Most managers accept that employ-ers benefit from a diverse work-force, but the notion can be hard

to prove or quantify, especially when it comes to measuring how diversity affects a firm’s ability to innovate.

But new research provides compelling evidence that diversity unlocks innovation and drives market growth—a finding that should intensify efforts to ensure that ex-ecutive ranks both embody and embrace the power of differences.

In this research, which rests on a nation-ally representative survey of 1,800 profes-sionals, 40 case studies, and numerous focus groups and interviews, we scruti-nized two kinds of diversity: inherent and acquired. Inherent diversity involves traits you are born with, such as gender, ethnicity, and sexual orientation. Acquired diversity involves traits you gain from experience: Working in another country can help you appreciate cultural differences, for exam-ple, while selling to female consumers can give you gender smarts. We refer to com-panies whose leaders exhibit at least three inherent and three acquired diversity traits as having two-dimensional diversity.

By correlating diversity in leadership with market outcomes as reported by re-spondents, we learned that companies with 2-D diversity out-innovate and out-perform others. Employees at these com-panies are 45% likelier to report that their firm’s market share grew over the previous

year and 70% likelier to report that the firm captured a new market.

2-D diversity unlocks innovation by creating an environment where “outside the box” ideas are heard. When minori-ties form a critical mass and leaders value differences, all employees can find senior people to go to bat for compelling ideas and

can persuade those in charge of budgets to deploy resources to develop those ideas.

Most respondents, however—78%—work at companies that lack 2-D diversity in leadership. Without diverse leadership, women are 20% less likely than straight white men to win endorsement for their ideas; people of color are 24% less likely; and LGBTs are 21% less likely. This costs their companies crucial market opportuni-ties, because inherently diverse contribu-tors understand the unmet needs in under-leveraged markets. We’ve found that when at least one member of a team has traits in common with the end user, the entire team better understands that user. A team with a member who shares a client’s ethnicity is 152% likelier than another team to under-stand that client.

Inherent diversity, however, is only half of the equation. Leaders also need acquired diversity to establish a culture in which all employees feel free to contribute ideas. Six behaviors, we have found, unlock in-novation across the board: ensuring that everyone is heard; making it safe to pro-pose novel ideas; giving team members

decision-making authority; sharing credit for success; giving actionable feedback; and implementing feedback from the team. Leaders who give diverse voices equal airtime are nearly twice as likely as oth-ers to unleash value-driving insights, and employees in a “speak up” culture are 3.5 times as likely to contribute their full inno-vative potential.

These findings constitute a powerful new dimension of the business case for diversity. HBR Reprint F1312B

How Diversity Can Drive InnovationTALENT by Sylvia Ann Hewlett, Melinda Marshall, and Laura Sherbin

Sylvia Ann Hewlett is the chair and CEO of the Center for Talent Innovation.

Melinda Marshall is the center’s senior vice president and director of publications, and Laura Sherbin is an executive vice president and the director of research.

Research Watch

Employees of firms with 2-D diversity are 45% likelier to report a growth in market share over the previous year and 70% likelier to report that the firm captured a new market.

Long LInes, sMaLLer BottoM LIneWhen deciding whether to join a line, customers care more about how long it is than how quickly it’s moving—a finding counter to the conventional wisdom that a single queue with multiple servers generally works best. According to a study led by Yina Lu, now a postdoc fellow at the Wharton School, increasing the number of cus-tomers in a supermarket deli line from 10 to 15 causes a 10% drop in sales.

IDEA wATCH hBr.Org

30  harvard Business review December 2013

Harvard Business Review Notice of Use Restrictions, May 2009

Harvard Business Review and Harvard Business Publishing Newsletter content onEBSCOhost is licensed for the private individual use of authorized EBSCOhost users. It is notintended for use as assigned course material in academic institutions nor as corporate learningor training materials in businesses. Academic licensees may not use this content in electronicreserves, electronic course packs, persistent linking from syllabi or by any other means ofincorporating the content into course resources. Business licensees may not host this contenton learning management systems or use persistent linking or other means to incorporate thecontent into learning management systems. Harvard Business Publishing will be pleased togrant permission to make this content available through such means. For rates and permission,contact permissions@harvardbusiness.org.