Harvard Business School’s Institute for Business in Global Society (BiGS) recently invited Sarah Kaplan, a professor at the University of Toronto’s Rotman School of Management, to speak to the school’s faculty and fellows. Kaplan is the founding director of the Institute for Gender and the Economy. She is co-author of the bestselling book Creative Destruction as well as Survive and Thrive: Winning Against Strategic Threats to Your Business. Her latest book is The 360° Corporation: From Stakeholder Trade-offs to Transformation. We caught up with her on campus to discuss how today’s executives can address gender diversity and other societal issues. This transcript has been edited for length and style.
—Barbara DeLollis
Editor-in-Chief, The BiGS Fix
Q. Please give us an overview of your latest research.
A. There has been a lot of conversation in the United States, in Canada, and globally, around increasing the diversity in organizations, in particular corporate boards. One of the things I've been interested in is understanding how we can help move the needle. What are the systems, procedures, policies, regulations and laws that might actually help increase diversity?
One study that I'm doing right now is looking at a regulation in Canada that required firms to disclose whether they have women on their board, how many and what practices they had in place. My question was, do these disclosure regulations actually help?
What we found is that for companies that are large and visible, covered by analysts and the media, those firms are already well on their way to moving toward greater representation. But slightly smaller firms, firms that are outside the media spotlight, are able to use their disclosures to hide their sometimes poor performance. And in doing so, they actually are prohibiting themselves from moving forward.
Q. What can business leaders take away from this?
A. There is so much research to suggest that you have better governance, better decision making, better ability to represent the communities that you serve if you have a diverse board. Any company that is not moving toward better representation is going to find themselves behind – not just in terms of pressure from stakeholders but also in terms of the products and services they offer. Every firm should be thinking about how they can improve the diversity of the people who are making critical decisions.
Q. Why are these findings particularly timely now?
A. Many stakeholders, whether it's regulators, whether it's consumers, whether it's investors, are becoming frustrated that firms haven't moved faster. So, it's really relevant now because I think that firms are going to see increased pressure from all those … who want to see better representation. People have realized that the soft-touch approaches have not been powerful enough to move the needle, and there are going to have to be stronger measures. If firms want to avoid being subject to those stronger measures, they better move forward themselves.
Q. Does that apply to other societal issues as well, such as climate change?
A. These are challenging problems that lead to many kinds of tradeoffs. What I try to advocate … is that these are really innovation opportunities. If companies thought about it that way, I think they could come up with something really interesting.
Q. You’ve been researching tradeoffs for years. Do you think executives understand what that means and how to manage them?
A. One of the reasons we don't make progress on these issues is that you end up facing tradeoffs, but people aren't explicit about it. They don't understand it. They don't map it out.
So, they might say, ‘we want more diversity on the team.’ But to actually do that, they’re going to have to search harder. They’re going to have to look into communities they don't normally look into. They’re going to have to invest more in recruiting. They’re going to have to invest more in team building. That feels really expensive; therefore, they’re not going to do it. That's a tradeoff, but no one says that explicitly or maps it out.
If we look at that tradeoff closely, we can actually come up with different ideas. Research shows that you often get the most innovative ideas when you have the most constraints. And so, mapping those constraints out and thinking about what those tradeoffs are is a first step to innovation.
Q. What would you tell a CEO or founder who wants to take action but doesn’t know where to begin?
A. The first step is to be thoughtful and explicit about what those tradeoffs are, because I think many organizations skip over that.
The second thing is to think about whether there is any low-hanging fruit, easy things that we can do. Every organization should just pluck that fruit, and that will make a huge difference.
The third thing that organizations can do is really think about whether there is a way to innovate. We have all these great product and service innovation teams but when it comes to the environment or diversity, we suddenly don't use all those talents and skills.
The fourth thing is not giving up when it's hard. If you can't do anything, at least marinate in it. At least try some experiments. At least try to do something that could eventually lead you to that innovation.
Q. Can you give us an example?
A. One of the ideas that we had when it comes to diversity is to think about it as an innovation challenge—not just how we do talent management but how we go to market. One example that I give is a small company in Canada that sells uniforms to schools and for construction and other things like that.
The new CEO comes in for a turnaround and decides to apply a gender lens. She analyzed everything about how they went to market and their products … and she discovered a number of things that were really important.
[For example,] school uniforms were always sold with the hems undone because they figured the mother would hem the pants or the skirt. One of the things she discovered was that no one has time for that anymore, so they innovated by creating a hem tape that would allow families to quickly fix the clothes. That led her to win many more contracts.
She also looked at uniforms they were selling for bus drivers and discovered they weren't selling sizes for women… She said the first time a woman bus driver tried on a uniform that fit her, she cried because it was so powerful—and again, it led to winning more contracts.
The company was supposed to take four years to turn around. She did it in two because she applied this lens in ways that allowed her to innovate.
A. Gender Analytics is a system for designing products and services in a more inclusive way. It involves doing more analysis and [gaining] a deep understanding of your marketplace, including qualitative and quantitative data and engaging deeply with the community … to offer products and services that encompass insights from a much more diverse set of customers.
It's flipping the script on a challenge.
We always thought of diversity as this thing that we have to do on the talent side. Let's flip the script and think about what it means for going to market. We could do the same thing with environmental issues. We could do the same thing with global warming… There are so many exciting opportunities that organizations could have if they would just flip the script more often.