”
Commenting on the downsides of this, Gerard does admit: “Diversity of perspectives is actually code for different perspectives, which naturally leads to (some) conflict. However, I’d rather us have that argument now, than fail at this or that in the future.”
Diversity helps to minimise business risk
Beyond even customer representation and innovation, one of the most important benefits of diversity for any small business is that it fundamentally reduces risk. In a day and age where businesses taking excessive risks has resulted in everything from the collapse of Enron to the Global Financial Crisis, organisations of all sizes are advised to structure themselves in a way that mitigates risks.
From a structure and decision-making perspective, then, there is no better way to reduce risk than to have a diverse team. Research has now shown that the management team within Enron, for example, suffered from ‘groupthink’ – a crippling phenomenon where members of a group are too similar and as a result, they do not question the (often poor) decisions of others. Having diversity within a team greatly reduces this agreement-seeking behaviour – and reduces the risk that your business will suffer the same fate as Enron, and many before them.
Teigan Kate Margetts is a freelance writer who specialises in producing thought-provoking content on business and education-related topics.