Birds of a feather lose money together
When a colleague of mine was visiting from China (he is Indian and has lived all over the world), we were discussing the merits of living in New Zealand.
His comment was that it is a great place to visit but by bringing up our children here, we would be doing them a disservice as we are “bringing them up in a bubble that does not prepare them for the real world.”
I have thought about his comment a lot and would argue quite the contrary (which I did at the time), that in fact the New Zealand upbringing allows our children to be children for longer. It also allows for greater creativity and independence because of the freedom they have to play and explore unsupervised.
The success of many New Zealanders off-shore demonstrates that our upbringing does set us up for the global stage – at least I think it does.
My colleague’s perspective took me by surprise as I have never heard anyone argue the downside of the ‘great New Zealand childhood’. But then, I have only ever discussed this topic with people bringing up their children in New Zealand, or wanting to.
It got me thinking about how easy it is for us in our everyday environments to be confident of the rightness of our assumptions because we surround ourselves with people who think the same way.
There has been much focus on increasing the diversity of New Zealand company executive and governance teams, yet most people narrowly view that as a gender equity focus – getting more females into leadership and board positions.
I would argue that gender equity is a minor step (and the easiest step) in achieving true diversity of thinking, which is what we really require from our companies if we are to expect global success.
When our main export market was the United Kingdom, perhaps we could get away with our white middle-class male model of company leadership. However, times have changed and with the growth and opportunities in Asian and South American markets, it is time to shake the tree a bit harder.
What we need are leadership teams of different ethnicities, ages, genders, and industry backgrounds.
In a recent article by Carmen Nobel that is based on the study “The Cost of Friendship” by Paul Gompers, Yuhai Xuan, and Vladimir Mukharlyamov, she attributed failed ventures to factors such as group-think and one venture capitalist guilt-tripping another into making a bad deal – doing a favour for a friend.
The study showed that the probability of a venture’s success decreased by 17% if the two co-investors had previously worked at the same company – even if they did not work there at the same time. If investors attended the same undergraduate school, the success rate dropped by 19%. And overall, investors who were members of the same ethnicity were 20% less successful than investors with different ethnic backgrounds.
Communication, decision-making, and general logistics are all easier in practice when we work with a less diverse team (and we humans will always look for the easiest way!).
Finding executives with international business experience and different cultural backgrounds sounds a bit hard, but with increasing global connectivity and the support of organisations like New Zealand Trade and Enterprise, it is easier than it has ever been.
On top of that, it is now relatively simple to have international businesspeople – who are predominantly based off-shore – ‘video-in’ to board or senior executive team meetings. I have discussed this with people on some of our major export boards, who use the excuse that, “it’s just not the same”, my answer: does it need to be the same?
There is really no excuse for mono-cultural executive and board teams anymore. We have to work hard to create a diverse thinking business environment and be open to having our long-term thinking challenged.
I will argue black and blue that New Zealand is a great place to bring up my children, but having that belief challenged has been good for me as I now more determinedly expose my children to other cultures and ways of thinking.
In business, friendship and collegiality could be more expensive than we think. If we truly want to innovate and grow, diversity of thought in our leadership and governance teams is vital.