Why Diverse Teams Outperform Homogeneous Teams
Diversity is critical for innovating new ideas and troubleshooting old problems.
Posted June 4, 2021 | Reviewed by Devon Frye
- Dozens of studies and decades of research have found that diverse teams are smarter than homogeneous teams.
- But diversity and equity initiatives can be complex and messy. Often, specific pockets in companies pick them up faster than others.
- It is, then, critical to know when, why, and how diversity is important.
- Psychological research can help us better focus diversity efforts in the right places, and at the right time, to make the most of early wins.
There’s no doubt that there is more pressure than ever on organizations to increase their diversity. Putting aside the important social and ethical issues, it turns out this is also relevant to an organization’s day-to-day success. Dozens of studies and decades of research have found that diverse teams tend to be smarter than homogeneous teams: they often think more logically, are more creative, and are more adept at identifying errors in thinking.
At the same time, it's important to recognize that organizations are busy places, often with an overwhelming amount of change going on and many different competing goals on any day. In theory, an organization should just commit to better diversity everywhere across the firm all at once, and it starts to happen. In practice, change tends to be complex and messy, and there's evidence that specific pockets within companies tend to pick up diversity initiatives faster than others—perhaps a sales team in a specific business unit, or a particular marketing function.
Thus, it's important to ask: Should we be thinking homogeneously about rolling out diversity initiatives? Or, given that success tends to happen in pockets and then expand, is there a way to focus diversity efforts early on in the most impactful pockets of the business, to see the best results and use this to build positive momentum, while also addressing the wider organization?
We went into this question cautiously, as we didn’t necessarily want to discourage broad strategies. But at the same time, we were curious: Can science help us better focus our diversity efforts to get the best early wins—and then keep them going?
Where Diversity Has the Biggest Impact
To help us consider this question, we recently spent time with Dr. Valerie Purdie Greenaway from Columbia University, who runs one of the world’s leading diversity, equity, and inclusion research labs. In a recent conversation, Valerie helped us understand the deeper science involved in diverse teams and formulate a hypothesis.
Here’s our early thinking. There are four kinds of work activities likely to especially benefit from the strengths of diverse teams: first, when launching a new product; second, when troubleshooting an existing product or a process; third, when planning for the future; and finally, when responding to crises. That’s because diverse teams are particularly good at exposing and correcting faulty thinking, generating fresh and novel ideas, and accounting for a wider array of variables in planning.
Part of the reason this happens is due to what scientists call cognitive elaboration—the process of sharing, challenging, and expanding our thinking. In essence, diverse teams compel each other to think more deeply about their reasoning and interrogate the facts more objectively. They share counterfactuals as they go, they don’t take things for granted, and there is minimal "social loafing"—of just accepting things at face value. In short, diverse teams tend to come to better conclusions because those conclusions have been road-tested more thoroughly.
Given the uncertainty and volatility of the world today, it’s likely your organization is engaging in some or all these tasks: launching a new product, troubleshooting an existing product or a process, planning for the future, or responding to crises. Here’s why diversity matters in each case.
A caveat. The benefits of diversity aren’t likely to accrue if we simply put together a team of diverse individuals and assign them a task. The environment in which they’re working should be inclusive—one in which all members feel valued and as if they have a voice. In that inclusive environment, the benefits of diversity are far more likely to materialize. If not, employees will leave the organization, or worse, stay but not contribute. Diversity without inclusion only creates a revolving door of talent.
1. Launching a new product.
Diverse teams are likely to yield more and more novel ideas. The friction that arises out of having different experiences, ideas, and philosophies can feel uncomfortable in the moment. But when employees speak up and share diverse inputs, they help the group see things from new angles and perspectives, and in turn, help the group find more creative, innovative solutions.
In a 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.’” And that, “diversity is particularly important for reaching international markets.” Another study, conducted in Spain, found that “that gender diversity is positively related to radical [emphasis added] innovation.”
2. Troubleshooting an existing product or process.
Many studies show that diverse teams outperform when it comes to detecting errors. Whether it is reviewing troublesome lines of foundational code in an app, reviewing a critical press release before it goes out, or signing off on a new recruiting strategy, diversity increases the chances of detecting errors. You are less likely to miss the perspective of certain stakeholders, and people just work harder to notice flaws as well.
In one study, researchers divided sorority or fraternity members into four-member groups, each of which had to read interviews conducted by a detective investigating a murder. Three people in every group, referred to as “oldtimers” in the study, came from the same sorority or fraternity, while the fourth, the “newcomer,” was either a member of the same sorority or fraternity or a different one.
The three oldtimers in each group gathered to decide who was the most likely murder suspect. Five minutes into their discussion, the newcomer joined the deliberation and expressed their opinion as to who the suspect was. Interestingly, although groups with out-group newcomers felt less confident about the accuracy of their joint decisions, they were more likely to guess who the correct suspect was than those with newcomers who belonged to the same group.
3. Planning for an uncertain future.
Diverse teams focus more on facts and process them more carefully than homogeneous teams. This makes it more likely that they won’t lapse into unreasoning consensus—an affliction known as groupthink—which makes homogeneous teams’ decisions less rational and riskier.
In one series of experiments, researchers set up faux financial markets in Texas and Singapore and asked participants to buy and sell stocks in either a same-race group or an ethnically diverse group. The studies found that same-race groups, with their implicit sense of shared identity, trusted each other more. But that trust led them to put too much faith in each other's judgments, fueling a circle of blind conformity in which people copied each other’s mistakes and ultimately created a price bubble. Ethnically diverse groups were more skeptical of each other, and encountered more conflict. But since they tended to scrutinize each other's decisions more closely, they wound up being far more accurate in how they priced the stocks.
The Dynamism of Diversity
We want to leave you with two thoughts: First, it’s not enough to know that diversity is important to your business. We want to know when, why, and how it’s important. We know that when the stakes are high—we’re relying on the development of an innovative product or idea, we’re grappling with uncertainty, or a crisis is bearing down—diverse teams are critical.
Secondly, within the categories of identity and cognition, diversity takes many specific forms. And a great number of those forms have shown up in the research as critical to improving performance.
In other words, be diverse in how you think about diversity.
This article was written in partnership with Paulette Gerkovich, Ph.D., a Senior Consultant at the NeuroLeadership Institute.
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