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Diversity matters for founders, and here's what to do about it

Most start-ups get going in a similar way. While the motivation varies, from opportunity (“there was nothing like the product I needed on the market”) to necessity (“it was the only way I could make money”), to altruism (“society will be better if this business existed”), there is often a pattern to the process.

This generally means a “power culture” forms around the founder or founders, with them at the centre of all decision making in the business. There is rarely much structure and, while decisions are quick and agile as a result, the downside is that such businesses often rely very heavily on the founder’s personal network. They are often working fast and scaling quickly and drawing on their own network is the quickest way to get things done.

This is fine in most respects and is hard to avoid. But it can become difficult when it comes to recruiting a team. As Nicola Cardwell, a consultant and coach at Culture Consultancy explains, “As founders turn to their personal networks, choosing the path of least resistance to get stuff done, it often includes making crucial early hires. Unless a business has been set up with specific purpose or values in mind, the culture is often forgotten or seen as either an unaffordable luxury or something that will take care of itself.”

But cultures and businesses built just in the image of a busy founder can soon run into trouble as they try to scale and the lack of robust processes for hiring and decision-making leave them struggling to shift the diversity dial.

At the same time, over-reliance on a single strong customer can shape a business in terms of culture, process or ways of working as the business mimics or mirrors that one client. This can make working with other clients (or even the type of client) more challenging, further reinforcing the existing culture of the business, as well as the people it attracts as customers, suppliers and employees.

So, why does this matter?

To some extent, if a business is successful and growing, does it matter if it is built around a monoculture? Why question its success, where’s the harm? But such a view misses the key point that this business won’t be as successful as it could be.

Most founders want to maximise, rather than limit, business growth and success. And while there are arguments in favour of building a more inclusive and diverse team that point merely to it being a better experience for all concerned, including society at large, there are other arguments, based on long-standing evidence, that an intelligently diverse organisation will perform better and be more successful.

As Cardwell explains, “The commercial rationale for building diverse teams is not new. There is a raft of research that shows more diverse teams are more productive, innovative, and engaged. The highest performing teams have a strong sense of inclusion. Research by Cloverpop, published in Forbes, showed that inclusive teams make better decisions up to 87% of the time, delivering 60% better results in half the time.”

Meanwhile, the Financial Conduct Authority (FCA) has found that investment firms that promote gender diversity also significantly lower their conduct risk, with firms with monocultures suffering 24% more governance-related issues than their peers. And research by Josh Bersin in 2015 found that inclusive companies are 1.7 times more likely to be innovation leaders in their market.

It is also an important success factor in an increasingly tight labour market, as the war for talent hots up. Employers able to show strong inclusion credentials will begin to benefit from them. Multi-generational, hybrid workforces and clients will require everyone to know and respect the boundaries of all parties whilst upholding company values and behaviours, as this piece in HRM Asia shows.

It’s all about balance

In his book Rebel Ideas: The Power of Diverse Thinking, Matthew Syed highlights the benefits of building a team that has the right balance of diversity and cohesion. If people are too similar in outlook and have the same frames of reference, their ideas and approach to problem solving will overlap so much that the result will be sub-optimal. They will look to the same solutions or come at problems from the same starting point. The team will underperform because it will miss opportunities it simply can’t see.

The same is true where people in a team are too different from one another and have little or no connection. Here the problem is that this excessive difference makes effective team work all but impossible, as people fire off in all different directions and rarely connect with one another. Again, here the outcome will be sub-optimal.

The ideal solution is a balanced, diverse team that the business founder has considered from the start. It should be rooted in the business culture. In this optimal approach to building an inclusive culture, it starts from the outset, and combines thinking about how well people will work together, as well as the degree of new thinking and innovation they bring to the business.

But what can founders do to impact diversity?

If there are potential limitations in founders understandably building their business by drawing on a personal network, this is also the best place to start addressing concerns about diversity.

As Cardwell explains, “Often founders will strive for D&I but not understand where, why or how their organisation is under-performing. The start is to recognise the importance of this as an issue. One place to start is to address business or team diversity by getting them to address their own personal network. Here, founders can begin to understand where bias has (usually unwittingly) crept in to their business.”

One easy way to do this to use a simple diagram (see below) to map out and assess your current network. This includes looking at personal contacts, contacts within your organisation and your wider business contacts.

For each of the contacts that you add to the map, you need to consider their diversity, according to any number of characteristics. You should end with a table that looks something like this:

Once you start to map out these contacts you can also then start to search for commonalities and these commonalities can help you to see the diversity gaps that you can start to act on to plug. While this is a useful exercise for an individual, it comes into its own really when you start to run the same audit across entire teams and businesses.

Diversity is a strength and will become more important in the years ahead. In order to manage diversity, you need to start to measure it and it is only by being able to really assess where the gaps lie in your team that you can begin to put in place a strategy to rectify this and fill those gaps.

Culture Consultancy facilitates regular workshops on improving your culture of diversity, inclusion and wellbeing. Call +44 (0) 208 088 2228 to find out more.