Managers will face unprecedented challenges over the next decade. Not surprisingly, many leaders will focus on the strategic aspects of change.
Just as important, however, is driving a skills-based transformation that can create teams that are diverse enough to be vibrant and innovative, as well as inclusive and cohesive. That’s easier said than done.
Decades of research show that diverse teams, while often high-performing, also encounter obstacles. Managers who attempt to reshape the workforce without first acknowledging the challenges of difference risk getting mired in conflict and acrimony.
What we have found in our work advising some of the world’s most high-performing firms on how to accelerate transformation and drive growth is that successful leaders strive to identify shared values and build change upon common ground. This means that managers need to not only evaluate technical skills, but also clearly communicate their organization’s shared mission and hire people who will be inspired to dedicate their talents to it.
What makes a great team?
There has been abundant research into how teams function best and what makes them perform most efficiently and productively. In one wide-ranging study, scientists at MIT and Carnegie Mellon found that high-performing teams are made up of people who have high social sensitivity, who take turns when speaking and that include women in the group.
But perhaps the most important trait of any team is that its members contribute a diversity of talents, experiences and perspectives, which maximizes the number of possibilities the team can explore and leads to smarter, more innovative solutions. However, building a diverse team that works well together is a challenge that takes real effort to overcome. Leaders shouldn’t underestimate it.
The diversity paradox
Diversity, all too often, is viewed as an element in conflict with performance; something that leaders will get around to once they’ve made their quarterly numbers. However, the evidence that diversity improves performance is nothing less than overwhelming.
One study found that diverse groups solve problems better than more homogenous teams of objectively skilled problem solvers. Another experiment that simulated markets showed that ethnic diversity deflated price bubbles. A McKinsey report that covered 366 public companies in a variety of countries and industries found that groups that were more diverse in ethnicity and gender performed significantly better than others. The list goes on.
While the benefits of diversity are clear, so are the challenges. We are hard-wired to be hostile to those we see as “other,” and to some extent, tribalism is unavoidable. These tensions, if not addressed, can inhibit performance. Consider that when researchers at Northwestern’s Kellogg School of Management and Stanford Graduate School of Business put together groups of college students to solve a murder mystery, cohesive groups were much more able to come to consensus and feel confident in their solution than diverse groups. Even so, cohesive groups were also much more likely to be wrong.
This is why leaders need to be able to square the circle and build teams that are diverse enough to be innovative, but cohesive enough to work together smoothly. The best way to do that is by building a culture of strong, shared values.
Building a shared mission and shared values
The link between values and performance isn’t always immediately obvious. But culture and values are how an enterprise honors its mission, and that means that values are a crucial component of strategic intent. For example, throughout his tenure as CEO at Apple, Steve Jobs’ commitment to fusing design with technology was a value that attracted both customers and talent. More recently, Tim Cook, Jobs’ successor, has been leveraging the value of privacy in much the same way.
Similarly, signaling a shift in values can help attract new domains of expertise. This was very much the case in the artificial intelligence community, which for decades had prided itself on its meritocratic values. When it became clear that the industry was encountering serious ethical challenges, its commitment to taking those concerns seriously helped attract organizations such as the ACLU and Chatham House to its Partnership on AI effort.
What is crucial for leaders to understand is that commitment to values always comes with costs and constraints. Over a century, one company we worked with has provided high-quality products and earned a reputation for ethics and excellence. Due to technological disruption, the firm needed to hire people with more diverse skills and mindsets. Their challenge was twofold. First, leadership needed to have a frank discussion about how it needed to operate differently. Second, it needed to signal to outsiders that the change was genuine. Managing the shift required a sustained commitment from the top to achieve the desired results.
A high-performance culture is a journey, not a destination
Strictly speaking, values are how an enterprise honors its mission. To achieve any significant objective, capabilities must be brought to bear, and some of the most crucial capabilities are the skills embedded in an organization’s talent. However, while skills enable an enterprise to achieve its mission, they are separate and distinct from it. Values are central.
There is a fundamental difference between hiring people to do what you want and hiring people who already want what you want. The value of any particular skill is likely to degrade over time. On the other hand, people who share your mission and values can acquire the skills needed to achieve your shared objectives.
What we’ve found in our work helping to develop high-performing organizations is that every strategy requires specific capabilities and those capabilities come with people attached. Those people, in turn, come with their own needs and peccadilloes, rough edges and dreams. The art of leadership is no longer merely to plan and direct action, but to inspire and empower belief.
In today’s disruptive marketplace, every organization needs to attract, develop and retain talent with diverse skills and perspectives. The difference between success and failure will not be in the formulation of job descriptions and compensation packages, but in the ability to articulate a higher purpose. That begins with a clear sense of shared mission and values.
Greg Satell the author of Cascades: How to Create a Movement that Drives Transformational Change. Cathy Windschitl is practice director at Proteus.
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