Beyond Political Correctness: The Economic Case for Embracing Diversity

Hey Friends,

In the workplace, we often hear about the importance of promoting diversity and inclusion. It's the politically correct thing to do, right? But let's take a moment to explore a different perspective - one that is not only politically correct but also economically and productivity-driven. Get ready to dive into an intriguing facet of this topic that will make you see the value of diversity in a whole new light.

“Discrimination” are rooted from scarcity of resources

Firstly, let's explore the intriguing connection between competition and discrimination. "Discrimination" is a behavior that we are all familiar with, rooted in the scarcity of resources in our world. As resources are limited, competition arises, necessitating the ranking of competitors based on certain rules. This ranking system, in turn, leads to discrimination, where winners gain access to the coveted scarce resources. Consider the example of buying a Mercedes-Benz car: anyone can purchase it, but the buyer must have the financial means to do so, representing discrimination based on wealth. Similarly, in beauty pageants like "Miss Hong Kong," only unmarried females can participate, exemplifying discrimination based on gender. The intertwined nature of competition and discrimination invites us to delve deeper into their profound implications and societal dynamics.

The real issue here is about the discrimination based on irrelevant factors which leads to ineffectiveness

You might be thinking, "Wait a minute, this isn't the discrimination we usually talk about, right? We're talking about race, gender, age, and religious belief affecting job opportunities and other important stuff!" And you're absolutely right! So, what's the deal with the kind of discrimination we're discussing here?

Well, discrimination based on irrelevant factors like race, gender, or age leads to some pretty suboptimal decision-making and higher transaction costs. It's like trying to play a video game with the wrong controller - it's just not going to work smoothly. In a market economy, where things are supposed to be fair and square, discrimination can really mess things up. It's like throwing a wrench into the gears of efficiency and potentially causing financial losses for those doing the discriminating. Market economies are supposed to be "colorblind" - not in a literal sense (we're not talking about being unable to see colors!), but in the sense that they should facilitate economic interactions without discriminating based on personal biases like races. It's like going to a buffet and being able to pick and choose based on what’s most valuable, not based on someone's gender or age.

Now, let's bring in the big guns - Professor Gary Becker, winner of the Nobel Prize in Economic Sciences. He defines "discrimination" as when someone is willing to give up certain benefits, like money or enjoyment, just to satisfy their own personal preferences. It's like saying, "I don't care if you're more qualified, I just prefer someone who looks like me!" That's just not cool.

But hey, let's not get carried away here. There's a difference between choosing someone based on their abilities and making choices based on personal biases. If someone is clearly stronger, more agile, or more knowledgeable, it's not discrimination to choose them over others. It's just common sense! We're not saying, "Hey, let's hire this person because they have a cool hat." No, we're saying, "Let's hire this person because they're the best fit for the job." See the difference?

Discrimination is a tricky thing to tackle, but with economic analysis, we can start distinguishing between real discrimination and reasonable choices. We can also see that discriminators actually harm themselves in the process. It's like shooting yourself in the foot while trying to shoot someone else. Ouch!

Why is inclusion and diversity more important than ever? There’s a paradigm shift

Well, picture this: in the past, economic production focused on physical effort, and being a good executor was all you needed to succeed. But times have changed! The high-value adding parts of a value chain now demand high-quality creative solutions. So, diversity and creativity are no longer seen as productivity blockers. In fact, they're like the secret sauce for generating innovative ideas and solving complex problems.

Scott Page even wrote a whole book about it called "Diversity Bonus" because he knows what's up. He says that diverse teams kick some serious butt on complex tasks, resulting in what he calls "diversity bonuses." Think improved problem-solving, increased innovation, and accurate predictions. It's like getting extra sprinkles on your ice cream!

Let's discuss real-life examples from my own experience. In consulting projects, we always assembled a dream team by sourcing the best talent from different business divisions and regions. I have had the opportunity to work with a group of talented UX designers to deliver a membership experience workshop. Additionally, I collaborated with an HR IT system Subject Matter Expert from the Philippines for benchmarking purposes. In my current project, I am fortunate to be working with individuals from the Middle East, Japan, India, and the US. It's like a supergroup of awesomeness! By combining the unique strengths of everyone involved, we are able to deliver projects with mind-blowing results.

Oh, and did I mention the McKinsey interview in the last edition? They found that having a diversified team with people from different backgrounds can help you better understand and empathize with your competitors. It's like having a secret advantage, like knowing the opponent's playbook or having their decoder ring!

So, here's the deal: embracing diversity and encouraging creativity is like tapping into the superpowers of your workforce. When you bring together individuals with different backgrounds, experiences, and perspectives, you unleash a whole new level of innovation. It's like upgrading your team to Avengers status. And in today's ever-changing business landscape, that's the kind of edge you need to thrive.

Ciao,

Sherman

Things that I found interesting this week:

📚 Book - Diversity Bonus by Scott Page

I recommend this book to you since I know you might be interested in exploring the power of diversity and how it can elevate team performance to new heights. Scott Page, a renowned scholar and expert in the field, delves into the concept of "diversity bonuses." He demonstrates how diverse teams excel in complex tasks, bringing fresh perspectives, innovative solutions, and accurate predictions. With captivating examples and real-life case studies, Page reveals the untapped potential of embracing diversity in the workplace. Prepare to be inspired and equipped with strategies to leverage diversity as your secret superpower.

📃 Notion - My Personal Book Summary for The Model Thinker

This is my personal book summary for another great read from Scott Page, "The Model Thinker”. In the book Scott Page dives into the realm of thinking models and their application in understanding complex systems. He explores various models, including Power-law distributions that shed light on growth patterns and Systems dynamics models that help us analyze complex reactive systems. By embracing multiple thinking models, we gain internal diversity that equips us to tackle problems from different angles. This diversity of thought leads to what Page refers to as a "diversity bonus," where our ability to approach challenges with a variety of perspectives enhances our problem-solving capabilities. Just as we discussed the benefits of diversity in the workplace, a diverse toolkit of thinking models can bring a similar advantage in navigating the complexities of our world.