March 22, 2021

How ‘outsider’ thinking can supercharge your business

A diverse workforce is one thing… but it’s cognitive diversity that can truly set your business apart.

Think a murder mystery game played by college students couldn’t possibly be relevant to your company’s culture, way of working and ultimate success? Think again.

In a classic 2009 study published in Personality and Social Psychology Bulletin, teams of three from the same fraternity and sorority houses were asked to solve a murder mystery. The variable was that, five minutes into the discussion, a fourth teammate was introduced. For some teams, it was another member of the same house; for others, it was an outsider.

Ultimately, ‘outsider’ teams were less confident in their final decisions and judged their team interactions to be less effective. Turns out they were wrong – startlingly so. Those teams that had to work with an outsider rather than an insider doubled their likelihood of solving the puzzle correctly, from 29 per cent to 60 per cent.

Creating an ‘ideas factory’

Evidence abounds that increasing the diversity of workplaces leads to better business outcomes.

A study by Boston Consulting Group, for example, found that companies with above-average diversity on their management teams reported innovation revenue 19 percentage points higher than that of companies with below-average leadership diversity. Meanwhile, a Peterson Institute for International Economics study of 21,980 firms from 91 countries found that, among profitable companies, increasing female representation at board level from zero to 30 per cent delivered a typical firm a 15 per cent increase in profitability.

What is it about diversity that helps create these outcomes?

Viren Thakrar believes it’s about accessing different ways of thinking. The co-founder of Melbourne-based HR firm In the Game believes these results, plus countless similar findings, show that demographic diversity is a major contributor towards cognitive diversity – people who think differently to one another – and it’s this that delivers results.

When people with different life experiences and systems of thinking come together, they are more likely than groups of ‘the same tribe’ to spark novel ideas, he says. The right workplace environment creates the proverbial ‘melting pot’ where different ideas meld to become even more original and compelling.

“My view is, ultimately from a business perspective, what you’re looking to do is get cognitive diversity, which is about the different ways in which people think, the skills they have and the experiences they have,” Thakrar says.

“That’s really where you get great outcomes from an innovation point of view.”

The world’s greatest experiment?

Thakrar references one of history’s greatest examples of cognitive diversity: the WWII Bletchley Park team that cracked the German Enigma code. (This example strikes a particular chord with Thakrar as, coincidentally, it’s his birthplace.)

It was a group comprised not simply of mathematicians, professionals logically assumed to be ideal code-crackers. Instead, it had substantial diversity of minds: from a Renaissance scholar and a legal philosopher to an accounting clerk and a papyrologist. A high percentage of the group were women.

With some historians arguing the group’s code-breaking work shortened the war by up to three years, others have gone further. The philosopher and critic George Steiner described Bletchley as “the single greatest achievement of Britain during 1939-45, perhaps during the [20th] century as a whole”.

Diversity is only the start

If, as the Bletchley Park example shows, demographic diversity is an important contributor towards cognitive diversity, then greater visible workplace diversity – gender identity, age, cultural heritage, sexual orientation, etc. – is only the start of the journey.

Dr Jess Murphy, founder of leadership consultancy Pathway to Your Potential, says the real work begins when organisations strive to become truly inclusive by involving employees who think and work in different ways owing to their diverse backgrounds.

“You can have all the diversity sitting around the decision-making table you like, but until you learn how to involve difference effectively, you’re not going to reap the benefits,” Murphy states.

“Even though most organisations have an awareness now of bias, it still exists and impacts disproportionately those who do not fit the ‘in’ group.”

How you can lead the way

For leaders who want their organisation to embark on the journey beyond mere demographic diversity, there are a range of things they can do to allow cognitive diversity to flourish.

One is to consider – even prescribe – diversity in project teams, with different ages, genders, cultures, ethnicities and training giving rise to different perspectives and modes of thinking.

While that’s in part an HR initiative, Thakrar says any project lead can take deliberate steps to involve people they wouldn’t normally, breaking down silos to create cross-functional and cognitively diverse teams. “You might get someone from another part of the business to come in and join the working group, to get a fresh perspective,” he says.

Murphy says it’s important to then go beyond ‘visible’ differences – like gender and cultural heritage – to cognitive difference, “meaning the way people interpret information, make decisions and communicate (busting stereotypes and addressing conscious and unconscious bias)”. Organisations themselves need to shift their focus to nourishing cognitive differences in areas like how people interpret information, make decisions and communicate, she adds, as key to retaining talented individuals who think and work in unique ways.

Finally, a practical way any leader can look to use cognitive diversity is how they set goals.

“A great way to harness cognitive diversity is to set goal posts but not the direction to get there,” Thakrar says. “Give a group the headline of what you want to achieve, but then allow them the freedom to consider and work through how they would each achieve that goal.”

Ana Marinkovic – Making the most of holiday trading

Ana Marinkovic – Making the most of holiday trading

29 November 2023

The holiday season shopping flurry can offer some small businesses the opportunity to prosper… and others a time to take stock for the new year. Both call for careful preparation – particularly in the current environment. NAB Executive Small Business Ana Marinkovic shares her top tips.

Ana Marinkovic – Making the most of holiday trading