March 17, 2023
Despite all the indicators of incompetence on the part of an executive team made up of over 70% white men, the “Andy Kesslers” of the world flocked to The Wall Street Journal opinion section to entertain the classic argument that focusing on diversity, equity, and inclusion was a distraction from the “real” business of running Silicon Valley Bank (SVB). How original and certainly worthy of publication!
Those who promote this idea seem oblivious to the fact that they are essentially admitting that homogeneous leadership teams are incapable of multitasking. If incorporating the perspectives of women, LGBTQ, and Black people is enough to cause a group of white men to fail in leading SVB, then they were not competent to manage a bank in the first place.
So, let’s be clear — a focus and commitment to diversity is a strength and never a distraction. Research has shown that companies with diverse leadership teams are more likely to be profitable because they can tap into a wider range of customers and markets while being better equipped to address the needs and preferences of a wide range of customer groups.
The Selig Center for Economic Growth estimates that African American and Hispanic consumers combine to have 20% of the total buying power in the United States. This equates to trillions of dollars spent in alignment with a different set of needs and preferences. Therefore, companies that want to participate in this economy and sell to more than just white men must have the perspectives of more than just white men at the table.
Additionally, studies have consistently shown that a commitment to diversity reduces the risk of groupthink. And as we’ve seen with SVB, the consequences of groupthink can be far-reaching and devastating.
In these challenging times for businesses, it may be tempting to assign blame. However, we must recognize that diminishing diversity and inclusivity in the workforce is not a viable solution for poor decision-making. By hiring senior leaders and executives from diverse backgrounds, companies can tap into a broader range of ideas, skills, and knowledge, which can help them stay ahead of the competition and adapt to changing market conditions.
According to a Harvard Business Review study, teams with diverse members solve problems faster than teams with homogenous members. And, according to a study by McKinsey & Company, companies in the top quartile for racial and ethnic diversity are 35% more likely to have financial returns above their respective national industry medians.
Diversity is clearly good business, but it is also a reflection of the world we live in. The foundation of the United States is based on the principle that power and responsibility should be wielded by those who are representative of the people. And that sacred principle extends to businesses that must be led by teams that can advocate for their diverse customer groups.
So, let’s not be distracted by scapegoating minorities and maligning valiant commitments to increasing representation in corporate leadership. Instead, let’s lean in and focus on building teams that are diverse, inclusive, and committed to excellence. Let’s work together to create a world where everyone has a fair shot at success and where we can all thrive together.