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How diversity makes teams more innovative

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    Fifteen years ago, I thought
    that the diversity stuff
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    was not something I had to worry about.
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    It was something an older
    generation had to fight for.
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    In my university,
    we were 50-50, male-female,
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    and we women had often better grades.
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    So while not everything was perfect,
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    diversity and leadership decisions
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    was something that would happen naturally
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    over time, right?
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    Well, not quite.
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    While moving up the ladder
    working as a management consultant
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    across Europe and the US,
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    I started to realize how often
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    I was the only woman in the room
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    and how homogenous leadership still is.
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    Many leaders I met
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    saw diversity as something to comply with
    out of political correctness,
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    or, best case, the right thing to do,
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    but not as a business priority.
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    They just did not have a reason to believe
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    that diversity would help them achieve
    their most immediate, pressing goals:
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    hitting the numbers,
    delivering the new product,
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    the real goals they are measured by.
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    My personal experience
    working with diverse teams
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    had been that while they require
    a little bit more effort at the beginning,
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    they did bring fresher,
    more creative ideas.
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    So I wanted to know:
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    are diverse organizations
    really more innovative,
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    and can diversity be more
    than something to comply with?
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    Can it be a real competitive advantage?
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    So to find out, we set up a study
    with the Technical University of Munich.
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    We surveyed 171 companies
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    in Germany, Austria, and Switzerland,
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    and as we speak, we're expanding the study
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    to 1,600 companies
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    in five additional countries
    around the world.
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    We asked those companies
    basically two things:
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    how innovative they are,
    and how diverse they are.
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    To measure the first one,
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    we asked them about innovation revenue.
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    Innovation revenue is the share
    of revenues they've made
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    from new products and services
    in the last three years,
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    meaning we did not ask them
    how many creative ideas they have,
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    but rather if these ideas
    translate into products and services
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    that really make the company
    more successful today and tomorrow.
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    To measure diversity, we looked
    at six different factors:
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    country of origin, age
    and gender, amongst others.
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    While preparing to go in the field
    with those questions,
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    I sat down with my team
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    and we discussed what
    we would expect as a result.
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    To put it mildly, we were not optimistic.
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    The most skeptic on the team thought,
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    or saw a real possibility,
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    that we would find nothing at all.
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    Most of the team was rather
    on the cautious side,
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    so we landed all together at only if,
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    meaning that we might find
    some kind of link
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    between innovation and diversity,
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    but not across the board,
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    rather only if certain criteria are met,
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    for example leadership style,
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    very open leadership style
    that allowed people
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    to speak up freely and safely
    and contribute.
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    A couple of months later,
    the data came in,
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    and the results, the results convinced
    the most skeptical amongst us.
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    The answer was a clear yes,
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    no ifs, no buts.
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    The data in our sample showed
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    that more diverse companies
    are simply more innovative, period.
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    Now, a fair question to ask
    is the chicken or the egg question,
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    meaning, are companies
    really more innovative
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    because they have
    a more diverse leadership,
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    or the other way around? Which way is it?
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    Now, we do not know how much
    is correlation versus causation,
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    but what we do know is that clearly,
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    in our sample, companies
    that are more diverse
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    are more innovative,
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    and that companies
    that are more innovative
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    have a more diverse leadership too.
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    So it's fair to assume
    that it works both ways,
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    diversity driving innovation
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    and innovation driving diversity.
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    Now, once we published the results,
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    we were surprised
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    about the reactions in the media.
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    we got quite some attention,
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    and it went from quite factual,
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    like "Higher Female Share
    Boost Innovation"
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    to a little bit more sensationalist.
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    (Laughter)
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    As you can see,
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    "Stay-at-home Women Cost Trillions,"
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    and, my personal favorite,
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    "Housewives Kill Innovation."
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    Well, there's no such thing
    as bad publicity, right?
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    (Laughter)
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    On the back of that coverage,
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    we started to get calls
    from senior executives
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    wanting to understand more,
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    especially, surprise surprise,
    about gender diversity.
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    I tend to open up
    those discussions by asking,
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    "Well, what do you think of the situation
    in your organization today?"
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    And a frequent reaction to that is,
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    "Well, we're not yet there,
    but we're not that bad."
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    One executive told me, for example,
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    "Oh, we're not that bad.
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    We have one member
    in our board who is a woman."
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    (Laughter)
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    And you laugh --
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    (Applause)
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    Now, you laugh, but he had a point
    in being proud about it,
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    because in Germany,
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    if you have a company and it has
    one member on the board
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    who is a woman,
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    you are part of a select group of 30
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    out of the 100 largest
    publicly listed companies.
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    The other 70 companies
    have an all-male board,
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    and not even one of these hundred
    largest publicly listed companies
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    have, as of today, a female CEO.
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    But here's the critically
    important insight.
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    Those few female board members alone,
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    they won't make a difference.
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    Our data shows that for gender diversity
    to have an impact on innovation,
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    you need to have more
    than 20 percent women in leadership.
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    Let's have a look at the numbers.
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    As you can see, we divided
    the sample into three groups,
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    and the results are quite dramatic.
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    Only in the group where you have
    more than 20 percent women in leadership,
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    only then you see a clear jump
    in innovation revenue
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    to above-average levels.
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    So experience and data shows
    that you do need critical mass
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    to move the needle,
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    and companies like Alibaba,
    JP Morgan, or Apple
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    has of today already
    achieved that threshold.
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    Another reaction I got quite a lot was,
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    "Well, it will get solved over time."
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    And I have all the sympathy in the world
    for that point of view,
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    because I used to think like that too.
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    Now, let's have a look here again,
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    and look at the numbers,
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    taking Germany as an example.
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    Let me first give you the good news.
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    So the share of women
    who are college graduates
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    and have at least 10 years
    of professional experience
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    has grown nicely over the last 20 years,
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    which means the pool in which
    to fish for female leaders
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    has increased over time,
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    and that's great.
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    Now, according to my old theory,
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    the share of women in leadership
    would have grown
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    more or less in parallel, right?
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    Now, let's have a look
    at what happened in reality.
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    It's not even close,
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    which means I was so wrong,
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    and which means that my generation,
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    your generation,
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    the best-educated
    female generation in history,
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    we have just not made it.
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    We have failed to achieve leadership
    in significant numbers.
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    Education just did not
    translate into leadership.
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    Now, that was a painful realization for me
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    and made me realize,
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    if we want to change this,
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    we need to engage
    and we need to do better.
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    Now, what to do?
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    Achieving more than 20 percent
    women in leadership
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    seems like a daunting task to many,
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    understandably given the track record.
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    But it's doable,
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    and there are many companies today
    that are making progress there
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    and doing it successfully.
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    Let's take SAP, the software
    company, as an example.
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    They had, in 2011, 19 percent
    women in leadership,
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    yet they decided to do better,
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    and they did what you do
    in any other area of business
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    where you want to improve.
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    They set themselves a measurable target.
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    So they set themselves a target
    of 25 percent for 2017,
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    which they just have achieved.
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    The goals made them think more creatively
    about developing leaders
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    and tapping new recruiting pools.
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    They now even set a target of 30 percent
    women in leadership for 2022.
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    So experience shows it's doable,
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    and at the end of the day,
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    it all boils down to two decisions
    that are taken every day
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    in every organization by many of us:
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    who to hire, and who
    to develop and promote?
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    Now, nothing against women's programs,
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    networks, mentoring, trainings.
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    All is good.
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    But it is these two decisions
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    that at the end of the day
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    send the most powerful chain signal
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    in any organization.
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    Now, I never set out to be
    a diversity advocate.
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    I am a business advisor.
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    But now, now my goal
    is to change the face of leadership,
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    to make it more diverse,
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    and not so that leaders can check a box
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    and feel like they have
    complied with something
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    or they have been politically correct,
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    but because they understand,
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    they understand that diversity
    is making their organization
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    more innovative, better,
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    and by embracing diversity,
    by embracing diverse talent,
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    we are providing
    true opportunity for everyone.
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    Thank you.
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    Thank you so much.
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    (Applause)
Title:
How diversity makes teams more innovative
Speaker:
Rocío Lorenzo
Description:

more » « less
Video Language:
English
Team:
closed TED
Project:
TEDTalks
Duration:
11:05
  • Hello,

    Please note that the, at the request of the speaker, we've changed the headline of this talk from
    Want a more innovative company? Hire more women

    to

    "How diversity makes teams more innovative"

    Thank you!

English subtitles

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