I have been the chair of the Society of Actuaries (SOA) Inclusion and Diversity Committee for a few months now, and I continue to talk to others, observe diversity and inclusion (D&I) practices wherever I go and read everything I can get my hands on. I hear a lot about the business case for D&I, but what does that mean for the actuarial profession?
In my view, the foremost reason to incorporate diversity, equity and inclusion (D, E & I) into our workplaces and professional activities is best viewed through the lens of social justice. It’s simply the right thing to do—to recognize the value each human being brings to our workplaces.
Another related reason we need to weave D, E & I into what we do is that it’s vital to our future workforce. Forty-seven percent of millennials consider the D, E & I policies of a workplace an important criterion in their job search.1 Indicators show the up-and-coming Generation Z, now becoming our actuarial candidates and entry-level employees, care about D, E & I even more than millennials.
A third justification for D, E & I activities is the financial business case. Business results are better at organizations that are strong in diversity and inclusion.2 Organizations in the top quartile of gender and ethnic diversity continue to outperform those in the bottom quartile by significant margins.3
I want to go beyond the financial business case to a related area where D, E & I matters: innovation. Innovation is certainly an overused buzzword and has many meanings. The actuarial profession, though, is currently threatened by competitors like data scientists and InsurTech startups that are claiming the innovation territory for themselves. We can sit in our actuarial ivory tower of “how we’ve always done it,” or we can seize these new opportunities and begin to venture into new frontiers through innovation.
And, guess what? Innovation cannot happen without a business culture that embraces D&I and weaves it daily into the creative process.
One of the core tenets of innovation and design thinking is empathy, also frequently framed as human centeredness.4 When at least one member of a team has traits in common with the end user, the entire team better understands that user. For example, a team with a member who shares a client’s ethnicity is 152 percent more likely to understand that client.5
The need for connection to the user or customer may seem obvious, but a great example of a failure to understand a customer sits, ironically, with the best-known innovation company of our time. When Apple Health debuted in 2014, Senior VP of Software Engineering Craig Federighi told users, “You can monitor all of your metrics that you’re most interested in.” However, his design team missed a critical market: The estimated 100 million (yes, 100 million) women who track their menstrual periods on their phones. Period tracking—one of the applications most utilized on smartphones—was finally added to Apple Health after a year of operation and a lot of feedback. It seems unlikely that women were included in decision-making on that initial design team.
Accenture has done considerable research on how innovation is closely linked with D&I, studying more than 18,000 employees in 27 countries. In its report, “Getting to Equal 2019: Creating a Culture That Drives Innovation,” Accenture expands on basic diversity and calls for a “culture of equality.”6 (I’ll talk more about the concept of equality in a future “Inclusive Ideas” column.) This culture of equality becomes a powerful multiplier of innovation, developing an organization’s “innovation mindset.”
An innovation mindset is six times higher in the most equal organizational cultures that Accenture studied, compared to least equal. Accenture measures an organization’s culture of equality with 40 factors that are organized into three pillars: bold leadership, an empowering environment and comprehensive action.
The research defines an innovation mindset with six elements:
- Purpose. Providing alignment around and support for the organization.
- Autonomy. Being shown a clear mandate for change and trusted to follow through.
- Resources. Having the tools, time and incentives necessary to innovate.
- Inspiration. Tapping into inspiration from beyond the organization.
- Collaboration. Working with other departments or in cross-function teams.
- Experimentation. Experimenting with new ideas quickly without fear of failure.
The link between a culture of equality and an innovation mindset is nicely summarized by Mastercard President and CEO Ajay Banga: “We’re in an industry where technology and innovation flow around you all the time. If you surround yourself with people who look like you, walk like you, talk like you, went to the same schools as you and had the same experiences, you’ll have the very same blind spots as them. You’ll miss the same trends, curves in the road and opportunities.”
I invite you to share with me your stories of innovation mindsets as we work to bring a culture of equality to the actuarial profession. The more we can learn from each other to iterate (iteration is another core tenet of innovation and design thinking!) and improve, the further we can push the limits of innovation.
- 1. Kochhar, Sarab. Nearly Half of American Millennials Say a Diverse and Inclusive Workplace is an Important Factor in a Job Search. Institute for Public Relations, December 4, 2017 (accessed July 2, 2019). ↩
- 2. Kim, Michelle. Compilation of Diversity & Inclusion “Business Case” Research Data. Medium’s Awaken Blog, March 26, 2018 (accessed July 2, 2019). ↩
- 3. Hunt, Vivian, Lareina Yee, Sara Prince, and Sundiatu Dixon-Fyle. Delivering Through Diversity. McKinsey, January 2018 (accessed July 2, 2019). ↩
- 4. For more information about innovation and design thinking, I recommend anything from the Stanford School (the Hasso Plattner Institute of Design at Stanford), IDEO or IDEOU. ↩
- 5. Hewlett, Sylvia Ann, Melinda Marshall, and Laura Sherbin. How Diversity Can Drive Innovation. Harvard Business Review, December 2013 (accessed July 2, 2019). ↩
- 6. Shook, Ellyn, and Julie Sweet. Getting to Equal 2019: Creating a Culture That Drives Innovation. Accenture Into the New (accessed July 2, 2019). ↩
Copyright © 2019 by the Society of Actuaries, Schaumburg, Illinois.