14 Sep It’s Time For The Entrepreneurs And Tech To Get Comfortable With Diversity
The tech industry struggles with diversity. Many people in Tech espouse viewpoints or engage in behaviors indicating they prefer the Caucasian and Asian male-dominated status quo. Recent evidence for this includes numerous reports of male venture capitalists harassing female entrepreneurs and a notorious memo written by a male Google engineer arguing that women are less capable in technical positions than men. [Google soon fired the engineer for violating its code of conduct.] The entrepreneurial sector as a whole receives less scrutiny than Silicon Valley, but I suspect that these issues arise in entrepreneurial companies outside of the tech sector too.
It’s time for entrepreneurs and techies to get comfortable with diversity, for two big reasons. First, there is significant evidence that diversity is a good thing for firm performance, particularly as firms scale and evolve. For example, a McKinsey study of larger firms showed that firms with diverse management teams, on the basis of either gender or ethnicity, achieve better financial performance that firms that lack diversity.
A paper published in Harvard Business Review sheds light on how this works. Teams with diverse membership function better: their decisions are more fact-based, they process facts more carefully and they are more innovative.
Start-ups are often founded by a group of like-minded people and their initial success is based on the shared vision, close-knit execution and sheer guts and determination of this team. At the beginning, you hire only the people who buy into your passion for the business and can get you to market quickly. That may not result in diversity. As the business scales and the market evolves, however, a start-up has to adapt to new facts and circumstances. The objectivity and innovation boost that diverse teams provide increases the speed and accuracy of adaptation, which can be a big factor for long term success.