Nowadays, a diverse team is a top priority for most big companies.

It shows a commitment to inclusion and social responsibility. And it means that the company will reflect society at large—as well as its customer base.

But beyond these clear advantages, there’s another hidden benefit to diversity as well: it makes your company more innovative. In fact, research has shown that firms in the top quartile for gender diversity are 21% more likely to have above-average profitability than bottom-quartile firms. Furthermore, companies in the top quartile for ethnic diversity are 33% more likely to enjoy above-average profits than counterparts in the lowest quartile.  

In today’s fast-paced business world, only the most nimble, adaptable companies survive. And the greatest rewards go to the companies that know how to create and innovate.

So how can diversity make your company more innovative and more competitive?

That’s what we’ll explore in this article—by taking a look at some of the most commonly talked about ways of diversifying a team (and a couple that rarely get mentioned).

Cultural diversity

A culturally diverse team is essential if you want to be as innovative as possible.

Why?

Because our perspectives are formed by the background assumptions that we carry with us. And our work styles are shaped by our cultural upbringing.

If your team is made up of people from just one cultural background, then however talented and well-trained they are, they’ll often tend to view problem-solving challenges from the same perspective. And if you want to create innovative solutions and products, that’s far from ideal.

On the other hand, if you have a culturally diverse team, then that kind of automatic “group-think” is much less likely. It’s for the simple reason that there won’t be a single, consensus perspective about how to tackle challenge at the beginning of a project.

This means that your team will be free to really unleash their creativity, since they won’t have a set of rigid assumptions or the limitations of what “everyone knows” weighing them down.

And that means that they’ll be much better able to come up with a truly original idea, or a really creative solution to an intractable problem.

Linguistic diversity

The business benefits of a multilingual team are obvious—you can communicate with your international customers more easily, deal with logistics issues abroad more efficiently, and open new markets for your products and services much more quickly.

But having people on your team who speak other languages has an innovation advantage as well—and one which is often overlooked.

There was a time when most of the serious R&D work was being done in a handful of countries—and in just a few languages.

Those days are over.

Looking for the best and most cutting-edge research publications, or the latest high tech components and OEMs? These days, that could be anywhere, from Hong Kong and Tokyo to Stockholm and Cambridge.

And the more languages your team speaks, the more access your company will have to the research that drives innovation—as well as the vendors who are at the forefront of their industry.

That access to the best new ideas and technologies means that you’ll be much better positioned to make a breakthrough of your own: to innovate.

Gender diversity

Women are 50% of the population—but they make up a much smaller proportion of top management roles across most industries.

And while this is changing, there’s still a long way to go.

But researchers have stumbled on a very interesting fact that might help inspire progress on this front: hiring women makes companies more innovative.

Studies in both the US and Europe have found that diverse companies innovate better than their more homogeneous counterparts—and that gender diversity plays a key role here.

Research from BCG has shown that companies with above-average diversity on their management teams reported 19 percentage points higher innovation revenue than companies with below-average management diversity.

But these researchers stress that it’s not just a matter of having a few women in your company, or filling junior roles with women. Rather, the crucial difference seems to come when women are promoted to leadership roles and given the power to make key decisions.

There’s some debate as to why this should be the case. Perhaps it comes down to differences in the communication and work styles of men and women. The old stereotypes may contain a grain of truth, with women turning out to be better listeners and communicators after all—key leadership traits that allow managers to get the best out of their teams.

But whatever the reason, mixed gender teams—especially at the management level—are good for business. So if you want to build a truly innovative company, hire women. Then promote them.

Industry diversity

The trend these days in that most industries are moving is towards specialization. And the tendency in most companies is to hire people with extensive experience in the field—simply because there’s so much to know that it seems imperative to build a team of “insiders” and “experts” in order to stay competitive.

But while this is natural, and sometimes necessary, there’s a missed opportunity here as well. Companies that hire people from other industries are often rewarded with that elusive “outsider’s perspective” that sparks original and unorthodox approaches to solving problems. And that is absolutely vital if you want to foster innovation.

To offer just one example, computer programmers tend to approach problem-solving and project management very differently from graphic designers or sales people. And while algorithmic thinking and test-driven development can generate excellent results, combining them with a more right-brained approach can produce truly innovative products and services (as evidenced by tech companies like Airbnb, founded by a designer).

So in the end, while you do need people with the technical skills and background to do the work, be aware that diversifying your team by hiring people from another industry or with unconventional backgrounds can bring tremendous benefits. Their fresh perspectives just may be what you need to come up with the next billion dollar idea.

Diversity of ability

Nowadays, most companies nowadays do everything they can to accommodate workers with visual, hearing, or mobility impairments. Not only is it the law in most countries, but it’s also the right thing to do—and the vast majority of modern, progressive companies do their best to act ethically.

However, as sad as it is to say, there’s sometimes a sense that by making hiring decisions without regard to physical ability, companies are somehow willingly putting themselves at a competitive disadvantage—sacrificing ease in order to live up to some higher ethical or legal ideal.

And while that’s debatable, what is often completely overlooked is that having team members who are differently abled can actually be a powerful source of innovation.

People in the tech industry are at the forefront of this way of thinking. Web and app developers have made accessibility a huge issue in the world of computer programming. They argue that the technologies of the future should be available to everyone—and that development should embrace accessibility as a core practice in everything it does. And so they design and implement their products, services, and websites to be usable by as wide a range of people as possible.

They also point out, quite rightly, that this is more than just ethical: it’s profitable as well. It makes sense: If you create a site that three million people can’t use, then you’re only hurting yourself. The more accessible your products and services are, the larger your potential customer base.

Other industries have started to follow suit, realizing that there is not only tremendous potential to improve the lives of people with physical and other impairments—but also that there’s an enormous opportunity to win new customers as well.

So what does this have to do with innovation? Everything.

Because when you have team members who are themselves used to dealing with accessibility challenges, you have an incredibly valuable perspective available to you. If you want to create new products to serve this still largely untapped market—or simply modify an existing product to make it usable by a wider range of people—you’ll have someone on your team who can give you ideas and feedback that would never have occurred to you otherwise.

At the end of the day, diverse companies are much better positioned to innovate than the competition. These companies benefit from a variety of perspectives and ways of working—and they’ll be the ones leading the way with groundbreaking innovations and fresh ideas.

So the next time you’re at work, take a look around you. If you don’t see an office that looks like the world you live in, just be aware that you might be missing a great opportunity to make your company more creative, more competitive, and more profitable.