1. DiversityandInclusionasa prerequisiteforacompany’ssuccess
“One must still have chaos in oneself to be able to give birth to a dancing star…” Nietzsche.
The notion of diversity as a social value typically refers to gender, cultural, and racial
differences, and inclusion as overcomingour prejudices towards these differences. We
embrace diversity and inclusion as an act of developing humanism, as a victory of the
democratic values that define our society.Each step forwardmakes society happier and
more just. People well recognize it obvious value. But there is also a rational meaning for
diversity and inclusion, and I wouldlike to emphasize this rational meaning herein.
Diversityandinclusionis an essentialprerequisiteforbusiness success. Themechanism of
how diversity and inclusion propel a company to its success may be better understood if we
apply contemporary studies in complex systems' behavior. A company fits the model of
complex systems well.
Any organization has its structural principles, which is the way the parts of it correlate.
These include the principles in business organization, production flow,and management
structure. These principles make a matrix of an organization that provides stability and
functionality. The question is whether building a company as a well maintained mechanism
should be the goal formanagement. Is a clock-mechanismorder a purpose in itself? If it was,
it would create a rigid system not capable of developing and keeping up withthe changing
world around it. An organization is a living system that can’t exist if not constantly
responding to its environment and evolving accordingly.To be successful, an organization
needs to be nimble. The quickerit can respond to changes in the economical,technological,
political, social, and natural environments, the better chanceit has for success. What makes
a company capable of responding to those changes? The company’s openness and flexibility:
openness to ideas, flexibility to adaptations. What provides openness and flexibility?
Paramount is a company’s culture and its set of values.
The interdependencies between the structure of a company and the individuals that make it
up can be described using the social dynamics formula of Raymond Boudon
Mn+1=M(m(S(Mn));thoughthe formula might be complex-looking, wemay easily see how the
cycleworks. The behaviorof individuals in a company is represented by ‘m’ (Microstates)
whichreact to situations ‘S’ created by the ability (orinability) of the company’s current
structure (Macrostate) Mn to keep up with its environment (in a broad sense). Microstates
provide feedback on the situation, and then evolutionary reconstructions take place
creating a new organizational structure Mn+1. For the feedbackto be activeand timely, the
microstate level of the system needs a certain level of autonomy, a higher level of entropy. If
the system is toorigid, the changes are slow and the system fails to respond to challenges.
An evolutionary process goes through fourmain stages: Stage 1- a stage of
variations/diversity, stage 2- cooperation,stage3 – selection, and stage 4 –

2. reinforcement/reiteration. A successful scenario of evolutionary change of a social system,
such as a company, would be as follows:
Stage 1: When there are changes in the environment, a system experiences growing
diversity in its lowerlevel of structural organization – on the level of individuals.
Individuals are the ones that sense the changes in the environment and are first to react to
them. They are the first to sense the dissonance or incongruity between the established
procedures and processes and the new environmental reality. With growing technological
complexity, employees think more critically and independently, capable of estimating the
situations and developing their own solutions. With a rigid hierarchical management
system, a company loses valuable feedbackfrom employees, which is critical forthe
company’s evolution. When the feedback is slow,a company potentially loses opportunities
and innovativesolutions.
When trying to find a way to adapt to the changing conditions, people question the
established norms and more actively deviate in their approaches to problems and tasks.
Trials, refutations, and more trials, deviations from obsolete procedures, active feedback
and openness to ideas become essential in the process of the company’s evolutionary
change.
Stage 2: The growing diversity in the lower level of the system’s structural organization is
compensated by unificationon the higher organizational level. This unification prevents a
system fromfalling into chaos.
Although the individuals get “loose” from the old matrix - established processes and
procedures - they unify under a strategic vector,they collaborate under a shared vision and
values. This is a process of standardization. Such standardization makes it possible to
integrate growing diversity into a more complex, but well-functioningorganism. Sharing a
common vision and values, and yethaving more freedom in decisions and solutions, is what
provides a company with the ability to be flexible and quickin adaptation to changes in the
environment.
Here lies the challenge formanagement to provide the conditions forcreative diversity –
trust the employees’ expertise and self-sufficiency,abandon micromanagement, provide a
clear vision and understanding of goals and strategies, and of paramount importance -
promote a culture of listening to opinions.
Stage 3: The search fornew approaches eventually consolidates in the most optimal
solution. The most optimal solution then gets its popularization throughout the system.
This popularization is a stage of selection. The commonly acceptedsolution brings the
system to structural reconstruction and establishes new principles in correlations between
its parts - a new matrix, forexample a matrix called 6Sigma or Lean Productionor Agile.
These structures emerged as a consolidation of experience accumulated on the microstate
level.

3. Stage 4: The new structural organization reinforces individuals’ behavior to fitthe new
system’s order. This stage lasts until once again, the matrix and the environment come into
conflict,bringing about the need to challenge the efficacy of theprocesses and procedures in
light of those changes. Nowadays,the cycleof the four stages happens very quickly, perhaps
simultaneously in various units of a company.
Some companies learn from within from these processes of internal reconstructions, while
others acceptthe lessons only when demonstrated effectiveby others, and thus invariably
lag. Eventhen, the adopted matrix may apply to some extent, but the subtleties of its own
particular structure will not completely fit an adopted solution. Internal feedback remains
essential.
If a company recognizes the need for structural development, it necessitates diversity -
diversity in views, approaches, and solutions. True, that diversity is richer with more
variety in cultural and educational backgrounds; however, such diversity alone gives no
advantage if there are no conditions for them to flourish. Youmay have representatives of
all kinds of groups, but if there is no individual value recognition, there is no benefit from
diversity. Inclusion - recognition of the value of each - is whatallows diversity to fully play
its role in a company’s development. This is what a company’s culture is responsible for.
The company’s culture should cultivate the atmosphere of inclusion, awareness of
psychologicaland cultural differences – while understanding and accepting them. The
heuristic nature of people is stifled when they are not involvedin decision making. In its
attempts to create a more productive workenvironment, an appreciation forthis factwould
benefit Management’s efforts.
People differnot only culturally or educationally,but also psychologically,whichis one of
the main issues in a team atmosphere. Without being open and inclusive, psychologically
opposite people have a harder time understanding each other and may misinterpret each
other’s intentions. For example, an introvert might seem as a person withno opinions or
lacking initiative. On the other hand, an extravert might be seen to his opposite type as a
showoff. A person with an East Asian cultural background typically tends to talk in a
propositional way,not assertive, and may seem to his opposite type as not so sure of
himself. On the other hand, to him, his opposite would lookopinionated and blunt. When
this happens there is very poor synergy.
In the situations of instability (stage 1), there is alwaysa harsher contraposition between
modernist and conservativetrends. We should understand that the role of each is valuable:
in searching fornew ways- the innovative side is needed, and in preventing from falling
into unnecessary turbulence – the conservative side provides stability. Strong inclination
to a conservative side may lead to suppression of the innovative character of people, thus to
a company’s slow and passive reaction to challenges. Hence, a company may lose business
opportunities or inventive solutions. There are not only potentially lost opportunities, but
also loss of inspiration, whichmight be an even bigger loss fora company. It wouldbe

4. extremely difficultfor people to maintain peak performance if there is no satisfaction from
their work,if their innovative nature does not find its realization due to a rigid, hierarchical
management organization or cultural/psychologicalbiases. How many “Steve Jobs” are lost
by a company?
There is also a situation fora workconflict.Peoplewith strong innovativecharacter and
high professional level tend to appreciate a more horizontal management system, meaning
equal discussions and collectivedecision making. It is harder for them to accept
authoritarian management, a strictly verticalmanagement structure; they rather appreciate
a partnership. The feeling of being a valuable part in creating a product and being
recognized as contributing to the company’s success is the best motivation.
Acknowledgement of differencesbetween those that are psychologically more comfortable
with keeping established regulations as a guarantor forthe system and those that would
rather search for variety and innovation might make it possible to find a mutually
benefitting solution. Mutual inclusion needs to have better practice; otherwise the situation
is rather misfortunate for the company. Awareness of different natures would decrease
misinterpretations and misjudgments. Lack of inclusion is manifested, for example, when
instead of a just evaluation on personal merits and potential, an innovative person is
considered a trouble-maker in a conservativeenvironment and a cautious workeris
considered slow in a risk oriented setting. A reserved person may be considered as lacking
opinions and an outgoing person as an arriviste depending on the cultural environment.
Once labeled, it is very hard to get rid of the stigma, and that may define a person’s entire
career and life; some would prefer to leave. Promoting openness to psychologicaland
cultural differences will help in reaching fair evaluations on the base of true merits. If a
company is losing talents, this wouldbe the first problem to check.
Although the term “diversity” became widely used, there is a narrow understanding of the
role it has in a company’s success, how to fully benefit fromthe rich diversity that
companies naturally have, so as to create better synergy. Oftenwe have a traditional
cultural inclination that favorsone type overanother. Personal characteristics and cultural
background is something that a person comes with to a job. A company with a culture
auspicious fora person’s self-actualization will bring the best out his/her potential. The goal
of any company is to be an inspirational place for its employees. Self-actualization is one of
the main components of people’s happiness. Providing this chance,a company receives hard
workand creativity.
Copyright 2014, Marina Fortmann