Just about every company includes diversity in their value or mission statements. After all, embracing diversity is the right thing to do (or, if you’re cynical, at the very least the right thing a company should appear to value).
But, just in case you need one, there’s a bottom-line reason to value diversity, both in the people you employ and in a broader sense in the investments you make.
Just ask Mark Cuban.
Let’s start with investing in startups. During an appearance on The Problem With Jon Stewart podcast, Cuban said:
I’ve invested $50-plus million in funds and companies of people of color, men and women, because I think there is unique opportunity there. I like to invest where people aren’t looking.
Hopefully some of those deals turn into something significant and someone will come along and say, “You white guys you missed the boat. Now it’s people of color who are in a position of power because you weren’t looking when the demographics of the entire country changed … (while) you were trying to mine what was already there.”
Statistics bear out Cuban’s position. According to a paper published by the National Bureau of Economic Research, even though immigrants make up only 15 percent of the U.S. population, they make up 25 percent of company founders. In addition, 30 percent of all U.S. innovation since 1974 has come from immigrants.
And then there’s this: Another study shows that over 50 percent of all “migrant inventors” (people who move to another country and then invent something) land in the U.S.
All of which means the number of immigrant inventors and small-business founders should only increase over time.
As the researchers write, “The findings suggest that immigrants appear to ‘create jobs’ (expand labor demand) more than they ‘take jobs’ (expand labor supply) in the U.S. economy.”
Cuban then moves on to discuss the power of a diverse workforce:
I’m not going to lie and say I’ve always had very diverse workforces. That’s just not the case.
But I try to be very disruptive in the businesses I enter, and in order to be disruptive you have to be cognizant of what’s happening in the world and look for where those opportunities are.
It took me a while to realize that if I hire people from the Indian community in Dallas, which is the sixth-largest Indian community in the country, I’m going to sell a lot more to that community because they know the community. (The same is true) if I hire veterans, people of color, women of color, people who represent the LGBTQ community … it just makes good business sense now.
In short, embracing and expanding diversity isn’t just the right thing to do — or, as Cuban calls it, “virtue signaling.”
It’s also, as the demographics of the country continue to change, a smart business decision. Diverse workforces — with a range of perspectives and life experiences to draw from — solve problems faster, make better decisions, and build superior products.
Diversity helps team members challenge (in a good way) each other’s assumptions instead of create an echo chamber for similar ideas.
And — once again, if you need a bottom-line reason — the proof is in the numbers pudding: Ethnically diverse companies are 35 percent more likely to financially outperform industry medians.
Just ask Cuban.
And a whole lot of research.