Why cognitive diversity matters

Cognitive diversity can give your team a significant edge – if you take the right approach to leadership. That’s according to a major new study commissioned by the Diversity Project, a cross-industry initiative to boost inclusivity in the investment and savings industry, where standing out from the competition is notoriously tough. 

“When you’re trying to pull together the optimal team, having clones of each other in terms of thought process doesn’t work,” says Baroness Helena Morrissey, chair of the Diversity Project.

Hunting the outliers

With cognitive diversity, the focus isn’t on getting a balance of races, ages or gender. And, as a useful retort to the backlash against diversity, equity and inclusion initiatives, it’s certainly not about ticking boxes or meeting quotas.

The Diversity Project research, led by Alex Edmans, professor of finance at London Business School, defines cognitive diversity as “the range of expertise, experience, perspectives, preferences, traits and ways of thinking within a team”. That could mean differences in educational and professional background, life experience, cognitive style, personality or demographics.

The research concludes that cognitive diversity can create clear competitive advantages for investment teams – and, by extension, any others engaged in knowledge work – in part because it helps to prevent groupthink and encourages game-changing suggestions.

“In investments, a lot of the best ideas will be the outliers,” says Helena. “Everyone’s looking for the next Nvidia, but if you just follow the consensus, you won't outperform. If you have more inputs and more perspectives, you're going to have fewer blind spots and a broader range of ideas.”

Licence to disagree

The research found the most valuable sources of cognitive diversity to be different skill sets and professional backgrounds.

Dame Helena’s distinguished career has seen her hold senior roles in major companies across finance. She has been named one of Fortune’s World’s 50 Greatest Leaders and the Financial Times’ Person of the Year. She recalls experiencing the value of cognitive diversity first hand when working as a fund manager at Newton Investment Management, a company built on the principle that no one has a monopoly on good ideas.