Bain & Co. documented that company performance is 95% correlated to decision making:(1) better decisions, better performance. It has been well-illustrated by many researchers that groups made up of individuals with diverse backgrounds make better decisions, but to what extent, and why?
A unique study conducted over 2 years by Cleverpop analyzed 566 decisions made by 184 teams across a variety of businesses.(2) The results showed that gender and geographically diverse groups (two or more different continents represented) made better decisions 87% of the time,(2) but why is this?
The concept of informational diversity is well understood: people with different backgrounds (experience, ethnicity, gender etc.) bring unique information, perspectives, opinions, and experiences to the decision-making process. Are decisions made better simply because of unique information and perspectives? Or, does interacting with diverse backgrounds force others to “up their game” by preparing better, being more creative, anticipating debate and being more open to different opinions?
In her paper, “How Diversity Makes Us Smarter,” Katherine Phillips delved into that question. Through a review of current research and a set of unique experiments she illustrated that diversity may actually cause better performance, leading to better decision making.(3)
Being with people of like backgrounds can lead us to assume we share similar perspectives, and this perceived homogeneity can hinder creativity, debate, and innovative thought. It has been shown that when just one person with a diverse background presents a dissenting opinion, that opinion provokes more thought than if it was introduced by a person from the majority group.(3) Studies have also shown that when disagreement or debate comes from a socially different person (i.e., one with different political beliefs) others are prompted to prepare better and work harder.(3)
This is an added benefit of diversity: not only does it bring together different perspectives and experiences that broaden the range of possibilities, but groups made up of diverse backgrounds seem to cause people to actively change their behavior. They anticipate unique differences, and work harder both “cognitively and socially,”( 3) ultimately leading to better decision-making outcomes.
Published by Dan O’Day
- Shariff, K. & Davis-Peccoud, J. (2012, March). Score your organization to improve decision effectiveness. https://www.bain.com/insights/score-your-organization-ame-info/
- Hacking Diversity with Inclusive Decision Making. cleverpop.com https://www.cloverpop.com/hubfs/Whitepapers/Cloverpop_Hacking_Diversity_Inclusive_Decision_Making_White_Paper.pdf
- Phillips, K. (2014, October). How Diversity Makes Us Smarter. Scientific American. https://www.scientificamerican.com/article/how-diversity-makes-us-smarter/