History is full of market leaders that became stagnant, failed to innovate, and were uprooted by new, disruptive business models. Ride-sharing has completely transformed the taxi industry.  Kodak, who employed over 145,000 people at its peak, has now been outpaced by the likes of Apple, Instagram, Facebook, and others. And Blockbuster passed on buying Netflix in 2000. These titans of industry failed to innovate, which eventually led to their dwindle or demise.

These companies were run by smart executives, but they missed key signs that could have led to a different outcome. So, why is it so hard to innovate?

One of the challenges is groupthink–like-minded individuals’ desire for harmony or conformity results in dysfunctional decision-making, clouding the ability to innovate or think outside the box. This can be particularly hard for organizations with a siloed, homogenous culture that fails to incorporate diverse views working toward a common goal. That’s why smart corporations are investing heavily in diversifying their workforce, and establishing new strategies to do it.

Why Diversity Matters

Research shows compelling evidence that diversity unlocks innovation and drives market growth. A McKinsey & Company study shows ethnically diverse companies and gender-diverse companies are respectively 35% and 15% more likely to achieve returns above average. Further, an Egon Zehnder study found “63% of senior executives worldwide believe that diversity programs will help them become more competitive by being able to access top talent.” With the unemployment rate at the lowest it’s been in over a decade, companies with a diversity strategy are much more likely to attract top talent in this competitive labor market than those without.

Recently, 175 CEOs of top companies, led by the Chairman of PwC, formed the CEO Action for Diversity and Inclusion to focus on three main areas:

  • Creating a safe workplace environment for dialogue
  • Mitigating unconscious bias
  • Sharing best and worst practices

But while Diversity and Inclusion (D&I) is starting to command the attention of CEOs, companies are still struggling to understand how to make any significant headway in their diversity goals.

Injecting Antiquated Methods Over Innovative Solutions

Building a strong diverse culture is not easy—it’s complicated. While Fortune 500 companies are setting new goals to tackle diversity by 2020, they’re still using antiquated tools and disproven tactics to get there. Harvard Business Review highlights the problem with using old tools like mandatory diversity training, hiring tests, and grievance systems is that they’re found to be remedial or ineffective, and sometimes lead to potentially worse outcomes for participants. A complex challenge needs an innovative solution, and mentoring is proving to be a viable answer.

Drive Innovation with Formal Mentoring Programs

HBR found that “mentoring programs make companies’ managerial echelons significantly more diverse.” On average they boost the representation of African American, Hispanic, Asian-American women, and Hispanic and Asian-American men anywhere from 9% to 24%. The improvement in numbers stems from the nature of mentoring in an informal setting versus a formal program. “White men tend to find mentors on their own, while women and other minorities more often need the extra assistance or guidance a formal program can provide.” It’s not that executives don’t want to mentor women or minorities, but rather they “don’t feel comfortable reaching out informally to mentor young women and minority men.” With formal diversity mentoring programs, the connection is facilitated through a more structured system, alleviating apprehension or uncertainty around asking for mentorship.

Diversity mentoring helps organizations create an inclusive workforce, supporting diverse populations to build relationships, establish career paths, and feel empowered within the organization. Whether it’s creating a high potential mentoring program for African American employees, or mentoring circles for women, infusing a workplace with mentoring can increase engagement, retention, and create larger networks for a more all-encompassing and innovative workforce.

Conclusion

Improved diversity in the workplace is critical to the future of our global economy, from both an equality and business success standpoint. Business leaders that don’t harness the power of diversity risk falling behind in this fast-paced, innovation-driven world. And while companies that have taken the first steps in making diversity one of their top priorities are ahead of the curve, they still face the barriers of outdated solutions to properly build a diverse workforce.

Meanwhile, mentoring is proven to make an impact on diversity, helping to break down silos while spurring greater innovation and productivity. As we look into 2018 and beyond, companies that have healthy diversity and mentoring cultures are becoming more innovative, competitive, and ambitious as they transform their industries, while those that ignore diversity fall further behind, struggling to attract top talent, innovate, and create progressive collaboration.