generation, geography, ethnicity, and sexual orientation was good for business. Leaders knew that having sales and marketing folks who “looked like the market” helped the firm connect to that market. We took this much further and posited that having people in R&D who represented target markets might similarly offer a competitive edge: who better to identify unmet needs and market opportunities among underserved populations than members of those populations? Research by social scientist Scott Page had affirmed the wisdom of crowds; Page showed mathematically that diversity trumps ability when it comes to solving thorny problems or predicting outcomes. If so, could we show that diverse teams were more innovative than homogeneous teams? And that diverse companies enjoyed, as a result of their innovation, greater market share?
Bringing our own diverse team to the endeavor, we embarked on a two-year research quest. We surveyed 1,800 college-educated professionals in the US, 700 of whom worked for multinational companies. We interviewed some 60 executives and innovators. We held focus groups with team leaders across industry sectors. And we generated 35 case studies of innovation that had derived from diverse teams. What we found, intriguingly, was that innovation depended on having two kinds of workforce diversity: inherent (inborn, immutable traits such as gender, ethnicity, and sexual orientation) and acquired (a sensitivity to difference gained through experience). Inherent diversity, as we had hypothesized, helped ensure that teams tasked with identifying unmet needs and innovating for them had the end-user insight they needed to succeed. Acquired diversity turned out to be highly correlated with inclusive leader behaviors, behaviors that unlocked the contribution of every team member and tapped everyone’s toolkit to create the “speak-up culture” so critical to sustained problem-solving. We were able to show that companies with leadership manifesting both inherent and acquired diversity (what we termed “2D Diversity®”) measurably outperformed companies that lacked it in terms of both innovation and market growth. Employees at these companies were 75% more likely than employees at non-diverse companies to say that their ideas were developed and implemented. They were 45% more likely to report that their firm’s market share grew over the previous year and 70% more likely to report that the firm had captured a new market.
Our findings, which we published in a report entitled Innovation, Diversity, and Market Growth, caused a sensation. Harvard Business Review published our research, as did the Stanford Social Innovation Review. Our quest had culminated in the Holy Grail: a robust business case demonstrating that diversity unlocks innovation and growth.
Andrea Turner Moffitt was quick to perceive its implications in finance. As a former banker, a female professional, and a proactive investor, Andrea knew firsthand how poorly the industry connected with women, both in terms of its female talent and also with its female clientele. She was eager to apply our research to her field, to explore how inclusive leadership and our insights into acquired diversity could help advisors discover new ways to work with women, both as colleagues and as clients.
A wealth of industry data suggested that women comprised an enormous purse, with control of some $20 trillion of assets worldwide. Yet from Andrea’s personal and professional work, it was apparent that most of that money lay on the table. Women weren’t leveraging their wealth because wealth advisors ignored them or misunderstood their needs and wants.
As a research organization dedicated to helping women fulfill their leadership potential and to helping Fortune 500 companies better leverage female talent, CTI had its work cut out for itself: We would measure the disconnect globally. We would quantify the US purse (the amount of unleveraged wealth held by women). And on the strength of our findings from “Innovation, Diversity and Market Growth,” we would map a way forward that would benefit both the industry and the women it employed and served.
Thus was born our Power of the Purse research stream. Under Andrea’s leadership, we published Harnessing the Power of the Purse: Female Investors and Global Opportunities for Growth, the first in a series which has grown to encompass women in healthcare and is soon to study women in technology. It’s a call to action but, more importantly, a blueprint for industry-wide change. We’ve provided advisors with a new toolkit of behaviors and tactics that will close the gap with the new market segments we identify. Andrea’s familiarity with the industry and commitment to helping women take control of their wealth has infused this blueprint with invaluable energy and expertise. I am enormously pleased to have collaborated on this research and, with her, to share it.
—Sylvia Ann Hewlett, Founder and CEO, Center for Talent Innovation
Introduction
My Story
On a warm summer afternoon in 2011, I joined a group of women working on Wall Street for lunch at a local café. After catching up on family and work, we plunged into a vibrant discussion of global challenges, kicking off with obstacles women face in finance. We bemoaned the stubbornly low numbers of female business leaders on the Street, and indeed across all industries. We debated why it was so difficult for our female entrepreneur friends to secure funding. Naturally, we landed on the perpetual discussion of the balancing act—career, family, and how to have it all.
But there was one topic we rarely touched on: money. Given our collective expertise as educated, opinionated women working in finance, I found this baffling. All day we discussed financing and investment strategies—just not our own and certainly not with each other. Privately, I had given a lot of thought to how we might invoke our capital and financial know-how to tackle our desire to solve some of the world’s thorniest problems. After some hesitation, I sensed an opening and proposed an idea, “What if we actually invested in the advancement of women?”
The table grew quiet. “Imagine if we invested in companies with diverse boards,” I said. “What if we created new capital sources for women entrepreneurs, or funded education for girls in emerging markets?”
I had made my case, to nods all around the table. The market, we knew, might serve as a powerful lever for change. Everyone was inspired. “I love the idea,” said a friend I will call Caroline. She paused. “But honestly, Andrea, I do not have time to tackle even the basics. I am embarrassed to admit this but I have three years of compensation sitting in cash.”
Another friend piped up. “Even though I have met with several potential financial advisors, I just can’t find one that I trust,” she said. “They cold-call me after I’ve gotten a promotion that’s made the press, a strategy I find extremely off-putting.” One after another, my colleagues chimed in with stories of similar challenges in managing their own finances.
After lunch I reflected on our conversation, marveling at the irony. We had weathered grueling years climbing the ranks at our firms; we had survived the 2008 downturn; we’d become financially independent with autonomy over decisions about our careers and families—only to hit a plateau in the long-term management of our own wealth and impact. The nest eggs we had worked so hard to accumulate were stagnant. Why were we not leveraging our earnings at the same pace as our male peers? I was deeply perplexed by our collective paralysis, given what it had taken to attain this economic power.
FINANCIAL INDEPENDENCE: A MEANS TO AN END
I grew up in the heart of Illinois, surrounded by rich farmland as far as the eye could see. Indeed, agriculture and education are at the center of my heritage—both my grandmothers went from their family farms to college in the midst of the Great Depression.
They passed that passion for education to both of my parents. My father, in particular, strongly wanted his children to attend the best universities possible, no matter the cost. He wanted us to be exposed to a world outside of our small town. My mother, a teacher, wanted this too, but worried deeply about our family finances. I can remember the concern that crept over her face when the subject would come up at the dinner table. Despite her razor-sharp intuition, she struggled, as many women do, to influence our family’s
