Masters of the Multicultural

Chief diversity officers (CDOs) proliferated in the 1990s, as business responded to litigation and public pressure to show a more heterogeneous face. But in a few forward-thinking companies today, the diversity officer has assumed a new role: overseeing innovation efforts and generating revenues. Business leaders know that heterogeneous workforces are rich seedbeds for ideas. Yet companies rarely tap employees for insights and experiences specific to their cultures. Furthermore, barriers of language, geography, and association may prevent diverse employees from coming together on innovation efforts. CDOs are probably more familiar with the cultural breadth and variety of their companies’ talent than anyone, and consequently they are in an excellent position to bring together different groups to produce innovation. For example, Amy George, the vice president of global diversity and inclusion at PepsiCo, works closely with several affinity groups—associations of employees united by gender, race, ethnicity, or other traits—within the company. She can cite several examples in which employees from those communities generated ideas for new products and market strategies. For instance, the Hispanic employee affinity group at Frito-Lay, a division of PepsiCo, provided input for a line of guacamole-flavored potato chips, which became a $100 million product. “The main argument for having a diverse workforce is the increase in innovation,” says Rosalyn Taylor O’Neale, the former CDO of MTV Networks. “But new ideas don’t just happen. You have to find the connections.” O’Neale launched a companywide program to do just that, with enthusiastic support from Tom Freston, MTV’s former CEO and the current copresident of Viacom. One cross-cultural group, for example, discovered marketing opportunities in the congruence of North American country music and Latin American music, which use many of the same instruments, feature singers with similar vocal styles, and—in the U.S. Sunbelt—appeal to much the same audience. Similar groups have influenced the multicultural content of Nickelodeon’s children’s programming. “Those teams are diverse by design to generate innovation,” says Freston. “The probability that you will get a good, original, innovative idea with that type of chemistry is simply much higher.” O’Neale was successful, in part, because she is knowledgeable about marketing and innovation. Most CDOs will need considerable training if they are to assume the innovation mantle—or companies will have to seek CDOs with richer experience. One smart move is to release CDOs from the confines of human resources and position them to work closely with the heads of product development, business development, marketing, and sales. This allows the CDO to more easily spot innovation opportunities throughout the company. That change is already happening. “Increasingly, chief diversity officers report to the CEO, outside of HR,” says Edie Fraser, founder and president of Diversity Best Practices, an organization that tracks diversity issues. At Russell Corporation, an Atlanta-based company that specializes in athletic clothing, the human resources function handles traditional diversity matters such as affirmative action, recruiting, and legal questions. Meanwhile, CDO Kevin Clayton is busy turning a separate diversity department into a profit center. For example, Clayton’s group—which is directly accountable for profits and sales—discovered that a large number of Russell employees had graduated from historically black colleges and universities. The group then used those graduates’ input to create products for the black university market, resulting in an $8 million-to-$10 million deal. (Since then, the CDO has created several additional development groups that combine employees of different ethnicities and religions—and he is expecting to double revenues next year.) CDOs may have been hired to limit liabilities in the past. But now, deployed correctly, they can also expand horizons. The business case for diversity is finally becoming clear: With dedicated, informed leadership, diversity becomes the tinder to ignite innovation.

Masters of the Multicultural

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