When the first Xerox copier came out in 1959, it took the world by storm. Sales in 1960 were $40 million. In 1962, sales increased by 70 percent. By 1970 they had reached $3 billion. It's hard to argue with that kind of success, and no one did. Fortune magazine called the 914 copier, "the most successful product ever marketed in America."
Everyone at Xerox shared the enthusiasm and the frame of mind of its CEO, Charles Peter McColough. No one said, 'Stop! Wait a minute. We need some dissenting voices.' In short, there was no diversity of thinking. Everyone thought the same way.
And Xerox had no idea what to do next. This lack of diversity led directly to the company making blunder after blunder, such as ignoring the Japanese copier market as irrelevant and purchasing a failing computer company just to get in the game and managing Xerox's rapid growth by hiring legacy industrial managers who had no idea how to run the new wave of organizations that were springing up and that would lead to the tech revolution.
The result was that, just 25 years after launching the 914 copier, the new CEO, David Kearns, said, "We are in the proverbial soup." The New York Times ran a headline that said, "Once a Prodigy, Xerox Faces a Midlife Crisis." They called the company "the computer industry's most conspicuous failure." And Xerox copiers were being mowed down by the Japanese. Xerox missed out on the tech revolution.
This scenario could have been very different if the company had paid attention to complexity and diversity in its staff and especially in seeking out people who did not think like the crowd.
March 22-23, complex systems researchers will meet with business executives to discuss when and how diversity improves decision-making. The two-day education course will be held in San Francisco, CA, and is being organized by the Santa Fe Institute, a theoretical research center known for pioneering the science of complex systems.
According to Scott Page, a social scientist who will be presenting at the course, it’s not just diversity in identity that matters, but also — and especially — cognitive diversity. “We think of identity diversity as leading to better outcomes. But identity differences often correlate with differences in how we think about things,” he says, and that’s important when making decisions under conditions of uncertainty.
Page researches the logic of group diversity, and has authored two books on the subject. His most recent publication, The Diversity Bonus (Princeton University Press), was released in the fall of 2017.
Research on complex systems — from human and animal social dynamics to ecosystems to cities — shows that diversity within a system can improve resilience, robustness and adaptability. Geoffrey West, who is one of the instructors for the course and is also head of the Santa Fe Institute’s Cities, Scaling, and Sustainability research team, has analyzed data from hundreds of cities and over 10,000 public companies in hopes of understanding why cities live forever, but most companies will eventually die. “One of the things cities have that companies don’t is diversity,” West says. As diversity feeds creativity and problem solving, “squeezing out the creative aspect, in the end, leads to extreme vulnerability."
The lack of diversity that plagued Xerox can be seen in an endless list of examples, from Quaker Oats, whose great victory with Gatorade led it to buy Snapple — and lose a billion dollars — to NASA’s refusing to listen to an outsider’s warning about the O-ring in the Challenger space shuttle.
“When the leaders who design and implement diversity policies ignore the science of complex adaptive systems, they significantly increase the risk that their policies will backfire,” says Will Tracy, the Vice President for Strategic Partnerships at the Santa Fe Institute, who is organizing the two-day course.
Mari Kooi, the CEO and founder of Wolf Asset Management International LLC who helped fund and envision the course, would like to nudge the national dialog from identifying problems from lack of diversity toward identifying solutions. “Things that seem to be the most difficult often present the greatest opportunity,” she says. “Diversity is an opportunity.”
Of course, not every problem requires a diverse, complex-systems approach. “If we’re doing a simple problem, like chopping trees, the best team will consist of the best people,” says Page. But for hard problems, such as fixing a health care system, the best team will come with a variety of tools. “Organizations shouldn’t just look for the smartest — the best test-takers — but rather, for a team made up of people who bring a range of perspectives to a problem.”
Mirta Galesic, a quantitative social scientist who studies psychology and complex social dynamics at SFI, will also present during the course. “Diversity of opinions enables more exploration of a problem spaces,” she says. But following a leader can be intensely tempting, especially when a company is doing well. Quaker Oats looked at its success with Gatorade and tried to clone it by buying Snapple. The decision cost the company a billion dollars or more. Seemingly trivial influences can push the group into conformity rather than encouraging them to explore ideas that challenge the norm.
“The executive course will showcase a broad spectrum of domains where we see the manifestation of diversity in complex systems” Tracy says. “The Santa Fe Institute can help provide the scientific basis to help understand how and when diversity matters.”
“In the end what it comes down to is the fact that diversity is one of most effective strategies for confronting complexity,” says SFI President David Krakauer. “From Adam Smith to Charles Darwin, diversity has been recognized as a consistent means of taming uncertainty.”
For more information, and to enroll, visit: https://www.santafe.edu/events/complexity-diversity
Read Scott Page's article, "Why hiring the 'best' people produces the least creative results" in Aeon (January 30, 2018)