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Inclusion Is More Strategic Than Ever

By setting your company up for growth, you have already made a strong, implicit commitment to diversity. The political events of 2016 could help you deliver on that promise.

As writers on the subject of strategic incoherence, we are often asked what types of cultural values are important in becoming a more coherent company. The answer often depends on the company’s particular circumstances. But the political events of the past year — the U.S. presidential election and the Brexit referendum in particular, but also the increasing visibility of nationalism and “anti-globalization” politics — have brought one key cultural value into focus: diversity and inclusion.

If you are a leader in a global, expansive business enterprise, then your success depends on growth. For most successful companies, that means building and deploying complex capabilities that are distinctive to your company and help define its identity. We have simply not found any other sustainable path to profitable growth. Examples might include ways of designing and manufacturing products, translating customer needs into services, working with suppliers, creating experiences, or engaging with the communities around you.

Distinctive capabilities are inherently complex in ways that are difficult for others to copy. They combine processes, organizational structures, technologies, and (most relevant here) human skills and behaviors. It takes intensive collaboration to create these capabilities; that collaboration is almost always cross-functional, bringing together people from different backgrounds. Indeed, in nearly every company we know, including those Strategy&, PwC’s strategy consulting group, studied for the book Strategy That Works (Harvard Business Review Press, 2016), we see diversity of teams as a major enabler, and other research backs this up. (See “Thomas Malone on Building Smarter Teams,” by Art Kleiner.)

Thus, if you’re serious about growth, and if you recognize the link between that growth and your company’s capabilities, you have already aligned your company with inclusion and collaboration. Implicit in this is a promise to your employees that they can trust one another in your workplace, that they will be treated with respect, that you need their talent to be successful, and that people from any background might, under the right circumstances, rise to a higher level as contributors, collaborators, and leaders. Large companies by their nature bring diverse talent together to solve difficult problems. Try doing that if people don't trust their colleagues at a very basic level.

The political events of 2016 might seem to contradict this implicit promise. A significant number of your employees, of all backgrounds and political persuasions, may be worried that they will not accepted by their peers, or even by management. You may be tempted to dismiss these concerns as irrational or overblown, but they are likely to be sincerely felt. The nature of the brain’s response to traumatic events — and for many people, these divisive political experiences have indeed been traumatic — is to make people more likely to mistrust others. It is extremely important to recognize that this affects all groups, on the left and right of the political spectrum; we are all prone to subconscious bias that makes it hard to collaborate with everyone, especially after contentious public events.

What can you as a leader do to make sure people in your organization feel ready, willing, and able to work together? One place to start is with the expression of your support for diversity and inclusion as a company principle — in internal communications to employees and public statements to the world at large. (Since internal statements may be leaked, you should assume that eventually everything will be public.) This is not just a moral issue; the atmosphere you create, and the way you speak about it publicly and to your employees, will influence your economic performance. It will affect your ability to recruit key people, build effective teams, maintain your reputation, and allocate your time and that of other key leaders effectively. The more time you spend resolving internal conflicts, the less you have to devote to your strategy and execution.

Start by affirming your commitment to your current staff that they will remain employed, no matter what their background or perspective. Some members of your workforce may feel that others are against them in some deep-seated way. You can remind them that everyone has a stake in understanding the reasons underlying one another’s behavior. As the Dalai Lama has pointed out, an enemy is the best teacher of tolerance. We all have to understand why these conflicts exist in the first place, and we have to think more clearly about the root causes of the problem, rather than just the symptomatic expressions of anger.

Your diversity initiatives have a new role to play — but they’ll need more strategic clarity.

Your diversity initiatives have a new role to play. While the field of diversity management is still in its infancy, investments in it are paying off economically, because of its effectiveness in attracting and retaining skilled people. But many diversity and inclusion programs need more strategic clarity. They don't link the goals of diversity with the organization’s strategy — and often don’t make explicit the connection between diverse skill sets and great capabilities, like design at Apple, the supply chain at IKEA, or the customer experience at Starbucks. (Perhaps it’s no coincidence that the leaders of these three companies, which are all featured in Strategy That Works, spoke out in favor of inclusion this year.) Capabilities like these are complex. They bring together a broad range of skill sets to create incredible outcomes. To assemble those skills sets, you need a high level of collaboration among many different kinds of people, in a way that brings out everyone’s unique skills. Diversity programs can be more closely linked to strategic goals, even using the building of complex capabilities as a “demonstrator” project that will give team members the skills they need to work across many types of boundaries more effectively.

Is this enough to help you navigate these new pressures? Probably not, but it’s a starting point. You will need to build new skills, oriented to politics and human capital. Those skills will serve your company as it moves forward, no matter what else happens. This is the time to begin.

Art Kleiner

Art Kleiner was formerly editor-in-chief of strategy+business.

Paul Leinwand

Paul Leinwand is global managing director of capabilities-driven strategy and growth for Strategy&, PwC's strategy consulting group. Based in Chicago, he is a principal with PwC US. He is the coauthor of Strategy that Works.

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