Sara Sanford - Inclusion, Inc.

In 2012, a research scientist named John Coates, who formerly ran a derivatives trading desk, wanted to follow up on this theory. He found that male traders were significantly influenced by something called the Winners Effect—when men are “winning,” their testosterone levels spike, increasing their appetite for risk and willingness to take chances, even if the odds say not to. When they are losing, their testosterone levels are reduced and they become more risk-averse, even if the odds say they should bet.

Women, on the other hand, appear to be largely immune from this Winners Effect.

Coates wondered if greater gender diversity could help prevent booms and busts, and played it out in experimental market simulations. The answer to the hypothesis was a resounding “yes.” Simulations with exclusively male or exclusively female traders revealed substantially larger speculative bubbles in all-male than in all-female markets. In some cases, all-female markets even produced negative bubbles with prices below fundamental value.

A follow-up experiment showed that evenly mixed gender markets fell somewhere in between, where healthy markets thrive. Balancing the genders and risk-taking tendencies of a group could help prevent another 2008.

“I don't know how the world's going to progress.”

When I think back to my first conversation with Sanaika, the challenge in those words still resonates.

Inclusion-minded businesses are rising to meet the challenge by showing us that progress is possible. An analysis of the S&P Composite 1500 found that companies that embrace gender-balanced leadership teams have been evaluated as more innovative, and the returns on their innovations outpace those of their less gender-balanced competitors. Scientific American has published research demonstrating that racial diversity delivers similar benefits. 25 Another study from North Carolina State University found that firms that have embraced pro-DEI policies are producing more products and registering more patents per year than firms that haven't implemented inclusion-minded practices. 26

As some business leaders have experienced, though, a diverse workplace alone does not automatically yield these benefits. In his book, Rebel Ideas: The Power of Diverse Thinking , Matthew Syed notes that diversity can actually lead to greater conflict, friction, and stagnation. 27 Leaders are often disappointed when they put in the work to build diverse teams, wait for collective intelligence to “happen,” and instead see groupthink or tokenism persist.

This doesn't mean that diversity isn't worth pursuing. It just means that diversity is the first step.

Billy Beane didn't recruit undervalued players and let them sit on the bench. Coates's experiment didn't include female traders but deny them access to high-value accounts. The businesses that benefit from diversity take steps to ensure that voices like Sanaika's aren't just in the room—they're included.

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These companies have gone beyond diversity to inclusion by embracing one key perspective shift: They've ditched outdated approaches to DEI, and instead, they've adjusted their cultural levers . In the next chapter, we'll start to explore the promise of this design-based approach.

1 1.“Women in the Workforce: United States (Quick Take),” Catalyst, October 14, 2020, https://www.catalyst.org/research/women-in-the-workforce-united-states/.

2 2.William H. Frey, “The Millennial Generation: A Demographic Bridge to America's Diverse Future” (Brookings, January, 2018), https://www.brookings.edu/wp-content/uploads/2018/01/2018-jan_brookings-metro_millennials-a-demographic-bridge-to-americas-diverse-future.pdf.

3 3.“Older People Projected to Outnumber Children for First Time in U.S. History,” US Census Bureau, March 13, 2018, release no. CB18-41, https://www.census.gov/newsroom/press-releases/2018/cb18-41-population-projections.html.

4 4.“Understanding Neurodiversity at Work,” Headstart, September 25, 2020, https://www.headstart.io/insights/neurodiversity-at-work-and-its-untapped-commercial-potential/.

5 5.Bailey Reiners, “The Cold, Hard Truth About Ageism in the Workplace,” Built In, May 12, 2021, https://builtin.com/diversity-inclusion/ageism-in-the-workplace.

6 6.Lynn Friss Feinberg, “The Dual Pressures of Family Caregiving and Employment: Six in 10 Family Caregivers Are in the Labor Force” (AARP Public Policy Institute, 2016), https://www.aarp.org/content/dam/aarp/ppi/2016-03/The-Dual-Pressures-off-Family-Caregiving-and-Employment.pdf.

7 7.Jeffrey M. Jones, “LGBT Identification Rises to 5.6% in Latest U.S. Estimate,” Gallup, February 24, 2021, https://news.gallup.com/poll/329708/lgbt-identification-rises-latest-estimate.aspx.

8 8.“What Workforce Diversity Means for Gen Z,” Monster, 2020, https://hiring.monster.com/employer-resources/recruiting-strategies/workforce-planning/workforce-diversity-for-millennials/.

9 9.“2017 Cone Communications CSR Study” (Cone Communications, 2017), https://www.conecomm.com/2017-cone-communications-csr-study-pdf.

10 10.“In an Increasingly Diverse Market, Brands Can Drive Growth With Multicultural Marketing,” Living Word Insights, December 4, 2020, https://livingword.co.uk/in-an-increasingly-diverse-market-brands-can-drive-growth-with-multicultural-marketing/.

11 11.Katia Savchuk, “Do Investors Really Care About Gender Diversity?” Stanford Business Insights, September 17, 2019, https://www.gsb.stanford.edu/insights/do-investors-really-care-about-gender-diversity.

12 12.“Tesla Exempt Solicitation,” Tesla, Inc., June 17, 2020, https://www.sec.gov/Archives/edgar/data/1318605/000121465920005699/p612202px14a6g.htm.

13 13.Greg Iacurci, “Money Invested in ESG Funds More Than Doubles in a Year,” CNBC, February 11, 2021, https://www.cnbc.com/2021/02/11/sustainable-investment-funds-more-than-doubled-in-2020-.html.

14 14.Sheryl Estrada, “‘Just Going Through the Motions’: Employers Fail to Make DEI a Business Function, Report Finds,” HR Dive, February 18, 2021, https://www.hrdive.com/news/just-going-through-the-motions-employers-fail-to-make-dei-a-business-fun/595293/.

15 15.“How Much Does It Cost to Defend an Employment Lawsuit?” Workforce.com, May 14, 2013, https://www.workforce.com/news/how-much-does-it-cost-to-defend-an-employment-lawsuit.

16 16.Reiners, “The Cold, Hard Truth.”

17 17.Allison Scott, Freada Kapor Klein, and Uriridiakoghene Onovakpuri, “Tech Leavers Study” (Kapor Center for Social Impact, 2017), https://mk0kaporcenter5ld71a.kinstacdn.com/wp-content/uploads/2017/08/TechLeavers2017.pdf.

18 18.Steve Henn, “When Women Stopped Coding,” NPR, Planet Money, October 21, 2014, https://www.npr.org/sections/money/2014/10/21/357629765/when-women-stopped-coding.

19 19.J. Terrell, A. Kofink, J. Middleton, C. Rainear, E. Murphy-Hill, C. Parnin, and J. Stallings, “Gender Differences and Bias in Open Source: Pull Request Acceptance of Women Versus Men,” PeerJ Preprints 4 (February 2016), https://peerj.com/preprints/1733v1.pdf.

20 20.Dexter Thomas, “Perspective: Forbes Deleted a White Tech Writer's Article That Called Silicon Valley a ‘Meritocracy’,” October 8, 2015, https://www.latimes.com/business/technology/la-forbes-tech-meritocracy-20151007-htmlstory.html.

21 21.Corinne A. Moss-Racusin, John F. Dovidio, Victoria L. Brescoll, Mark J. Graham, and Jo Handelsman, “Science Faculty's Subtle Gender Biases Favor Male Students,” Proceedings of the National Academy of Sciences 109, no. 41 (October 2012): 16474–16479, https://doi.org/10.1073/pnas.1211286109.

22 22.Ernesto Reuben, Paola Sapienza, and Luigi Zingales, “How Stereotypes Impair Women's Careers in Science,” Proceedings of the National Academy of Sciences 111, no. 12 (March 2014): 4403-4408, https://doi.org/10.1073/pnas.1314788111.