August 11, 2011

Why and How to Introduce Diversity into your Start-up

By Helge Seetzen

A few days ago I was at a “high society” party amongst captains of industry, political leaders and artists of renown from around the world (clearly as a “+1” to my spouse…). The crowd had two things in common: cowboy outfits (it was on a ranch), and pale skin. Out of about two hundred attendees and maybe fifty staff, I spied four people of colour (including my wife and a nanny in the corner).

It would be easy to deride the organisers, but they are deeply involved in the community and even champions of diversity in several associations. The real lesson has to be much broader: Diversity requires conscious effort, not just good intentions.

Diversity is a broad concept

There have been a lot of good opinion pieces on diversity recently, both for and against diversity in a start-up environment. While gender is emphasised in these discussions, diversity really covers a broader range: gender, culture, religion, orientation, physical ability, age, and so forth. Given this, pun intended, diversity of categories it is easy to miss the fundamentals. In a business context, diversity isn’t about hiring a minority to get government grants or a woman to have a pretty face for your PR endeavours. That will give you variety but not diversity. Diversity is about introducing, maintaining and leveraging different perspectives in your business. You don’t want a more colourful office, you want a smarter one.

Diversity creates smarter organisations

Technology start-ups are in the business of solving problems. Whether it is Product-Market-Fit or technical innovation, a start-up creates more value through analytical problem solving than almost any other line of business. So how do people solve problems? Not as you would expect. Human beings aren’t computers. We don’t actually calculate solutions with logical operators. Instead, we map a fairly small set of ready-made solution archetypes onto the problem and go with the best fit. We do so even if the fit isn’t particularly great in objective terms*1.

Problem solving therefore scales differently in computers and humans. Adding a second computer to a problem will usually half the solution time. Adding a second human with the same archetypes will do pretty much nothing. In fact, a large group of people with equal or very similar archetypes is no more likely to solve a problem than any one member. The key is to increase the collective archetype count, not add more humans. Diversity does that in a way that nothing else ever will. Archetypes are formed through our socio-environmental experience in (mostly) the formative years (possibly with some biological foundation mixed in).

Diversity requires a biased HR team

This valuable difference in archetypes is also the biggest enemy of diversity. We like people who have similar perspectives to ourselves. They look similar, act similar and are most likely to agree with our own views of the world. Absent deliberate counter-steering, we all hire our own clones. Affirmative action is the obvious but, I believe, wrong response to this fact. Hiring people *because* they are different usually just leads to a less qualified team and that’s the last thing a start-up can afford.

Instead, focus on providing opportunity, not jobs. To do so you need to deliberately fill your candidate pool with diversity. This is the part where deliberate bias is a good thing. At TandemLaunch we post our open positions all over the globe, we deliberately chase university career centres in far-flung places, and I have been known to look at the world map hanging in our office to find the empty regions (we have coloured pins for our staff origins and investments). This isn’t hiring bias, it’s opportunity democratisation. Your HR team should try to build candidate pools that mimic the education-weighted population distribution of the world.

Diversity requires objective recruiting criteria

Now that you have lots of candidates, you are running the risk of destroying all the progress you made so far. A hundred diverse candidates won’t do you any good if your hiring process only captures your clones. And that’s exactly what happens if you hire subjectively. We can’t help it and need to emotionally recognise that we can’t. I believe the Founder Fuel/Real Ventures team when they apologised for their all-male mentor pool – I don’t think they were being deliberately cliquish, they just didn’t consciously admin their own clone-bias (much less do something about it).

Objective hiring processes are the solution to this process: skill tests, trial periods with objective goals, etc. At TandemLaunch, we use our internship program for this purpose. You might not look like me, behave like me or think like me – but if you can achieve the SMART goals of your internship then you should be working at TandemLaunch. It’s never possible to make hiring perfectly objective, but this has worked well enough for us so far *2. Intelligence is (probably) uniformly distributed across genders, age and cultures. Thus, if your hiring process yields non-uniform results then you are doing it wrong.

Diversity requires integration

Once you have those diverse people with their unique archetypes, you have to leverage them. Perversely, that requires integration. Diversity won’t do your business any good if you end up creating the business equivalent of ghettos. Put all your women into HR and you won’t actually be better off than if you had never hired any women in the first place. Diversity needs to be spread through the organisation and involved at all levels of decision making. You cannot mandate this from the top. It will only happen if your diverse blend of personalities is nevertheless integrated into the work culture of the company. Put simply, have multi-coloured candy but put the M&M logo on all of them.

All of this requires deliberate effort and ongoing maintenance. It is therefore not surprising that many start-ups shy away from committing to diversity. The upfront cost is high and the long term payout is hard to understand for those who have never experienced it. But for those who have been part of a diverse team, I suspect that the choice is obvious. It certainly is for me.

*1 Which is why we are quite comfortable leading our lives with glaring logical inconsistencies in many areas of our belief system (e.g. religion, economics, politics, etc.).

*2 We went from zero to twenty in 12 months and only the first two hires didn’t come out of a 6 months internship/trial period (our internships aren’t limited to students or those without work experience).

Leave a Reply