A corporate diversity, equity and inclusion (DE&I) program is essential because it’s driving business innovation, which is a competitive advantage, risk managers heard during a recent web conference.
Carla Harris, vice chairman and managing director of Morgan Stanley, spoke at the recent RIMS Live 2021 virtual event about how companies are competing on innovation. Finding innovative solutions is how businesses get ahead, she said. Harris then reverse-engineered the process of innovation to illustrate the importance of DE&I.
To be innovative, companies need as many ideas as possible, Harris noted at the outset. Ideas allow you to figure out which one will open the door to being an industry leader. To get those ideas, you need an array of perspectives, “because, after all, ideas are born from perspectives,” she said.
To get a variety of perspectives, leaders need an array of experiences, Harris continued. “And if you need a lot of experiences in the room, you better start with a lot of different people in the room, because experiences are born from people.”
Reverse-engineering how innovation happens ultimately leads back to the people you have in the room. “To get to that one innovative idea that will allow you to obtain and retain a leadership position in your industry, you must start with a lot of different people,” she explained. “That is the business case around diversity.”
Harris gets concerned when people discuss diversity as the “right” or “moral” thing to do. “Well, in all honesty, you and I as people may not agree on the ‘right’ thing to do, but as business people, we will agree on the commercial thing to do. And it is indeed a commercial imperative,” she said of conversations around DE&I.
“I believe that the reason [DE&I] should matter is that we are all competing around innovation,” Harris added. “It is the dominant competitive parameter across all industries.”
Many companies haven’t thought of a DE&I program as part of their business strategy, and that has hurt them, Harris implied. “Unless you think about it, and frankly believe, that it should be an integral part of your business strategy, it will be very difficult to have a long-term competitive sustainable DE&I program.”
And to take the idea further, DE&I can’t just be part of the business strategy — it has to be essential to it.
“Why? Because in order to execute any strategy, you have to have the right people in the right seats at the right time,” Harris explained. “That’s a given. And as a leader, you should avail yourself of all the talent in the marketplace to give you the best opportunity to compete and to lead in your industry.”
Companies need to know that young people today “care an awful lot about this.” That’s your future talent pool, Harris pointed out.
“If [prospective recruits] don’t see their definition of excellence [represented by the company], they won’t come to the organization. Or if they come, they won’t stay,” she said. “And that will compromise your objective to be the employer of choice in your industry.”
When she finished school in the late-1980s, it was normal for Harris to be the only black woman in a room. She knew she had to be comfortable with being the first and only.
“But that is not how Millennials and [Gen] Zers have grown up,” Harris said. They live in an environment with women leaders. They go to elite schools with peers of diverse backgrounds.
“That’s what excellence looks like, and if they don’t see it, they are not apt to come,” she added.