Blog Post 4: Why Team Diversity Matters?

There are some golden rules to create a team for startups. For instance, it is highly suggested to have five members to start a team. Also, there are some essential roles that should be included in the first team such as the visionary, innovator, and accountant. I would like to add another rule to the list: create a diverse team.

A report published by McKinsey in 2015 explains why creating a diverse team is important for companies especially for those in innovative fields. Three articles, Why Diverse Teams Are Smarter, How Startups Benefit from a Diverse Workforce, and Why diversity matters in startups, also provide insights on the issue, referring to the report. Here are three key takeaways from the report and the articles.

1) More diverse, better performance

The biggest benefit that diversity brings to a company is better performance. McKinsey’s report clearly indicates that more gender-diverse companies are likely to achieve 15% higher returns than less gender-diverse companies. Likewise, more diverse companies in ethnicity are likely to have 35% higher financial performance than less diverse companies.

2) More diverse, more innovative

It is imperative for every company to stay innovative in order to be competitive, and innovation requires a “out of box” thinking. Let’s think about a newly created company with five members. If all of the members have the same background, for instance, all white, male with master’s degree in computer science, it is highly likely that the way each of the members thinks is very similar to each other and it is unlikely that “out of box” ideas are generated in such a homogeneous team. Thus, diversity is the key to stay innovative.

3) More diverse, more fact-driven

More diverse teams closely examine facts and stay objective than homogeneous teams. This is because it is hard for homogeneous teams to be aware of their biases. Team members unconsciously observe findings in the same due to their shared biases, which makes it difficult for the entire team to notice overlooked facts. Because a diverse team does not share such unconscious biases, each member perceive facts differently, which helps the team notice facts that a homogeneous team could overlook.

If you are going to create a team for your startup, don’t forget to think about the diversity of your team. It matters not only because it is politically correct but also because it actually brings various benefits including better performance to your company.