Have we been thinking about diversity all wrong?

For decades, diversity has been seen as a disruptive change against a neutral backdrop, but homogeneity has effects of its own.

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In 1998, Columbia Business School Professor Katherine Phillips was invited with her mentor, Charles O’Reilly, the Frank E. Buck Professor of Management at Stanford Graduate School of Business, to help synthesise forty years of research on the organisational effects of diversity. O’Reilly, an early pioneer in the field, was ready to put his findings in no uncertain terms: diversity hurts organisational performance. But Phillips, then finishing her PhD, wasn’t ready to put such a strong statement in writing. “‘I can’t write that,’” she remembers telling him. “‘There are too many gaps to make such a definitive statement.’”

The vast majority of diversity-focused research undertaken before the turn of the millennium used surveys and archival data to look at the composition of organisations and their outputs. That research found diverse teams reported more conflict, negatively impacting performance. “People thought, ‘You have people who look different from each other, who have been brought together in this diverse environment, and they’re fighting with each other.’ That was the theory,” Phillips says.

But the adoption of live experiments in subsequent years revealed something else entirely. Researchers began to find that it wasn’t different groups arguing, but instead that the mere presence of diversity altered the entire group dynamic. “The presence of diversity changes the behaviour of people in the social majority such that they actually engage more with the task at hand,” Phillips explains.

“They express their unique ideas and perspectives. They conflict with each other more because the diversity is there.” The effect holds up even when non-majority members add nothing to the conversation.

That observation led researchers to another conclusion: diversity wasn’t the only issue at play. Homogeneity has effects of its own. Phillips recounts discovering a potential bias in her own research—a “sense that homogeneity was good and that diversity needed to be explained.” “But,” she continues, “we know, for example, that more bubbles are created in financial markets by homogeneous groups than by diverse ones. And that’s likely not just a financial markets issue but something much broader.”

She points to one study in which the members of diverse and homogeneous groups were all given different sets of information. While diverse groups quickly recognised these differences, homogeneous groups tended to gloss over them. Similarly, in another study, diverse and homogeneous groups were given a problem to solve. While diverse groups overall reported lower confidence than homogeneous ones, a closer look revealed that diverse groups reported varying levels of confidence in their answers, corresponding to their actual performance.

We know, for example, that more bubbles are created in financial markets by homogeneous groups than by diverse ones. And that’s likely not just a financial markets issue but something much broader.

Homogeneous groups, on the other hand, reported high confidence across the board, regardless of whether they were right or wrong. “You could look at these results and say, ‘Oh, these poor diverse groups, they aren’t confident enough.’ But another interpretation is that the homogeneous groups are actually a little delusional,” she says.

For Phillips, diversity not only offers opportunities for creative problem solving, it also has the potential to curb the worst excesses of homogeneity. The key is how organisations think about and frame diversity.

“We tend to assume that what we see on the surface—social category differences—perfectly correlates with informational differences,” Phillips says. “That assumption is false.” The trick is to get people to realise that they are all different from each other in order to get the knowledge out of their heads and in front of the group. “It’s not all going to be easy,” she continues, “but those difficulties are exactly what you need to get to the innovative ideas and the creative outcomes— no pain, no gain. And that’s how we create new ways of being and doing.”

Katherine Phillips is a professor at Columbia Business School. Read more.