We recently caught up with Lloyd Mander, the creator of the DOT Scorecard. Lloyd spends a load of his time working with boards and executive teams to help them make better decisions by uncovering ways they can optimise for diversity of thought. In between, he has a handful of directorships, including in startup world as the Chair of Ministry of Awesome, an organisation based in Christchurch focusing on growing entrepreneurs and world class innovation locally.

OnBoard is all about increasing the pool of potential independent directors, with the aim of increasing diversity of thought on startup boards. As a leader in the field of diversity of thought and decision making, we quizzed Lloyd how this can be maximised in practice, along with demystifying some common terms and hearing first-hand how his tool works.

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Over the last few years we have seen plenty of headlines on diversity in governance. For example, in January Goldmans announced they won’t help take a company public if they have an all-male board, and some countries and organisations have announced board gender targets. Take me back to the basics. What is the difference between diversity and diversity of thought?

‘Diversity’ is commonly used to refer to demographic or representative diversity, which is about increasing the proportion of those with an under-represented characteristic. Mostly the focus is on things that are more visible such as Goldman’s initiative around gender diversity but it can also include other elements where discrimination has been observed too - such as ethnicity, sexuality or disability. Increasing representative diversity is great. It opens up deeper talent pools and is consistent with values applauded by employees, customers and other stakeholders. However, there are some limitations. 

Firstly, people can be diverse and suffer inequities on a multitude of dimensions, many of which are not so externally visible. For example, should Goldman’s initiative be applauded for addressing gender imbalance, or criticised for not going further to tackle diversity deficits in board ethnicity, neurological diversity, physical disability or difference in socioeconomic background?

Secondly, representative diversity in a particular characteristic, is often not predictive of thinking outside of this characteristic. For example, if you add a male accountant to a team of female accountants you may find that, with the exception of gender experience, their potential for diverse thinking is similar. Therefore how a group looks in a photograph is not an accurate way to measure their diversity of thought!

‘Diversity of thought’ has two essential components:

1. Group composition: The inherent potential of individual group members to think differently from each other, which may be based on experiences, beliefs and the way they prefer to address problems

2. Group culture: The attitudes, practices and group dynamics that influence individual group members openness to unreservedly share their thoughts and for group members to actively attend to (listen and consider) the perspectives of others

Diverse thinking boards and other groups have the ability to frame things in different ways, conceive of different options and build on each other’s ideas in creative ways.

And why should boards be focusing on diverse thinking? What does it remedy? What are the ultimate benefits?

Decision-making groups such as boards that possess higher levels of diversity of thought, have the potential to perform better with complex problems – those where you don’t know what you don’t know, the outcome cannot be predicted based on the input information and consequently there is no “right” answer (at least not at the time you need to make the decision).

Of course boards face a range of types of decisions, many of these are not complex - some have best practices that can be followed (e.g. accurately recording your important board decisions as resolutions), others may be complicated but can be addressed with expertise (e.g. commissioning a legal review of an important contract).

I believe it is particularly important for boards to take some time to make sure they are applying diversity of thought where it is needed and can add the most value.

Tell us about what you have been working on. How does the DOT Scorecard® work?

The DOT Scorecard® was developed as a fit-for-purpose tool to evaluate group potential for wide-ranging diversity of thought and measure the status of decision-making culture that underpins the realisation of diverse thinking.

To evaluate potential diversity of thought, each group member completes an online questionnaire where they self-report on the experiences, perspectives and thought preferences that underlie their mindset and worldview.

Next a proprietary algorithm evaluates the representation and overlap of these attributes within their particular group. The algorithm determines a score for the group on an index from 0 to 100. Higher scores indicate greater potential for diversity if thought.

To evaluate a group’s current realisation of their diversity of thought, a further set of questions addresses the group’s decision-making culture - covering inclusion in decision-making, psychological safety and how independently people develop and express their thinking.

The findings from the DOT Scorecard® tell you who you might bring together to address complex problems in addition to how the decision-making culture is currently functioning and can be improved.

In your website blogs we caught the quote “the best collective decisions are the product of disagreement and contest, not the consensus or compromise” (James Surowiecki, The Wisdom of Crowds). I can see that a group made up of people with the potential for diverse thinking is better for decision making. Are there any other factors that are needed for maximising outcomes here?

It is natural to want people to agree with you. Therefore when you are sharing your perspective you can easily moderate or modify what you are actually thinking to make it more palatable to the recipient. This is especially likely if you’re concerned that your idea might not sound smart or is flat out wrong compared to what others have said.

For example, if you think the solution is “100” and everyone else has said it is “5,000”, when asked for your view you might say “1,000” to seem more consistent with others. However, by doing this everyone else believes you view is “1,000”, not “100”. Therefore the group has missed the opportunity to consider whether there is a scenario where “100” might eventuate. This creates a tendency towards an unchallenged, illusory consensus that is a key characteristic of ‘groupthink’.

Of course to allow people to share what they are actually thinking and embark on a contest of ideas a positive decision-making culture is absolutely essential. This is a major part of my work.

What do you think the challenges are for startups when it comes to diversity of thought, compared to more mature organisation?

Unsurprisingly larger groups (with more heads) tend to have greater potential for diverse thinking. Therefore early stage startups who are likely to have smaller teams and smaller boards are likely to have lower potential diversity of thought. This is not always a problem as startups will often be focusing on technical progress, which is more about expertise than diverse thinking. 

However, diverse perspectives may be more relevant when conceiving of different business models, entering a new market, or managing risks. So mindful of this, startups should consider bringing more heads together than usual to address their most complex challenges and opportunities.

A more encouraging finding for startups is that smaller groups tend to have a more successful decision-making culture, so the diversity of thought that is present within small startup boards is more likely to be realised and decisions made more easily.

Outside of the DOT tool, are there any simple, practical steps in relation to diversity of thought you can recommend when a board is reviewing its own composition, or looking to add someone?

Although group size matters, a high potential for diverse thinking can be achieved for smaller boards through selecting people that have had different experiences, hold different beliefs and approach problems in different ways. I have observed successful boards achieve these kinds of differences whilst holding common values and working effectively together towards common objectives.

If you’re considering a new board member and they feel like a great “fit” with your existing board, it should be red flag that you risk appointing a “clone” who might bring a particular skill but is not going to otherwise have a positive impact on your wide-ranging diversity of thought.

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Lloyd's website is worth a visit! It has loads of great content on how to measure and manage diversity of thought -> https://diversityofthought.co.nz/