Why Diverse Software Teams Are More Innovative

A 2018 Boston Consulting Group (BCG) study of 1700 companies in eight countries found that businesses with above-average diversity realize 9 percent higher margins and 19 percent more revenue from innovation than businesses with below-average diversity. In other words, diverse teams are more profitable and innovative than homogeneous teams.

“This finding is huge for tech companies, start-ups, and industries where innovation is the key to growth,” Forbes said of the study. “ It shows that diversity is not just a metric to be strived for, it is actually an integral part of a successful revenue-generating business.”

“The fact is that if you want to build teams or organizations capable of innovating, you need diversity,” according to Scientific American. “Diversity enhances creativity. It encourages the search for novel information and perspectives, leading to better decision making and problem-solving.”

“This makes sense because diversity means diversity of minds, ideas, and approaches,” Forbes said, “which allows teams to find a solution that takes into account multiple angles the problem, thus making the solution stronger, well rounded, and optimized.

BCG measured diversity as differences in gender, age, the nation of origin, career path, industry background, and education level. The factor having the most significant impact on innovation and revenue was the nation of origin--defined as employees from a nation different than the parent company. 

But it’s not just hiring diverse employees that accelerate performance. “It’s all too easy to hire people from diverse backgrounds and then sit back and expect the magic to happen,” BCG said. “A passive approach is guaranteed to fail.”

Having diverse perspectives on a team only improves performance if you listen to and act on those perspectives. Michael Archibald, CTO of sales optimization software maker SalesRabbit has experienced this first-hand. Michael’s software team includes several engineers from Kenya, working as distributed team members. While the Kenyan engineers were initially hired to address a skills shortage that made local hiring costly and slow, SalesRabbit has reaped more benefits from the distributed team members' diverse ideas and experiences.

“The Africa-based engineers bring different cultural perspectives and development perspectives,” Michael said. “The diversity of thought and diversity of experience has made us more open-minded and they have opened our eyes to better ways of building our product and delivering our services.” 

Some of those “eye-opening” approaches included challenging the team to “not live with the status quo, and advocating for the migration to a new version of the platform, transitioning SalesRabbit’s API into a more efficient software language, and leading the automation of manual processes.

“You see people living and working under very different circumstances, we’re in their homes and they are in ours on Zoom and the whole team realizes ‘maybe we need outside perspectives,’” Michael said. “And you listen and they have really good ideas. It’s awesome” 

Diversifying through distributed engineering teams is easier than ever with most developers working remotely. Geography is less and less of a factor in hiring as software teams get better at all-remote work. SalesRabbit hired its Kenya-based engineers through Andela. Andela specializes in staff augmentation that places high-performing global engineers with U.S. companies for long-term engagements.

To learn more, read the case study: “SalesRabbit: A New Way of Hiring that Accelerates Development and Improves Products.”

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