Go Beyond IQ—Think EQ

The real benefits of diversity, equality, and inclusion.

Diversity, equality and Inclusion is not about looking good. It’s not about trying to be politically correct. And it’s not about simply hiring black or LGBTQ+ people and leaving it at that. DEI is powerful! In fact, the real reason everyone is talking about DEI is the neurodiversity you create. Bringing in people from every race, ethnicity, sexuality, and socioeconomic status creates an environment that powers more effective, more unique problem solving.

And this should be easy! The millennial and Gen Z generations are the most diverse in history: only 56 percent of the 87 million millennials in the country are white, as compared to 72 percent of the 76 million members of the baby boomer generation. 

This is the kind of diversity you want to make decisions.  If I’m sitting with somebody who's pretty much the opposite of me, I’m likely to look at a problem in a completely different way. Now, neither of our views may be “correct,” but if we merge these perspectives, you may create something very interesting.

Lauren A. Koenig, Strategic Partner Manager at Orchid Black puts it like this: “I subscribe to the belief that you are an average of the five people you spend the most time with. So bringing in those that look, act, or talk like us really constrains our ability to grow. Diversity brings richness—and ultimately, you are the company you keep. I know I wouldn’t want to be part of an organization that only keeps the company that makes them comfortable.”

The same is true in the investing world. The fact that female founded teams receive only 2.3 percent of venture capital is abhorrent and means we are missing out on a lot of good ideas. Philip Eliot, Operating Partner at Orchid Black, notes that “this kind of bias means we are not providing opportunities for fifty percent of entrepreneurs. That’s a missed opportunity for all of us.”

And the reason why the E, I—Equality and Inclusion—are so important is that you need those perspectives to make the best decisions. Sharawn Connors, VP of DEI for Micron, points out that “in an inclusive environment, everyone feels comfortable sharing ideas. If you have diversity, but people don’t contribute, you’re not getting the value.” Unfortunately, that kind of inclusion is all too rare: Gallup notes that  “only 55 percent of workers agree that their organization has policies that promote diversity and inclusion.”

Keep in mind that diversity isn't just the color of your skin or your sexuality, it’s also the socio-economic status of your family, your religion, everything! If you account for these perspectives, you will see better decision making—and you will see more opportunities.

I’ve seen this happen in wealth management, for example. In a company I worked with, 95 percent of their assets under management were white. Why? Because 95 percent of all of their advisors were white. They were ignoring an entire demographic of people that could help the company. So it’s more than creativity, it's effectiveness. And it’s not about getting more, it’s about getting better.

So let’s go straight to the bottom line. Orchid Black Operating Partner Michelle Westich points to studies showing that companies with significant numbers of female management or board members consistently outperform. One of the latest is from B of A, which found that “S&P 500 companies that are more diverse and inclusive see better results and have lower risk...Specifically, gender diversity on boards and among managers correlates with a higher return on equality.”

Even more impressive is a Catalyst report detailing that companies with higher female representation in top management outperform those that don’t by delivering 34 percent greater returns to shareholders. And although only 5 percent of Fortune 1000 companies have a female CEO, they generate 7 percent of the Fortune 1000’s total revenue and outperform the S&P 500 index during the course of their respective tenures.

This is not just about gender: ​​Fast Company notes that organizations with above-average gender diversity and levels of employee engagement outperform companies with below-average diversity and engagement by 46 percent to 58 percent.

Westich also points out that a company like Atlassian Software takes diversity seriously—and it’s paid off: “Atlassian is one of the first companies to ever do a diversity report—and they do it quarterly,” she explains, “to ensure that their developers are a mirror image of their customer base. And it works! Today their market cap is $98 billion.”

So inclusion is critical on every level, as a leader you have to understand how to connect to everyone with more than IQ—with EQ. Inclusion is what it’s about, not just intelligence. 


An important component of EQ is making sure everyone feels heard and is heard. This means communication between all of the departments is paramount. HR needs to be on the same page as finance or legal. Everyone needs to be speaking the same message—and making it a priority. When a department is missing these key points, then you're not promoting the initiatives of DEI, and you will not be effective.

Once the C-Suite is on board, once you’ve adopted a skills-first approach to hiring, and once you are leveraging neuro diversity, it’s critical to communicate all of this throughout the organization.


Diversity step one: think about where you are targeting employees. This is one of the easiest and most effective ways to achieve the right demographics. Unfortunately, schools are still segregated to a point, so think about what schools you are talking to. There is top tier talent in schools everywhere.

And work on your infrastructure—make the effort to reach out to the right people, and equally importantly, train your management to have EQ. Teach them how to interact with people, how to respect cultural differences, how to make sure that you're not letting extroverts monopolize meetings, that you’re listening to the introvert that has a really good idea. Overall, it’s about developing a more thoughtful approach to every interaction that you have. Sounds like a lot of work, but once you get used to it, it's simple.


I’m a Formula One fanatic. They struggle with recruiting minorities. This is because of a simple lack of available talent that meets the requirements to join a team. Formula One can't just go out and say, we want some more engineers. They have to go to the schools and explain what positions are out there, why STEM is important, etc.

Once you are committed to education and to DEI within your organization, the results will be staggering. As a recent Bain report points out, you can expect “improved rates of recruitment and hiring; increased levels of representation in an organization; increased feelings of engagement and belonging; and increased rates of retention and internal promotion.”

In other words, a lot more than “political correctness.”

About the Author

Orchid Black is a boutique advisory of former CEOs, CROs, CMOs, strategy execs, and board members. We are accomplished operators with an investor mindset and deep M&A experience.

Like an orchid, a company’s maximum value emerges from cultivating growth. Orchid Black’s unique business model not only accelerates value, but aligns our compensation with our partners’ success. We invest together, betting on a collective vision, using shared skills and expertise.

If you would like to learn more please visit Orchid.Black or contact: