Inclusion is the solution
Real Conversations podcast | S5 E8 | April 20, 2023
Stephen is a globally recognized diversity, inclusion, and leadership expert, and founded Included in 2012. Included is a global, impact-led diversity and inclusion consultancy working with organizations and leaders around the world to embed inclusive leadership in their decision-making to ultimately build inclusive organizations.
'Diversity and inclusion' is a term that gets used a lot, but what does it really mean? Stephen Frost is a recognized expert who has written books, runs a consultancy, and led the way ahead of the London Olympics and Paralympics in 2012. Today, he draws on his varied experience across industries to discuss the true value of diversity and how businesses can get good at it.
Below is a transcript of this podcast. Some parts have been edited for clarity.
Michael Hainsworth: Stephen Frost is known worldwide as a leadership expert in diversity and inclusion. His career in advertising included working on disability and age awareness campaigns. He launched the UK's first LGBT recruitment guide. And he's taught inclusive leadership at Harvard Business School and is the author of "The Key to Inclusion". Diversity and inclusion seem like a natural fuel for a company's success. But when I sat down with Stephen to discuss the topic, my first question was: can he prove it?
Stephen Frost: Well, there's several ways we can try and figure that one out. One, I guess, is looking at the counterfactual. If there's a lack of diversity or lack of inclusion, first in diversity, the most obvious thing is when there's a lack of diversity of thought or so-called 'Groupthink'. We've got lots of examples in corporate history of organizations getting into trouble when they've had lots of smart people who haven't had sufficient calibration to their decision making. But perhaps more interesting in terms of inclusion is where you might have this diversity. You might think you've got this wonderful diverse team, but if you don't include them, don't listen to them, they don't feel safe and so forth, then that's when you get into trouble too. The counterfactual, I guess, is a somewhat negative starting place, but a place we can start, nonetheless.
A more positive one is to look perhaps at the value added or the creation that can come from more diversity, more inclusion. And you really need both, because if you just have more diversity, you could end up with just a lot more chaos. If people aren't communicating or what have you, haven't got a common set of values or communication tools or norms and protocols, it can be chaotic. But if you have, and you've got inclusive leadership, you can have great things happen. And we can look at, for example, the contributions of people in the NASA space program who were previously excluded. We can look at examples of developments in recent technology, Chat GPT, female engineer (Mira Murati). We can look at lots of examples where diversity properly included has led to breakthrough results that wouldn't otherwise have happened.
MH: Just a matter of, it doesn't matter how brilliant you are, none of us are brilliant enough.
SF: Yeah, indeed. And that hubris can be a false god.
MH: Diversity isn't just about race though, is it not?
SF: It's way more than race. I mean, look, clearly, race is incredibly important because there's systemic racism in our organizations and society at large. It's clearly a factor and at least a pattern. But yeah, it's more than that, because ultimately, this is about, certainly in a commercial or business sense, this is about the goal. The goal being to sell more things or to have higher productivity or to serve a customer better. It's about the goal. And therefore, in one sense, diversity is an input to that goal. And racial equity is a very important input to that goal.
But so is, for example, accessibility for people who might have disabilities. So is treating people fairly with regards to sexual orientation or when they're on a diverse, neuro-diverse spectrum. Ultimately, it's about the entirety of the human condition, but we can clearly focus on things like race because they stand out so much as being a situation that's unjust.
MH: Can we quantify how much more successful an inclusion-oriented company is compared to one that doesn't put the effort into it?
SF: We're getting there. There's a lot of talk about correlations of causation, and it's still pretty hard to prove causation. If I were to say to you, Michael, if your company is X percent more diverse, it will be X more percent profitable, as a causation, you're stretching a little bit. We actually do have examples where that could be the case, but it's much safer to rely on correlation where there's ample evidence and the literature is pretty comprehensive on the correlations between those. And we can look at, for example, gender diversity and rates of return. And in banking, we can look at racial diversity and consumer satisfaction scores. There's lots there where we can talk about the correlation being pretty robust and statistically significant. But of course, look, we need to be humble. This is only one of many variables and it doesn't excuse that... It's not the only variable that's determining business success, but it is an often overlooked one.
MH: You mentioned the financial services sector. For someone such as me in Canada, it's often cited that Canada's banking system is more diverse than what we have seen elsewhere around the world. And when we had the big 2008 financial crisis, we didn't suffer to the same degree in this country, in part because diversity led to a willingness to say, "No, we are not going to take risks that others are."
SF: There's some truth in that. If you look at the 2008 crisis or the reports that have been written on it, particularly the 2011 World Economic Forum Risk Report, which referenced that example. We can look at many factors, indeed, to your earlier question. So other things at play in Canada's comparative success and comparative well weathering of the storm in the financial crisis are not just that. It was also good regulation and reasonably good relationships, less confrontational compared to the US and so forth and so forth. So many variables.
But indeed, I think there is a correlation to be made between the fact that in comparison, particularly with the US or the UK, Canada's banking sector was more diverse and was more... A little more risk averse. And that is a factor. It's been cited in the literature, but yeah, we should take it again with a pinch of salt. But undoubtedly, the diversity was a helpful factor in allowing Canada to weather the storm better than the US.
MH: Tell me about your industry. How did your experience in the advertising industry lead to a career in diversity and inclusion?
SF: Well, besides a series of wrong turns, I think what it was, Michael, was that advertising is a wonderful industry for cutting your teeth. It's the ultimate client service industry. It's very creative and you've got a profit and loss (P&L) from an early age. But ultimately, I suppose, for me, what was it for? And I was just very cognizant that at the time I was in advertising, we still didn't have, for example, equal marriage. We still didn't have equal adoption rights. There were still a lot of basic civil rights that we might take for granted that weren't in existence. I wanted to use those skills for what I perceive to be social good, which is why I made the shift in the early 2000s.
MH: And how has that played out for you? What's your biggest learning as part of that evolution of yourself?
SF: There's a ton of learning. We are all at this stage of the game in our careers. But I think for me, I still see to this day, a lot of organizations spend a lot of time and effort trying to discover that purpose. But actually, if you've got a purpose already and you've got a very strong call to action, then the rest kind of falls into place a little bit. And for me, advertising is a wonderful method rather than an end in itself. And what that means for diversity and inclusion, I think, is that if we can frame diversity and inclusion in a really effective way, including thanks to advertising, we can be more successful. If people think diversity and inclusion is a load of pure political correctness, tree hugging, kumbaya stuff that has no correlation to business performance, you're probably not going to engage the people you need to engage to have more success.
And indeed, if we're really honest with ourselves, I know plenty of executives that if they are frog marched into a diversity and inclusion session, will be doing it with one arm behind their back and rolling their eyes. I think that framing is really important, whereas actually, with effective framing, as indeed, I hope we are having in this conversation, that it's about performance, it's about productivity, it's about really good things that help us all. The question then becomes not why diversity and inclusion, but why not? Why wouldn't you?
If there's genuine value to be had and if you can still retain a sense of humor, it can be helpful and so forth, why on earth wouldn't you? And so, a lesson for me is that the framing which people might dismiss as comms advertising is actually critically important to how diversity and inclusion is understood and really internalized by executives and business folks worldwide. And that is really important.
MH: And I can imagine you got firsthand experience with this while working on the London Olympic Games in the Paralympics in 2012.
SF: That was a wonderful privilege and a wonderful opportunity to work with a team for five, six years really, in the run up to the London Games. I was head of diversity and chief of staff, and they were a wonderful combination to be able to access the powers that be, but hopefully again, for a really useful purpose, to really make London as inclusive as possible. I think the learning there, to your question, Michael, was that again, these wonderful women and men who were super smart and great at the day job would perhaps have thought under pressure and under duress and under a bit of a timeline that diversity and inclusion was, a nice to have. And that indeed doing it, which they really wanted to do, came at the cost of not doing something else. They saw it as a trade-off or an opportunity cost.
And the biggest lesson there was to talk to these brilliant but very, very hard-hardworking people and to say, "Look, don't think of this as a workstream. Don't think of it as a separate activity, but actually how is it a methodology to get done what you've got to get done?" If your job is to sell tickets, how can diversity and inclusion help you sell more tickets more quickly, more effectively to different people?
If your job is catering, how can diversity and inclusion help you with customer service, ensuring everyone gets fed on time and budget? If you're in procurement, how could diversity and inclusion even help reduce the supply costs through making things more transparent and more competitive? I think it was learning was to really empathize with smart people rather than bash them over their head, listen and actually try and frame diversity and inclusion as a methodology that would help them get done what they needed to get done, rather than another thing to add to the to-do list.
MH: You mentioned the idea of having to frog march leadership into a room to talk about the importance of diversity. If diversity isn't just for the frontline employees, how does diverse leadership fuel productivity?
SF: The frog marching comment is slightly tongue in cheek, right? Because while it's true, I hope that, increasingly with proper framing, they're chomping at the bit. But how does it tie in? I think, look, we can look at organizations that have not been privileged with diverse leadership and seen the mistakes they've made. And there's a ton of counterfactuals in financial services and corporate America and so forth that demonstrate that smart people who were all a collective mold fell off the cliff together.
The productivity gained from diversity in leadership can be seen perhaps in innovation. Let's take financial services (FS), yeah, but let's take, for example, tech. And we mentioned the founder of Chap GPT, or we can look at other up and coming areas, like in pharmaceuticals, where we're seeing an increase in gender diversity at the top of the pharma companies correlated with, for example, a bit of more emphasis now on clinical trial diversity, particularly post pandemic and so forth, that this isn't just an human resources (HR) thing, but actually we want to look at the whole end-to-end production system and drug development cycle.
So again, I don't want to overblow it and say that it's caused that, but there's a definite correlation between increased diversity in some of these sectors and changed practices, which in my view are for the better.
MH: You've told me in the past that diversity in itself isn't going to help. What's the one pitfall to building a diverse leadership team that doesn't get enough attention?
SF: Hmmm... I suppose again, it's back to how you build a diverse leadership team. If we can kind of agree that generally a diverse leadership team, all things being equal is a good thing, at least cognitive diversity if nothing else, but that difference is a good thing to have in leadership. I think the pitfall might be in how you get there. And I think under shareholder pressure or employee pressure or political pressure, you see some organizations going about it rather half handedly, and they tend to fixate on a target and just drive there with not enough due regard for the methodology of how they're trying to achieve it. And let's say for example, gender, which is perhaps one of the biggest ones that's out there. You go to the gender target and therefore you are really prioritizing the promotion, retention, recruitment of women, which sounds great.
And indeed, it may well be great, but if in fact you are disadvantaging some men who are going to lose out in a notable contest, great, because made the best person prevail. But often what happens is you get more alpha inclined gentleman putting themselves forward, whereas actually very talented, perhaps introverted men maybe taking a backseat, and you there get some distortion there in the talent market. By only going for example, on one variable, you may sure hit a gender target, but unfortunately rather than improving the quality of all folks, including men, you may be getting those guys who shout loudest staying on board rather than say those who are best qualified. We need to be a bit more nuanced and subtle in how we go about this rather than just pursuing a goal regardless.
MH: You cite movements in television and film as an interesting example of diversity working for leadership?
SF: Yeah, I think they're good examples to show where we can look at. For example, TV and film with onscreen diversity have changed very quickly, very noticeably. If you look at the movement, the Oscars, so white, and the focus particularly on post Harvey Weinstein and post George Floyd, the emphasis is actually on representation. While there's still a long way to go, I think a lot of western media certainly have very quickly and effectively increased the representation of diversity in front of the camera.
And we can see that in commercial advertising as well as Hollywood blockbusters and so forth. It's been a little like being behind the camera, which takes a little longer and it's a bit more nuanced and it's got a lot more challenges in it. But I think if we want to point to an area where diversity has clearly had an impact relatively quickly, we can look to the mass media and how there has actually been increased representation of different people that weren't before. And people have noticed that and definitely appreciate that.
MH: In your book, The Key to Inclusion: A Practical Guide to Diversity, Equity and Belonging for You, Your Team and Your Organization, you write about the importance of being more inclusive as an individual by building your "cultural intelligence". How do you define cultural intelligence?
SF: I think that's important. If we think of emotional intelligence, which people are very familiar with and Colvin's book and so forth, as being the other part of the brain to the pure rational decision maker, cultural intelligence is kind of building on that. We now realize we live in a global, interconnected, technologically digital world. No person is a bubble. And we've looked to be in some ways culturally competent. Various cultural norms or various language skills or various differences in meeting etiquette and so forth.
And we're becoming competent in that. But why we want to move from cultural competence to cultural intelligence is that, again, we don't want to frame this as a cost of business, that you've just got to be competent and I've got to learn how to interrupt the Canadian and you've got to learn how to interrupt with the Brit, it's actually what can I gain or what can we gain from a Brit and Canadian interacting? What can we gain through interacting with people who are very different from us?
And actually, it again goes to those things we've touched on in the business case for diversity, of cultural insights, being close to the market, close to the consumer, covering blind spots, thinking of new innovative ways of doing things or new practices or scaling a particular thing that's worked in one geography to a global audience. It's really going beyond doing what you have to do, for example, as an expat, into doing what you might want to do to create value where it didn't exist before. In that sense, seeing someone who's different from you, not as a piece of work, but actually as an opportunity to create something new and add value to all parties concerned.
MH: Then what are some of the tools required to build an organization and a leadership team that's diverse and inclusive?
SF: If we just stick on the culture intelligence piece a bit, there are examples of multinationals who've generally followed the expat model, exporting Americans or Japanese to geographies to run localized P&Ls. But increasingly, we've seen actually sourcing local talent being a more successful way to penetrate the local market. I think Hitachi and Panasonic, two of the leading Japanese multinationals, to recruit local folks to include India and parts of Asia and actually steal a march on their competitors through being close to the market in terms of talent attraction and retention, but also supply chains and customer base and so forth.
So that's one example of going local, but other examples, I think, have to look at the people's cycle in its entirety, from recruitment promotion to retention. And if we start at recruitment, where are you recruiting? And that's an obvious starting place. What pools are you fishing in, whether it's the graduate milk ground, whether it's different pools that you might not have thought of before.
One really interesting organization I've come across recently is about attracting those who've retired already, over 55s, and encouraging them back into the labor market, which again is perhaps something that some recruiters overlook. Then there's promotion and how we can get a much more de-biased objective means of promoting people in organizations and we can delve into that if you like. And then there's retention. Why do people want to stay, and conduct stay interviews rather than exit interviews but making sure you are particularly focused on diverse talent and that it stays and feels included and has a sense of belonging. And so, we can break it down into simple buckets on the people's journey to try and make sure we are building a sustainable pipeline for diversity and inclusion in our organizations.
MH: We've mentioned television. Your latest book focuses not just on the future of television, but the future of technology, the future of banking. Is achieving diversity and inclusion different depending on the industry?
SF: Yah, I think that's a great point. There are some things which I think are universal norms. Regardless of industry, generally speaking, if you believe in cognitive diversity, that's probably something which applies across sectors. And similarly, we look at the concepts of bias or in groups and out groups or system one, system two, thinking these are things which are not particular to any one sector and therefore it'd be good practice to adopt these practices wherever you're working. But to your point, there are clearly differences within sectors which are dependent on what the issues are and what they are trying to do.
Within TV and film, as we discussed, the main thing there is output and cultural product, and that's been very much focused on representation on screen. The bigger challenge there, as we've discussed, is offscreen technology. Perhaps the goal there is accuracy of search results or accuracy of algorithm design, and therefore it's much more around the cognitive diversity in the engineering teams and the coders to get those results correct and avoid blinding spots in financial services. I think the goal there, in one sense from a regulatory perspective, is to minimize risk. So how can we actually think of diversity and inclusion as being a bit more of a safe blanket to minimize excess and risk-taking amongst certain personality types, or at least increase the checks and balances on those personality types? Whereas from a non-regulatory perspective, how can we get the latest idea and maximize return? I think you're right, depending on whether it's returns in investment or innovation in tech or representation in TV and film, there will be those nuances.
MH: Stephen, from our time together today, if there was one takeaway, you'd want the listener to have from this conversation, what would it be?
SF: I think the takeaway would be, reframe diversity and inclusion and challenge yourselves to what this is. Because whether you think you are brilliant at it and you practice inclusion every day, as you said, none of this is brilliant enough. Whether you think actually sort of tree hugging rubbish, re-think again in terms of cognitive diversity and how you make decisions. I think the takeaway would be that everybody can improve their performance, everybody can do better work, and it doesn't cost anything. It really doesn't cost anything to examine your own blind spots, to examine your own input to your own decisions and so forth.
And at minimum, if you are a skeptic, diversity and inclusion can de-risk the decisions that you are accountable for, which is good news. A more positive spin would be actually that it can really kind of source new ideas and new perspectives which can create new things and enrich the lives of us all. So, wherever you are on that spectrum from being a skeptic to an advocate, I hope all of us can be humble enough to see that it can definitely help us. And a bit of reframing and changing ourselves is not a bad thing.