Diversity for an Effective Organization. It's Not What They Think.

Most people have opted for the lazy and anger-fueled interpretation of diversity and equality. 

This is not a piece on the importance of diversity. I think that's table stakes knowledge at this point in societal evolution. 

Rather, I hope to share my opinions on the process for effective diversity. Not one that serves superficial optics and plays to being "diverse for diversity's sake". 

What I want to address is the use of diversity as a crutch by the attention-seeking special snowflake and the over coddling leaders who are afraid to stick to their guns. Maybe it's just me but most of the reference for the importance of diversity stems from an outcry from someone's complaint, fear to be politically incorrect and desire to look different. Call me a cynic but just like how I believe the greatest driver for a great job is sex, I think the drivers behind the modern era's call for diversity is not one for an effective organization. okay let's first define what diversity is. 

Starts with the Leadership

First off, the research on having diverse teams is obvious (i.e. Forbes, HBR). It's great for your overall organization. 100%. It's something companies and teams should be cognizant of. 

The vision for diversity starts from the leaders. It's not about merely saying "Oh yeah, sure we want everyone and all kinds of thoughts". It's being intentional about diversity. It's about having a purpose for the diversity. I would say most use it as a form of political correctness without any innate purpose for why it's required in the organization.  

Without the leader being secure enough with herself to want diversity there is no way this is going to work out. 

The reason I say diversity is extremely difficult and why it depends on having extremely self-aware leaders is because you need to be someone who has such low ego that you are willing to be challenged. You need to be someone who is so intellectually curious and mentally secure that you want to learn and see things that may crack the foundations of your beliefs. 

To consider diversity as an element for building an effective organization, two specific areas need to be addressed. 

  1. Context over content

  2. Equality of opportunity. Not outcome.

Context over Content

Howard Marks, Co-founder of Oaktree Capital Management, talks about the value of second level thinking over first level thinking. 

In a basic investing example:

  • First level thinking: Stock price is going up, it must be good news so I should buy

  • Second level thinking: Stock price is going up, is it in-line with fundamentals or is it market euphoria? Is it greed and should i be fearful of this?

First level thinking is to merely look at content. It's like saying a team is diverse based on gender and skin colour: "Oh you must be diverse because look at the number of African-Americans and Hispanics you have". Making a binary diversity decision on optics is superficial way to judge individuals on the contents of their appearance instead of understanding the context that may make them truly diverse. 

An obsession on getting the right breakdown of skin colour and gender is easy. You just set parameters to have x many of whichever factors you lack. It's a "collect'em all" situation. It's easy and obvious. It appeals to the masses without having to truly explain the resulting effect of diversity. 

That is not diversity. Sure, you can infer that with different ethnicity and gender it is a form of cultural diversity. Yet, that is only valid if you have the contextual facts to support that cultural diversity truly exists for the individuals. By technical standards, every single human has a unique set of experiences and could be argued to be diverse from the other. Hence, the argument for diversity then falls on relative diversity from a set baseline.

Such a baseline is diversity from a collective thought. This is the value of diversity in an organization. Diversity of thought that is borne out of experience. Having truly diverse thinking can elevate the collective intelligence of the organization to new levels because growth only happens from challenging baseline beliefs. Just like how the human body grows through hormesis, stress on the body, the organization needs stress. This stress becomes possible through diversity in thought and experience. 

Here's scenario 1 to consider:

Candidate A is a third generation Canadian who has studied accounting and was a bank auditor for 5 years.

Candidate B has lived in Singapore, Malaysia and England before Canada and has worked as an investment banker, software engineer, and is currently a movie producer. 

Who has greater potential to have diversity in thought? 

In the example above, Candidate B is a much more diverse individual. It's an example I chose but they are personas of people I've actually met. I'd say candidate B is more diverse because of the set of unique and different experiences the individual has. If I wanted a more diverse team, I'll be selecting candidate B. The diversity comes from the experience that brings upon the possibility for unique thinking. 

But wait... a new variable.

Candidate A is an Asian female... or maybe an African-american female since that may garner more sympathy.. oops I meant empathy.

Candidate B is a Caucasian male. 

The mistake would be to look at the candidates by their skin colour and gender. Can the genders and ethnic backgrounds make a major difference to the individual's thought process? 100%. But merely looking at optics (i.e. content) to judge a person irrespective of the context of their life is discrimination. Candidate A may be from an Asian ethnic background but that doesn't make her necessarily diverse. Given her third generational status she is more likely to think like the average Canadian. Yet, Candidate B has lived in four different countries in his lifetime. Each country has a unique culture of it's own and this can do wonders in giving the individual a unique set of mental models. It would be a huge mistake to generalize as well. 

I've worked with Caucasians from Australia, Germany, Belgium, UK, Portugal, USA, Canada and other various EU nations and you bet they're "not the same". They have extreme cultural diversity just in their upbringing. To assume that they are the same is to be ignorant of history and disrespectful of their culture. Same goes for Asians as well. I don't generalize Asians as a group. I think in most cases its rude and ignorant. I've had my fair share of educating people on how Korean culture is explicitly different from Chinese and Japanese. As a Korean who's lived in Hong Kong before, with a father fluent in Japanese and having been a global investor of Asian countries, believe me. Asians are all different. 

I feel like making another scenario. So here's scenario 2.

Diversity of thought is important in every kind of organization and it's especially important in an investment organization where you are supposed to make money by being different from the masses, ironic since 80% of the investment industry is not contrarian. 

So let's say I'm hiring for someone to join the investment team:

Candidate A studied finance and worked in investment banking for 5 years covering retail companies, reads the WSJ every day, loves to read books on financial history and is bilingual. 

Candidate B studied philosophy and fine arts, became a lawyer, then designer, competes in rock climbing, reads poetry and ran the finance arm of a startup. 

Candidate B is obviously more diverse. Why? Because I already have 5 Candidate As. Certain personas fit the business model. If I'm running a technologically intensive company I want an army of people who only live and breadth code. Just the same as I want people who are in love with investing at an investment fund. 

But, the focus is to continuously cultivate diversity of thought and experience and that becomes essential for the future success of the organization. Hence, if the candidate fits the exact mold of a majority in the team then its an indication that I may not have enough diversity of thought to cultivate innovation.

To be innovative you need constraints. How will you think outside the box without a box. Most organizations will start by creating the box by hiring people like them. People like to be around people like them. It's natural. Then, to evolve and grow, the organization realizes a stimulus is needed. A stressor. The company no longer needs to worry about surviving and establishing product market fit. That's where diversity is strategically injected into the company. Its a natural transformation of the organization. Hence, hiring for diversity of thought and experience is essential to begin the process of testing the realms outside the box. 

Now... what if:

Candidate A was an African-American female of homosexual orientation.

Candidate B an Asian male of heterosexual orientation.

I'm going to tell you what you've been thinking but also wondering if that's what you really shoud've been thinking about. Candidate A has 3 deviations of diversity and Candidate B has 1. It may actually be -1 given cases of limitations imposed on Asian males. It's okay. This is optics. If you were trained to look for diversity as content factors then this is what you would look for. I'm not saying these facts don't count for anything. They do. 100%. If candidate A had to fight through unimaginable hell because of natural disadvantages, then you bet I'd value that grit and tenacity. I'm a huge believer of the power of people fighting through more obstacles. But that's a different factor. I'm not going to be hiring that person because of their diversity scores. I'm going to be hiring that person because of their undeniable prowess. It would be a huge disservice to whittle the individual's achievements down to diversity factors. It is not my place to identify that person with the diversity factors that I see. 

People screaming for diversity talk about being judged by their exterior but what they are screaming for is merely to do the same onto the others instead of actually making a progressively meaningful change to the way we create organizations and society. Most are mere cries of anger and fear rather than a progressive move. 

Yes, social media may explode if Candidate A complains about how Candidate B was nowhere near as qualified as her but got the job because of his race. It's unfortunate that she believed following the system and doing what everyone else did deemed one as being "qualified". The reality is that none of us is qualified for anything. Much less, doing investment banking and studying finance does not qualify you to be a top notch investor (the reverse is more likely true). Contextually, she was not more qualified but this will be missed if people are merely looking at content. 

If you want diversity, then consider context over content. Choosing content is merely a way to compound the problem of an anger-driven society.

Equality of Opportunity. Not, Outcome. 

This is not a new message. Yet, the truly smart people who spread this message (not including yours truly as part of this group, don't you worry) do not seem to have a large enough platform because it isn't a message about giving freebies to the lazy who have chosen to not work for it. 

Equality of outcome is a mistake. It's the scenario without competition. Everyone wants to be a winner but everyone becomes a loser (i.e. Soviet Russia, China before capitalism, North Korea, Cambodia or any other intense socialist regime that shot capitalism on its head). This'll be as political as I get.

Equality of outcome is requiring 50% women on a team or having the leadership team be 25% Caucasian, 25% African-American, 25% Asian and 25% Hispanics. We won't even get into the issues that may arise from people of interracial families but this will none-the-less start a "What About Me?" movement where everyone wants exactly what the other person has. 

There cannot be equality of outcome. If that was possible then there would be no Amazon. Why is stuff on Amazon so cheap? Because there was no equality of outcome. No one required Bezos to stop growing a company until a female or non-Caucasian individual could be a founder in the exact same industry. Amazon wasn't forced to wait around for the other competitors for a "fair" result. How did Airbnb come to existence to make life easier for travelers? Because there was no equality of outcome. There was no rule that required the co founders of Airbnb to force 1 person of each ethnic race divided up by gender to be in the founding team. This was not how they went about creating their early team either. These companies would not exist if we incessantly imposed every detail of equality of outcome. 

The thing is, most people screaming for equality of outcome just care about getting something for themselves. It's natural. People complain because they don't get what they want. Whether it's a sense of entitlement bred from a coddled generation or an honest reflection of unfair due process, its usually about them. "This is not fair because it's not fair to me." We all know that taller people have a higher likelihood of getting senior level jobs due to a psychological bias. Yet, you don't see my fellow below-average height folks screaming for equality in outcome for employees by height. It sounds ridiculous right? Well, if we know there is a bias for it then isn't there a case for demanding equality there? Could you imagine if 50% of the NBA was made up of people under 6 feet? Me neither. It's ridiculous. One could easily make an argument that an individual's competence and skill has taken a backseat in the name of equality of outcome. 

No. Equality of outcome won't work. Not if we want to have create an effective organization. Nay, an effective society. 

It's about creating equality in opportunity. It's close to impossible to have everyone start from the same line. One person's equal opportunity will be unequal to someone else. My parents didn't immigrate to a foreign land for equality of opportunity. No, they brought me here because individuals in the Western world have an unequal opportunity set compared to those back home in South Korea. It's hard to have everyone start from the same spot as of birth. We spend our entire lives focused on achieving. This is the beauty of capitalism. It breeds competition that results in unequal outcomes and that may lead to our own friends and family having unequal opportunity at times. That's what we wanted as well. Hence, it is up to the organizations to focus on creating systems that can help regulate a fair playing field so everyone has an equal opportunity. 

One such way would be to screen resumes without names when selecting interview candidates. We have innate biases for gender and race so take the names out. Evaluate the candidates on their resume. Sure, relying only on the resume may not be the most effective way to select interview candidates but if the focus is on providing equal opportunity then this is one way. You can go further by not requiring college degrees if it's not relevant for what the person will "actually be doing" in the role. You can go further by taking out the need to be permanent residents of a country. It's the company's decision how far they want to go in creating an equal-as-possible opportunity. We can never reach an absolute point of equal opportunity because of the relative nature of what is equal. But, we can strive to create systems that allow for every individual to showcase what they can do. This is the environment we should strive for. An environment where the best can demonstrate what they are capable of. 

It's true that you may have missed out on an opportunity because of your upbringing or geographical location. Maybe it's genetics too. But this doesn't stop you from busting your ass to become undeniable in what you are trying to do. I'm not going to make the NBA at 5'6". I can blame the system for inequality of outcome because they don't take any short people. I can even say I had inequality of opportunity because my parents don't have the "tall gene" or I didn't have Lebron James as my father. People like that don't make it. But you have 5'9" basketball players like Isaiah Thomas or Nate Robinson playing among the 6'7" giants. They didn't start off with equal opportunity in terms of genetics so they just had to work harder to become undeniable. They had to get so good that they would get drafted. 

This will always be the case. No matter what, there will be a specific case where the opportunity set may not be equal. That's just an opportunity for you to work that much harder. Effort and hard work compounds. Mental toughness compounds. 

"Be so good they can't ignore you." - Steve Martin

That's what organizations can incentivize by focusing on creating environments for equal opportunity. You can help instill a behaviour that focuses on the positive. A behaviour that focuses on competition and becoming the best knowing that they will have a shot. This is what will elevate the organization as whole. This is what will elevate our society.

Work until you're undeniable. 

Incentives drive behaviour and organizations have a responsibility of projecting a message to the job seekers and employees within. Taking a view/stance on choosing context over content and focusing on equality of opportunity over outcome will incentivize that kind of behavioural mindset among individuals. At least I hope it will. We don't know for a fact but I think it's the favourable path for the coming generations. 

It will teach individuals that what they have to strive for diversity in experience and to be undeniable. That's what matters. 

That's what you have to do. 

Of course this is not the blanket statement. I think I've made it very clear from my point of view that I dislike generalities and lazy blanket statements. If you think you're special and I am ignoring your special circumstance then take solace in that it's not me, it's you. Pick up the tears and control your blood pressure. This is merely a piece to promote the need for continuous questioning and prospective learning. 

There will be every unique case where this may not seem fair. But as I eluded to, that's life. Fairness is relative in most cases. What we can do is take a second level approach to creating systems that will impact human behaviour. 


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