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Diversity is not a ‘soft’ topic; it is good business. Period.

“The most innovative company must also be the most diverse”- states one of the biggest tech companies in the world. These are the lines used by Apple Inc in its 2016 report while highlighting its efforts towards diversity. However, 'diversity' is still viewed as a 'soft’ topic in most business interactions and dealings. Maybe it is this perception that has resulted in a glaring lack of diversity in startups and the investment ecosystem.

Therefore, we decided to make a business case for diversity to help startups view it as a 'hard' bottom-line issue:

Want higher revenues? Increase the diversity quotient of your teams

What is the purpose of any business enterprise? Change - maybe. Disruption - yes. Social Impact - possibly. Profitability - definitely. A study by Boston Consulting Group found that companies with diverse management teams have 19 percent higher revenues than companies with below-average leadership diversity. Supporting their findings is an analysis by Mckinsey which found that companies in the top quartile of gender diversity on executive teams experienced 25 percent above average profitability and companies with higher ethnic and cultural diversity outperformed their counterparts by 36 percent for profitability. Racial diversity in companies can drive sales revenues by as much as 15 times found a survey report.

This wide range of research on driving impact of diversity on the bottom line proves that startups and tech companies with a goal to establish high revenue-generating businesses cannot treat diversity as a feel-good metric to be strived for but as an integral part of business strategy.

Diversity and innovation are correlated

Parallels for the correlation between diversity and innovation exist all around us. It is especially evident in the way people of different ethnicities and experiences can become a key driver of innovation to turn a fledgling nation into a global financial heavyweight - Singapore is a case in point. The island nation’s cultural and ethnic diversity has worked as an asset for it giving it a high international ranking on key development parameters and resulting in it being recognized as the world's most technologically-developed nation.

This boost in innovation can be attributed to research that has found that non-homogenous teams are simply smarter. Different ideas and approaches to a situation help challenge the brain and enhance performance. This impetus to non-linear thinking provides the adaptability and agility which innovation requires. Translating the benefits of higher innovation into numbers is a BCG study that found that companies with diverse leadership teams reported a 45 percent average innovation revenue compared to 26 percent innovation revenue reported by a below-average diversity score.

Diversity helps tap new markets and opportunities

There are enough stories of failed corporate attempts of mergers and expansions due to a lack of diversity in management needed for establishing intercultural understanding and trust. The Daimler Chrysler merger is a case study of the inability of two corporate giants to resolve their cultural issues because of their homogeneous makeup. Scaling a startup is all about breaking into new markets, and surveys on diversity show that teams with members who share and understands a client's ethnicity are 150 percent more likely to understand that client and 70 percent likelier to capture a new market-a definite competitive advantage when signing up new deals.

Want to attract and retain the best talent? Be known for your diversity

One thing we are really proud of at BKR is our positive company culture. This not only enhances employee experiences but increases engagement, boosts performance, and supports retention. Happier employees are 20 percent more productive than their counterparts and we like to believe that diversity at the top level of our company is a key factor in this. With surveys proving that 76 percent of job seekers consider diversity an important factor when evaluating a job offer - companies need to ramp up their diversity quotient if they don't want to miss out on the best talent out there.

Conclusion - Diversity is the new business frontier

To make diversity a norm, both entrepreneurs and investors need to be on board to gain benefits that go beyond optics. Diversity has to be seen as a new frontier in the business where entrepreneurs are intentional towards establishing diverse teams and VCs seek out entrepreneurial teams with diverse founders and employees. Speaking from our experience of investing in Black-led companies, the financial rewards of this are out there for everyone to see.


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