The End of Diversity As We Know It: Why Diversity Efforts Fail and How Leveraging Difference Can Succeed

More Praise for The End of Diversity as We Know It

This is a results book. It provides a practical guide for committed leaders interested in achieving optimal results through the efforts of people. It is also a handbook for leaders who aspire to do the ‘right things right and at the right time.’

—Charlie W. Hill, Executive Vice President of Human Resources (retired), Landmark Communications, Inc.

In plain English, Martin Davidson explains how diversity can make a company more efficient and innovative, which leads to greater profits. This book artfully blends psychology, social issues, and good business sense to provide baggage-free, 21st-century solutions to problems. Read it before your competitors do.

—Reginald Hudlin, producer/director and former President, Black Entertainment Television, Inc.

Martin Davidson reminds us that diversity is not about others; rather, it is about us and our willingness to push ourselves to the edge of personal discomfort in order to run productive, sustainable institutions; create communities of harmony; and live fuller, happier lives.

—Subha V. Barry, Chief Diversity Officer and Senior Vice President, Office of Diversity, Inclusion, and Community Engagement, Freddie Mac

Martin Davidson hit the nail on the head! This extensively researched book moves the diversity paradigm from the human resource cubicle to the whole organization, the tactical to the strategic, the short term to the sustainable, and the domestic to the global. A must-read for every business leader.

—Dr. Austin Ifedirah, President and CEO, Aegis Healthcare Holdings, Inc.

This is a tactical book for business leaders who know they have to shift their thinking but have never quite understood how (and truthfully, why) to do it. Every CEO who looks at his or her company’s diversity initiative and wonders why it hasn’t made as much progress should read this book.

—Todd G. Sears, Principal, Coda Leadership Consulting LLC, and former Americas Head of Diversity & Inclusion, Credit Suisse

Professor Davidson takes us on an enlightening journey that raises the bar for any business executive seeking to improve productivity. Leveraging difference is a critical tool for those who are result and not process oriented when deploying talent.

—Mark Settles, Managing Director, JPMorgan Chase & Co.

The End of Diversity

As We Know It

The End of Diversity

As We Know It

Why Diversity Efforts Fail and

How Leveraging Difference Can Succeed

MARTIN N. DAVIDSON

The End of Diversity As We Know It

Copyright © 2011 by Martin N. Davidson

All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the publisher, addressed Attention: Permissions Coordinator, at the address below.

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First Edition

Hardcover print edition ISBN 978-1-60509-343-7

PDF e-book ISBN 978-1-60994-030-0

IDPF e-book ISBN 978-1-60994-031-7

2011-1

Project management, design, and composition by Steven Hiatt / Hiatt & Dragon, San Francisco

Copyediting: Phyllis Elving

Proofreading: Tom Hassett

Cover design: Irene Morris

Cover photo: Christopher David Photography

I dedicate this book to my father and mother,

Arlanda and Jean Davidson

Contents

Introduction: A New Possibility for Difference

1 The End of Diversity as We Know It

2 The Beginning of Leveraging Difference

3 The Leveraging Difference Capability

4 Seeing Difference

5 Understanding Difference

6 Engaging Difference

7 Becoming a Leveraging Difference Organization

Epilogue: The Power of the Margin

Notes

Bibliography

Index

Acknowledgments

About the Author

Introduction

A New Possibility for Difference

What does it take to create an organization that can do this?

Multinational manufacturer Procter & Gamble’s business is innovation. With more than $2.9 billion in annual sales in Canada, the company is constantly trying to improve its products and develop new ones. The global business service unit at P&G in Canada is in charge of designing business solutions and is composed of about 150 multifunctional professionals. They come from more than 40 nations, including Venezuela, Japan, Israel, and Ghana, and speak more than 20 languages.

To build and foster a culture of innovation, P&G has entrenched diversity as a key principle in the workplace and leveraged the skilled immigrant talent pool. When faced with the challenge of offshoring and outsourcing in 2002, group members realized, if they wanted to keep their jobs in Canada, they needed to adapt and leverage this diversity in a way no one else could. Now, the global business service unit in Canada has a unique position within the company. It is one of only four groups in the world devoted to sourcing and supporting P&G services such as IT, employee benefits and payroll, business analytics, and purchasing on a global scale.

In addition to creating a diverse employee mix internally, P&G is open to and prides itself on collaboration with external partners. It has formalized this strategy through its Connect and Develop program. Historically, P&G’s best innovations came from connecting ideas across internal businesses. Taking this one step further, the company decided to set a goal to acquire 50 percent of innovations from outside the company. The move was not meant to displace P&G’s own staff, but to leverage them by exposing them to even more diverse ideas, people and products. P&G can now identify promising ideas throughout the world and apply its own research and development, manufacturing, marketing, and purchasing capabilities to create better and cheaper products faster.

P&G’s leaders turned difference into advantage in other ways as well. It was quickly apparent they could only meet their growth goals through a combination of organic growth and growth through acquisition. They decided that these did not have to be disparate activities. Indeed, they realized that learning could be bidirectional.¹

This description of Proctor and Gamble Canada was excerpted from an article entitled Companies Embrace Power of Diversity. As the title suggests, the goal of the story was to highlight the importance of diversity in organizations. But this is not the typical diversity story, the one extolling the virtues of inclusion and highlighting a variety of diversity best practices like targeted hiring, employee networks, and mentoring. This one is different.

First, this diversity story starts with the company’s overarching strategy. P&G is an innovation company and it focuses on the kinds of diversity that help it to be a better innovation company. As a result, the article never mentions race, gender, sexual orientation, or age. It’s not that these differences don’t support innovation. But P&G Canada is much more focused in its approach to diversity of talent. It emphasizes national cultural diversity as most critical to supporting its strategic imperative to innovate in this particular business context. It seems that P&G Canada has a larger goal than simply being an employer of choice for people of various diverse backgrounds.

That larger goal becomes more apparent through initiatives such as the Connect and Develop program. It is designed to cultivate internal and external partner relationships as a way of generating new ways to think about the business. The idea is that supporting diverse collaborations that extend beyond normal corporate boundaries can create even stronger, more innovative results. The program has helped the company apply its innovative process in creating products all over the world.

Diversity is also evident in P&G Canada’s growth strategy. Company leaders recognized that cultivating new partnerships would infuse the organization with tangible resources and novel perspectives that would help it grow and compete more sustainably.

In sum, this diversity story is really about how P&G Canada capitalizes on difference in the broadest terms. The company connects with globally diverse stakeholders, and it uses those stakeholders to create value in unique and powerful ways.

The breadth of the P&G Canada example surfaces an uncomfortable truth about traditional methods of managing diversity: they don’t usually go far enough to really make companies better. In many organizations, the indicators of whether diversity efforts are successful have been how many people from group X are hired or promoted or fired, or how much product is sold to group Y. This approach doesn’t begin to do justice to the potentially positive effect that differences can have on an organization like P&G Canada. The real value of diversity emerges when exploring difference becomes standard operating procedure. Organizations that excell in the global marketplace aren’t thinking of diversity as a tangential activity handled by the HR department. Rather, diversity is mission critical. Differences are present—among employees, customers, suppliers, local communities, acquired or acquiring organizations, and governments. Success comes not from shying away from these differences, but from fiercely and skillfully capitalizing on them.

Traditional ways of managing diversity won’t always help leaders take advantage of those differences. In fact, sometimes these approaches actually cause problems that destroy, rather create, value. This book is about how organizations can thrive by making the most of the diversity that is right there among their stakeholders. The Leveraging Difference approach is designed to foster superior firm performance, both in the present and the future. Drawing on examples from organizations in the United States and around the world, my goal is to guide readers in moving from traditional methods of managing diversity to fully leveraging difference.

My First Glimpse into Leveraging Difference

A few years back, I worked with members of the leadership team of a Fortune 50 company. The focus was on developing leadership abilities, and I had designed a curriculum that emphasized the role of diversity in leadership. I confess I was more than a little intimidated. Here I was, an untenured (that is, expendable) faculty member preparing to work with a group of thirty-five executives, of whom thirty-three were senior white males, one was a white woman, and one was a multiracial male. I worried that most of them were fairly jaded when it came to diversity and would be bracing themselves for more of the same old rhetoric. I really wanted to make my sessions engaging and stimulating, and I wasn’t sure I knew quite how to do so.

Over a four-day period, I spent time with them in four sessions of about ninety minutes each, interspersed between presentations on other topics by two colleagues. My first session went fine. The material was strong, I thought, and I also felt that I was working with a tailwind. This group was energized, upbeat, and excited about engaging in new ideas—in part, I realized, because of some great classes they’d already taken with my colleagues. Thanks to that bonding experience, they were open and ready for learning. By the way, this was in stark contrast to the usual modus operandi for the group. This was a high-performing company that generated terrific results in its industry, but theirs was not a culture of positivity or high energy. They did a job, did it well, and moved on to the next task, all the while critiquing why the job done well hadn’t been done better.

My second and third classes with them were also okay, though certainly not great. My prediction at the time was that the leaders would evaluate the sessions as fine (and then critique them) but that our time together would have little lasting impact on them.

And then something happened.

The company’s CEO stopped by to speak to the group. This was routine for such programs. This CEO was renowned as a strong and thoughtful leader who held his people accountable for results. His task here was to share some of what he had learned by taking the program a year earlier (before I was part of it). He began to speak about the benefits he’d derived from the program, and then—to the surprise of many—he wandered into a critique of leadership development programs like the one we were part of at that moment. His question wasn’t whether our program was good or bad (he thought it was quite good), but rather whether such deep explorations into learning and leadership weren’t actually indulgences that distracted from the real business at hand: bottom-line results. He proceeded to lay down the company’s law of performance and to remind everyone that they were accountable for results.

When he’d finished speaking a half hour later, the group sat in stunned silence. After a few moments, people engaged in polite and sometimes challenging Q&A, but mostly they sat glassy-eyed. The CEO had left me fairly speechless, too. But I figured that was just how things worked in this company, and I left to prepare for my next day’s class.

When I showed up the next morning, the buoyant, energetic group of executives I had been working with all week now sat dejected and disengaged. We went through the motions until, disturbed by this marked shift in mood, I called time out and asked what was wrong. Needless to say, it was all about the CEO’s talk the prior afternoon. People expressed their disappointment and sadness about what they had heard. They felt duped and resentful about having really opened up to new possibilities, only to have their sponsor slap them down. Indeed, some confessed to having felt the need to drown their sorrows in a drink or two the night before.

As I listened, something occurred to me. I had worked with one of the company’s African American employee resource networks. In the unit I’d visited, younger African American employees had been struggling, and turnover was unusually high. I had been struck by how these conscientious and committed young professionals were convinced they couldn’t be successful in this company because of its difficult culture. Now, as I looked at these executives, I was struck by how much they resembled those disenfranchised African American employees. Both groups were de-motivated and unhappy. Both were frustrated and resentful. I shared my observation and summarized by saying, You know, in this moment you are just like the black people in your company, the very same people that are the source of concern and consternation to so many of your managers.

They were shocked. To be honest, so was I. But the connection seemed critical for them, and in retrospect it was critical for me as well. The essential insight from my conversation with that mostly white, mostly male group was that they actually had a great deal in common with their African American employees. What they all shared was a common experience of how people were managed in the company. The firm’s style and culture had a distinct effect on its people, and while some of that was constructive—they were high performing—some of it was not.

The relentless focus on results to the exclusion of empowering, appreciating, and celebrating the people who created those results was detrimental—even toxic—for many. And the black employees were the canaries in the coal mine. They were the ones who, by virtue of being marginalized in the company, were more vulnerable to this negative side of management style. When they voiced the challenges they felt around the lack of employee empowerment and autonomy, and the diminished opportunity to advance, they were highlighting a vulnerability that every employee in that company faced, regardless of race.

Until that moment, these executives had operated under the illusion that they would never have the same disempowering experience those black junior employees had. That illusion was now over. Everyone was in it together.

Several years later, this company has evolved, and its culture and management style are shifting. Not surprisingly, this has been fueled by leadership transitions and by the influence of newly acquired companies from around the globe. But in my time with that group of leaders, I caught a glimpse of why difference is so critically important for organizations. The new perspective—the extraordinary dissent—emerges because there is an opportunity for improvement and a need to change the status quo. It is the critical resource for helping organizations to innovate and operate more effectively. And the ability to look for and listen to these different perspectives—or to proactively solicit them—is one of several core skills that I’ll expand upon in this book.²

Overview and Roadmap for the Book

Traditional diversity efforts—in this book I call them Managing Diversity—focus on recruiting and integrating people who represent a varied but limited set of diverse identities. Following the Hudson Institute’s prescient Workforce 2000 report in 1987 forecasting dramatic demographic changes in the U.S. workforce,³ organizations have evolved numerous Managing Diversity initiatives to help them deal with this new workforce. These initiatives have had a significant impact over the past two