Companies today stand on a precipice. They need to become faster, more adaptable, and far better at innovation — or risk obsolescence. The key to this shift is transitioning from the traditional organizational structure, that of divisions and departments that result in silos, to a new model of fast-moving, diverse and inclusive teams that can rapidly uncover new, innovative pathways for growth. Diversity and inclusion are imperative to the success of these teams and in fact, the driver of their innovative capacity. This talk is about how to be a leader within this team-based revolution.
Frans Johansson is the CEO of The Medici Group, author of the global innovations bestsellers The Medici Effect and The Click Moment and one of the most revered speakers in the world on how diversity drives innovation. He has created a revolutionary platform for driving organizational speed and innovative capacity by using diversity and inclusion, and by breaking down silos throughout the enterprise. Watch his keynote with an introduction by Michael Matthews, SVP, Human Resources at Synchrony.
- Learn why the most powerful intersection in the world today is between innovation & strategy and diversity & inclusion - and what this means for you.
- Learn how diverse and inclusive teams can and will play a critical role in navigating a fast-moving world and will be the source of the next generation of game-changing ideas.
- Get inspired on how you can further accelerate your organization’s journey and your leadership mindset to reach the next level on the innovation curve.
Michael Matthews: Good afternoon. It's an honor and a privilege to introduce a great friend and partner to Synchrony, our keynote speaker, Frans Johansson. Synchrony was fortunate enough to work with Frans and the organization he founded, The Medici Group, to help guide our senior leaders in developing new business initiatives. Synchrony embarked on a multiyear process with Medici to accelerate our company's culture of innovation and to develop new initiatives that were incorporated into our company's vision and strategy.
In the words of our CEO, Margaret King, the Medici program enabled our leaders to develop breakthrough GrowCo opportunities and to transform the way we think about innovation. Through our work with Medici we now embrace bold new ideas, we execute with speed, and we take more chances. It's this type of smart risk taking that will sustain Synchrony's growth for years to come. The Medici approach has provided our leaders with the tools and the mindset that will drive our company's longterm prosperity and has taught us today how to become tomorrow's innovators.
Frans Johansson is the founder and the CEO of Medici Group where he advises executive leadership from the world's largest companies, including 30% of the fortune 100 as well as some startups, venture capital firms, government agencies, and universities. He's also the author of two books, the Medici effect and The Click Moment and the host of a podcast centered around diversity as the key driver of innovation. So without further ado please join me in welcoming Frans Johansson, our keynote speaker.
Frans Johansson: Good evening.
Audience: Good evening.
Frans Johansson: I am honored to be closing out this amazing first day at this Great Place To Work For All summit, and I am going to talk about innovation, what it is that drives innovation. And by the way, the message is going to be clear. Diversity and inclusion drives innovation. If you haven't sort of gotten that after these 30 minutes, come visit us at booth nine and I'll share some more around it. So that's the setup. The first half of this is going to talk about what innovation is challenging, the other half, why diversity and inclusion helps us solve those challenges.
But before I do any of that, I thought I should take maybe 75 seconds, maybe 90, to tell a bit about myself, where I come from. Why I'm even interested in this topic. Does that make sense to you? Yes?
Frans Johansson: All right. Then I'll do that. The is a question, where I come from, is my parents. So you need to know something about my parents. Ta da. Is there a clicker? Oh, that's connected. Let me see, if I do this it doesn't really work. Is there another clicker? Should I? Yeah. There is. Thank you. Yeah, that's good. Let's see first though. Okay. So, oh yeah.
My mother is Black and Cherokee. My Dad is Swedish and they met in Germany, obviously. It's where people like that meet. But I was born and raised ... oh, and here they are, actually, along with their parents. But I was born and raised in Sweden, which is located here. Now, something about Sweden [inaudible 00:03:43] time I grew up in this country. Okay, Sweden consists essentially of two groups of people. One group was blonde, blue eyed, and quite reserved. The other group was me, basically. I'm kidding. I'm kidding. That was me and my sister.
So here's my one of my favorite hobbies, fishing. The other was writing. I went to college, Brown University. I studied environmental science for the following reasons. When I did that I saw something interesting, lots of different scientific researchers at this campus, but I never really felt able to pull together the purpose of the research and I wanted them to do that so I created Science magazine with that intent. It's celebrating its 24th anniversary this year. Then I started a healthcare company based on my aunt's research at Johns Hopkins. She was the first black female tenured professor at Johns Hopkins, actually. After that I went to business school at Harvard, started a software company, which did great until it didn't.
Then something happened. I started seeing that there was a ... there's something missing. I started seeing that there was a pattern in life that I had spotted. Well, that was different. You see, when I grew up in Sweden life wasn't necessarily always easy growing up different, but what started noticing at that point was that this difference could actually be positive. I'd seen patterns where if you're able to actually use this difference to, well, to create new ideas, you actually could be better off through this difference. That made me come up with this idea of the intersection, that if you could step into the intersection of different cultures, sort of different industries, sort of different fields, you have a better chance of breaking new ground. I decided to write a book about this. I went to an island off the coast of Sweden then I moved to New York and I was literally down to the last $2.45 where things started changing.
The book came out, it's now translated into 21 languages. I have another book called The Click Moment. I'm going to talk both of them today, enabled me to start The Medici Group. Our vision is a world where we use our differences to change it. We operate in what I consider the most amazing and powerful intersection in the world today. The one between innovation and strategy and diversity and inclusion. We've been able to take companies on this journey. In the middle of this, I got married, moved to Brooklyn. Now I have a daughter, actually have two. Now I'm here with you. [inaudible 00:06:16] this is the story up [inaudible 00:06:16] this, and the point in time.
Thank you. So, I'm sometimes asked a question by a sort of would be entrepreneur seeking escape from life up in huge corporate structures. How do I build a small firm for myself? And according to me the answer seems obvious, because all you really need to do is buy a very large one and wait. You're going to have a small one soon enough.
The world is moving. It's moving fast, and it's challenging. If there's one question I get from CEOs today that is different ... I mean, so 5 or 10 years ago they would ask about what is the strategy we should do or what is the new killer product? But here's the question they're kind of asking right now, is the world outside of our organization changing faster than we are? Because if that is true, then ultimately we're doomed. So the question gets to: how can we actually change faster? This then is followed with another question. Why is innovation so challenging? We've been focusing on, we've been trying to do this. Why is innovation is so challenging? Because that is seen as the answer to help the organization move faster.
So I want to address this first question. Why is innovation so challenging? In my opinion, there's lots of reasons why. I mean, could spend hours just talking about that, but I'm going to hone in on what I consider the most important reason, which is that we tend to rely on expertise and logic in trying to reach success.
Now you look at this and go, "Yeah, obviously. What else are you supposed to rely upon?" Like incompetence and not logic, that doesn't even make sense. So let's unpack this for a second. I mean, what happens if you believe that you can use logic and sort of a rational analysis to figure out what your next best move is going to be if that is your competitive advantage. Well, if you believe that then you have to believe that your competitors do not have access to logic. Right? I mean, if this is your edge, but they do. And then we end up having things like this happening.
Imagine for a moment that you work for a car company, I'm going to pick one completely random. Let's say Volvo. Now, this is by the way an example for Youngme Moon, a professor at Harvard Business School, but it perfectly illustrates the point I want to make. Now, let's say that you valued cars along five dimensions and I'll read it out for those of you in the back that might not be able to see. Reliability, size, safety, design, and miles per gallon.
Let's say you have a direct competitor, let's call it Audi. Now look, three of these dimensions you're more or less the same, but on the two of them there are major differences, you are crushing it when it comes to safety, but not so much when it comes to design, and Audi is the reverse. If I will now ask you, what should you improve? The answer is staring at it from the screen. 'Cause if you can just improve this design, well then you'll crush Audi, except Audi's thinking the same way. So what do they improve?
Frans Johansson: Yes. And now something interesting starts to happen. If you use logic to set yourself apart, it simply means you're going to end up in the same place everybody else is because this is the logical place to be. Okay.
Well, what about expertise? I said something about expertise. We know for a fact that expertise is critical for our success. Many of you are sitting where you are, have been successful in your careers because expertise, and we can see it all around us. So there's something to it. This is Serena Williams, one of the most formidable tennis players who's ever lived and she's a perfect example of this, of sort of how important expertise is for success. She's an example of a rule that got popularized a couple of years ago called the 10000 hour rule. I mean, how many of you here have heard of the 10000 hour rule? Yes. It's a number of you.
Basically what this rule says is something like this. If you want to become the best in the world at something then you have to practice for 10000 hours or more at that thing. The reason that rule works is because 10000 hours is a lot hours, basically. That's what it says, it says that her success is less a matter of some sort of natural born talent and a direct function of dedicated focused practice. And you know what? In her case, without a doubt she can barely remember having lived a single day of her life without having played or practice tennis. It's just amazing what she's been able to accomplish and is still accomplishing.
This rule has been used to describe success more broadly, but does really hold up? I mean, how many hours of practice do you think Reed Hastings in video rentals before he started Netflix? He'd rented a couple of movies. He didn't like the experience, so starts Netflix. Or, take Richard Branson. Richard Branson starts Virgin Records and then he does the next logical thing, Virgin Airlines. How many hours of practice did he get running an airline? He started with a lawyer, but what's going on? Why is it that for Serena expertise perfectly explains her success but for in other situations it doesn't seem to be enough?
The reason why is because with Serena Williams the rules of the game never changes. These are the measurements of a tennis court and they stay this way for like 100 years. And if the rules change, the rules are sort of very slight and it will telegraphed. They used to be, for instance, that if you want it to serve a ball in tennis you need to keep one foot on the ground. They changed that rule in the 60s so you can now jump and serve. Wow. How can anybody keep up in this fast moving world of tennis where the rules keep changing all the time? Look, Serena knows exactly what she needs to do to win. She just has to do better than everybody else, but how does it work if the rules are not locked down?
Nokia used to be the Serena Williams of the mobile phone world and they knew the rules of the mobile phone world completely. You know, in 2007 they had the three times larger market share than any other competitors. At that time phones were supposed to have cool colors, well, cool colors, cool shapes, and cool ringtones and then none of it mattered, right? All the phones were black or rectangular and ringtones, nobody cared about those anymore. It was all about apps, and of course this is set up of what phones look at today. If the rules of the game can change then your ability to understand exactly what you need to do next drops. It's a very necessary relationship. This is why innovation is so hard. I mean, if you could just use logic, if you could just use expertise, you would never have any trouble innovating.
The problem with innovation, the challenge around it is that it's not enough. Well, wait a minute. You might say, but maybe Nokia were just idiots. They couldn't see the trends that we're coming. Right? Here's a quote by an Nokia executive. It was a very insightful quote. "We missed big trends," basically. It's from the former CEO of Nokia. But how easy was it to spot the trends? I mean, honestly, today's it's obvious. The iPhone came out and then the Android and so on. But what do people say about the iPhone when it actually came out? Right? I mean, was it an obvious success?
Here's what they said at CNet, which was just the leading tech site at the time, "Apple is slated to come out with a new phone and it will largely fail." So that was wrong. Okay. Here's Bloomberg, "Apple is unlikely to make much of an impact on this market." Here's Ed Corrigan. He used to be the CEO of Palm. We've learned and struggled for a few years here figuring out how to make a decent phone, PC guys are not just going to figure this out. They're not just gonna walk in."
I'm not out to make fun of these people. I point at simply this. They knew more about mobile phones than anybody else on the planet. So if they couldn't figure out what the next logical move was supposed to be who is supposed to do it? I mean, who do you turn to? It's not obvious. The truth is that it's the unexpected that makes us stand apart. The unexpected means we hit upon something that was not obvious, that we hit upon something that was not, that you couldn't just arrive at with even deep expertise, and over and over again we find that this is the case.
There were any number of people in Silicon Valley that was slamming heads against the wall when YouTube came out. I mean, are you kidding me? You upload a video and then you watched the video. That's the idea? Why didn't I think of that? Except even the founders of YouTube didn't think of YouTube. YouTube as a dating site. The idea was you upload the video of yourself and then people vote whether or not they want to date you. That's an awful idea, but then they had an insight. Happened at a dinner and he said, "Wait a minute. We're filming these dinners but there's [inaudible 00:15:57] easily share their movie." They realize that YouTube could do that. That became youtube. Of course, they got acquired by Google a couple of years later and everything is history after that.
Now, if you're feeling uneasy about this, this might be the reason. Because if innovation is so unexpected how do we ever set ourselves up for success? I mean, if we can't really use expertise as our guide, and if you can't use logic or rational analysis guide, what else is there? This is what is the else: diversity and inclusion drives innovation. This is the core of understanding how to create an innovative environment, how to create an innovative company, had to create an innovative team.
So I want to unpack this piece. No matter how complicated your innovation model might be, and there's hundreds of them out there, they all have at least these three components. You have to come up with ideas, you have to select some ideas, and you have to make those ideas happen. That sort of goes in a circle, right? This is the most basic innovation model you can create, and at the center of it is diversity and inclusion. This is essentially Medici's innovation model, and it drives every single thing that we do with our clients internally for ourselves.
What I want to do now is I want to show you why it is that diversion and inclusion drives innovation in this way. I'm going to walk you through the cycle and first we're going to, I'm going to focus on diversity first and I'm going to get to inclusion after that. So are you ready? This is will be on for the next six minutes or so. Are you ready?
Frans Johansson: All right, let's go.
So, when you talk about generating ideas the key of it is to understand that diverse teams come up with better ideas. Now, we've seen this play out all over the world. We worked with over 4000 teams at this point all over the world, same story over and over again. The more diverse the team is the better shot they have it coming up with better ideas. Let me give an example of how this plays out.
So we have a team at a hospital in Cambridge, they have a challenge. They're trying to take a patient from the surgical units through the intensive care unit, but you have two hospital teams now solving for this patient, which means you can have confusion, lack of collaboration, and that means you have errors, that means that you have flaws, that means that some of those flaws are fatal.
So now the hospital is trying to solve this problem. What is the obvious thing for them to do? It is to actually look at how other hospitals solves the problem. What are best practices? But they didn't. Instead this team, this team [inaudible 00:18:36] to understand what happens at a pitstop crew in a Formula 1 car race. When they looked at it that way, they realized the [inaudible 00:18:42] connections that we can make. If we can borrow concepts then we can improve what we're doing in the hospital and hence we can drop our error rate.
These type of intersections are the core to understanding why innovation is so powerful. If what you're combining is closely related or obvious the likelihood of this idea of being innovative drops. This is actually what I called the Medici effect. The Medici family sponsored creative people, Leonardo Divinci, Michelangelo, Architects, sculptures, philosophers from all of Europe, even as far as from China. They brought them to Florence, and we're able through that to unleash an explosion of absolutely amazing ideas. What I sorta call one of the most creative eras in the history of the renaissance. The question is, how can you create this type of renaissance in your own company?
Now, you create these ideas, but they have to select them. Again, diverse teams select better ideas. Now, we've seen this over and over again empirically through the client work that we've done, but it's nice when occasionally something happens, which means that you can actually measure it. There's a company here in Silicon Valley called Cloverpop. What they do is they ... this is a decision making software. They take teams and they enable them to sort of make decisions better. But this software goes back through a team after two weeks, after four weeks and asks the team, did you make the right decision?
Here's what they found. Because there's a certain profile of those teams that are better at making better decisions. It turns out that all male teams make better decisions about 58% of the time, but if this team had gender diversity, it became 73% of the time. If they had age and gender diversity, 80% of the time. If that age, gender, geographic diversity 87% of the time. And what we know is that the more dimensions of diversity you can add on, the better shot at this of actually selecting a better idea.
This brings me to executing ideas. Diverse teams execute faster and they use fewer resources to do it. This is counterintuitive because we often believe that homogeneous teams execute faster, which is true if the idea is innovative. If the idea is innovative you're looking at something else. You're looking at being able to leverage the whole company's resources on a tight budget. Somebody internal network, the IOUs, they have favorites, they own people inside of an enterprise. That is what drives action. If that network that you have is diverse, your surface area in front of the company explodes and we've been able to see that as well. At Disney world we worked with them for over a year for one of the parks to help them better break down the silos between the different teams and they were able to move the time it takes to go from idea to execution for 40 weeks to six weeks. This basically creates innovation cycle.
This is why diversity and inclusion drives innovation, and understanding that becomes core to understanding why all of this work makes sense. Now, this is a problem for us though, because the power of diversity challenges our notion of expertise and experience. How many of you have been in a conversation that goes something like this? Diversity is great, totally, but we're still going after the most qualified person, right? So if so I'm like, I'm just, I'm, I like diversity, but like ... How many have you been in a conversation that goes something like that? We have to, this is something that becomes critical.
I mean, what I'm saying is the diversity is actually a driver of innovation. So how do we connect that or how do we square that of how we think about expertise and experience. So imagine that you have, you want to add somebody to your team. You have two people to choose from, one is Peter right here and the other is Louise. Now, the surface area of this sort of bubble on this image represent their sort of combined experience and expertise. In this case, Peter has a bigger bubble than Louise. So this should be a pretty much a no brainer. You should go for Peter. He's much more experienced. When you make selections based on an individual, maybe that's the conclusion you would draw. But that individual actually is going to join a team when they join a company, so it's important to actually look at the team itself, and here's the team that this person will be joining.
We've got George, okay. We got Nina, we got Anders, he's really experienced. Like the bubble doesn't even fit in the slide. We got Juan and we got Bill. Now, if you map this out on his square, it looks something like this. We've got George there, we got Anders looking super experienced. We got Nina, we got Juan, we got Bill, and we got Peter. Here we got Louise. Who adds more to this team? You can say it. Louise, right? Yeah. Louise adds more to this team.
This suggests that in an era where innovation is becoming the key driver, not just of sort of creating new ideas but of growth, we have to rethink even how we think about recruiting or how we think about who joins the team. Diversity itself becomes a value. Diversity itself trumps our traditional way of looking at ability. In fact, I bet you that if you asked this group of people, what's the size of this [inaudible 00:24:57]? They would say it's like this. Yeah. We're freaking good. They wouldn't even know that actually there's a whole other place that could go. In fact, it requires Louise to do that.
Now, this brings me to inclusion, because without inclusion diversity becomes meaningless. Let me just say a word about this, because you know this, so there's a lot of talk about inclusion of course. Somebody here in the audience came up to me when I was on the floor earlier today and said, "You know, I hope that this conversation around diversity inclusion with all this emphasis on inclusion doesn't really, like, let's not forget about the diversity piece." And I said, "You know what? Companies are really good at inclusion. I mean, as long as we talking about, you know, people who are like yourself." Like the reason inclusion is an issue is because we're talking about inclusion of diverse teams.
I mean, companies are excellent at having inclusion of homogeneous teams. Happens all the time. It is only in context of diversity that this inclusion becomes a key driver, and we think of inclusion as activating diversity. So diversity in a team gives you the potential of that team could do. But inclusion is how you think about activating what happens.
Here it is worthwhile for us to revisit this graph again. I want to go back to this graph, because if you look at this image it's not a stable situation. This is not going to persist. And why is that? Because if you look at this group of George and Nina and Bill and Anderson and Juan, they're looking at Louise and they're see somebody that they can comfortably ignore. I mean, they might give lip service. "Oh, that's a great idea. Thank you." But Louise, Louise also faces a challenge, because Louise is ambitious and Louise wants to perform, and she realizes what's going on, and now she starts to shed every single bit about herself that is different. "What can I do to become part of this?"
And every single piece that she could bring to the team becomes either suppressed, she leaves outside of work, that recognition of this means that we're trying to solve it. Then there are solutions, right? So for instance, this group here to the left, maybe there's a way they can change their behavior towards Louise or maybe Louise herself can be coached on behaving differently, and those things matter. But there's one method. There is one approach that is more powerful than all of those, and it is this: adding one other person on this team that is different, and maybe not even different in the same way the Louisa is different, the entire dynamic changes. This group becomes much less able or willing to ignore both Louise and Gita, and Louise and Gita themselves are able to much more strongly defend who they are.
This is basically the core of understanding that's how to drive inclusion. It's about behaviors, but it's also about pure numbers. Research shows that actually going from one person who is different on a team to two makes a huge real difference, and this is how we understand the rise are diverse and inclusive teams today. It comes from this dynamic. You're about to see and complete unleash [inaudible 00:29:07] of diverse and inclusive teams within your companies, outside of them, and they become your core innovation engine.
Now question then, how ready is your organization to drive innovation in this way? That might be the question you're asking, and we have a way of thinking about that. Essentially we look at a five point scale when we look at an organization and we say, where are you on what we call a diversity leadership index? Now, the first level of that index is irrelevant. There are companies still that are in that ... none of them are here, but trust me, they're out there. But okay, fine. Let's move up on the scale.
The next one is compliance, right? So it is clearly against the law, doesn't prevent everybody, but so we got, we don't want to follow the law. So that's where that comes in. Now the third level gets interesting. So this is the right thing to do. When it's the right thing to do, really have to work hard at doing it. At this point, diversity initiatives, as far as we can tell, are put essentially on a parallel track of the other key strategic initiatives of a corporation. You can sort of see, it's like, well, how does this link in with your recent way of thinking about expansion into particular marketplace or a particular M&A strategy. And it's like, "Well, actually, we're not talking to each other."
I guess it's your fourth level, which is that it's market driven. This is the recognition, right? That the world itself is becoming more diverse, hence we have to become more diverse. It's this idea that the market itself is changing and we have to reflect it. Then we get to the fifth level. That's what I call strategic advantage. That basically suggests that no matter what issue you're solving, markets facing or not, because this fourth level, the market driven one, this is one that consumer facing companies tend to sort of see much quicker than B-to-B companies. B-to-B companies have to sort of go through one extra iteration to get there.
But this last level, the strategic advantage, this means that no matter what issue you solving, no matter what opportunity you're pursuing, you're better off using a diverse team to go after it. Supply chain, procurement, marketing, strategy, hiring, and it's become obvious to us the D&I is a completely untapped source of competitive advantage. This is the competitive advantage. It's not logic. Even expertise is becoming much easier to get ahold of today.
Are those organizations able to figure this out on a different place. I worked with ESPN, the digital and print unit to actually help them think through this. They've had their own challenges around diversity, but particularly for the digital unit. We sort of created an engagement, it's called diversity drives innovation, and through it ... We looked at this on a global lens. At the time we started with them they had one international website and within two years they'd moved that up to 12, and each one of those international websites were created by a mix of people that understood the local business, in Argentina for instance, but then they added other types of diversity to it, and the leader of this, understanding the value of diversity inclusion, was able to completely change his leadership team and increased the diversity of it through a variety of ways that had impacts.
They appointed the first female editor and chief for Sports magazine, which was the ESPN magazine, and through their sort of high profile body issue, they completely changed who was in that. They had the first transgender athlete, for instance, a couple of years ago when this played out. Over those two years they were able to expand the global and diverse fan base and grew monthly unique visitors by between 50% to 60%, making it sort of the largest media website really on the planet. Here's what's interesting about this. It's a race right now, because when you're recruiting diverse talent, you have an easier time recruiting diversity if you have diversity, which means that if you're behind in this game you better start moving, because I have options and people have options and they're more than likely to go to environments that are really, well, seemingly more welcome than others, which sets up my final point here.
These intersections are powerful for change. They drive change, they drive innovation, and the truth is that the future lies at intersection. So I would suggest that you find your way there. This is a picture of my parents on their wedding day and they explored this intersection. My mom would always say that life is an adventure here. Life is exciting here, and this is what I believe. I believe that at these intersections, this is where we can break new ground. It becomes exciting. This is [inaudible 00:34:32], traditional Muslim woman that moved to Australia, to Sydney, Bondi Beach right outside of Sydney, and she saw that if I can connect that culture with my culture maybe I can change the world. This is the Burkini, high performance materials Burka that spread around the world. The company grew by leaps and bounds. The last year Nike basically released their hijab line.
Companies that think this way change how they think about the market. Change how they think about the products. They are able to see opportunities that others perhaps can't. [inaudible 00:35:03], a driver of helping IBM navigate trade navigation for the Internet, and she's visually impaired. She can't see. Or combining the idea of origami with a space rocket and understanding that when you do that, you can create satellites that have tightly packed solar panels, that through those solar panels we can go and pursue the stars.
Now, the fact is that it's not just about technology. It is about people. It's about a great idea. It's about the team that comes up with this idea. It's about a great team. It's about a great company. It's about a great place. It's about a great place to work. We've got a great place to live. Thank you very much.