The Real Reason Diverse Teams Are Better at Solving Problems and Making Money

 In Bridget Frey, Diversity, Engineering at Redfin, Glenn Kelman, Redfin and Our CEO

Bridget Frey will speak about the ideas in this post as part of her keynote at the Redfin Women@Work event today in San Francisco. Glenn Kelman will open the event, which begins at 1 p.m. Pacific at Terra Gallery. Business leaders and top-tier journalists will also take the stage to discuss what’s next for diversity and inclusion in the technology industry. Speakers include:

  • Del Harvey, VP of Trust & Safety, Twitter, in conversation with Becky Peterson, Enterprise Tech Reporter, Business Insider
  • Emily Chang, Anchor and Executive Producer of Bloomberg Technology, Author of Brotopia, in conversation with Pui-Wing Tam, Technology Editor, The New York Times
  • Emily Melton, Partner, DFJ, in conversation with Molly Wood, Host of Marketplace Tech
  • Shannon Spanhake, Founder and CEO of Cleo, in conversation with Katy Steinmetz, San Francisco Bureau Chief, TIME Magazine

See more information and make last-minute reservations here.

When businesses discover a big new source of competitive advantage, we run over each other to get at it first. The reason that hasn’t happened with diversity is that many of the people building businesses still don’t believe diversity is such a big competitive advantage. They’re wrong.

There’s a reason the skeptics ignore an enormous amount of data, compiled by academics, investment banks and business consultants across thousands of businesses, showing that diverse companies generate more innovations, revenue growth, profits and stock-price gains.

It’s because some of the most disruptive innovators, such as Uber or Facebook, have generated billions in revenue despite their diversity struggles, especially in the earliest, most explosive stages of their growth. And it’s because diversity is so slow to develop at a company, you can’t really see how it makes a difference from one year to the next.


The Diversity Difference, in Real Time

But Redfin went from having no women on our Seattle engineering team to being about one third women five years later, and now we’re trying to transform ourselves again to hire and develop more engineers of color. These changes have made the difference in how a diverse team solves problems at our company easier to see with the naked eye, and easier to quantify.

The best way to explain this difference is in a case study, examining at every step how we approached a real-world problem differently, based on a different perspective from a diverse team, resulting in millions of dollars in additional revenue. Before presenting this case study, we should be clear about how diversity has and hasn’t changed Redfin’s approach to solving problems.

The Usual Arguments for Diversity Only Take You So Far

The diversity difference we’ve experienced hasn’t been what it was supposed to be. Yes, there’s the longstanding argument that a team can understand different customer problems if its members have had the same problem themselves. For example, Redfin’s communications weren’t as effective at reaching women until we hired a woman, Jani Strand, to run communications. That same premise is why we believe we can be more effective at representing people of color as we employ more agents of color.

But that premise is limiting. The truth is that a woman can write software for a male homebuyer, and a man can write software for a female homebuyer. A Black agent can sell a white person’s home just as a white agent can sell a Black person’s home. Insisting otherwise misses the whole point of what an engineer, or really any business person, is actually supposed to do: solve other people’s problems.

Being “The Other” Makes It Easier to Solve Others’ Problems

Diverse teams are well suited to solve other people’s problems because the folks on those teams have for so long been “the other.” What women or people of color bring to any project is a history of having to understand another world, a world not of our own making. For a woman or a person of color, this happens each day when she walks into an office that is mostly white or male. However much the advocates and emissaries of diversity may want to change that world, those folks have often first had to learn how it works, and how to adapt to it.

This process of understanding and adaptation is not exclusively reserved for women or people of color. Anyone to varying degrees can have an experience of feeling like an “other,” or, if you are open to it, of connecting with someone who feels that way. Of course, that connection is much likelier to happen in a diverse office. And we learn through those connections to respect others, freely not grudgingly, immediately and by default. This is especially true of folks who have had a history of having to fight for respect.

And this is exactly the humbling process we should go through when an engineer or a program manager shows up at a field office or a customer meeting. It is the process a Redfin engineer goes through to understand an agent. It is the true process of engineering, which is much different than science or any other abstract field, and different even than coding.

The job of most engineers is not to find a more efficient way to calculate prime numbers. An engineer prides herself on solving real-world problems, like how to make a grocery sack that can stand on its own before being filled, or how to schedule a home tour at a time that works for the buyer, the seller and the real estate agent. That requires us to be out in the world with others, not in our own heads.

How Diversity Increased Revenues by Millions

Going out into the world is hard to do, but diverse teams often do it best. For example, Redfin for years had tried to solve the problem of automatically scheduling a tour. We built the software to do this, and assumed that was all we needed to do. But we still didn’t understand what seemed at first like minor nuances in an agent’s availability, or which customers the agent most wanted to meet. Adoption was less than 30 percent.

But a gender-diverse team led by two Redfin executives, Adam Wiener and then Jen Chao, rebuffed the traditional approach that Glenn favored, which was to solve the problem by writing more software, and decided instead just to listen to our agents. When that team began coding again, our real estate policies matched how our agents wanted to work, and our software began to match those policies.

In one year, adoption tripled, and the impact on sales was dramatic: when a tour could be scheduled with a few taps on a customer’s phone, the proportion of visitors who reached out to a Redfin agent increased, lifting our 2017 revenues by millions of dollars. When we looked back on what led to a breakthrough after years of sometimes frustrating work, we realized that cultivating the habit of listening to others within a diverse engineering team had made it easier for our engineers to listen to our agents and coordinators about how to make this feature really work.

The Case for Diversity Isn’t Altruistic, But Money-Making

This is but one of many examples at Redfin of problems that a diverse team has been best equipped to handle. We saw this in setting up a regional hub for coordinators to support our agents, where our systems couldn’t work until we had made sure the people the systems were supposed to help felt respected and understood. And today we’re seeing the importance of listening and collaboration in building tools for automating the preparation of an offer on a listing, estimating the value of a home or evaluating the competitiveness of a neighborhood.

This is why we see diversity not as an end in itself, operating in parallel to our commercial goals, but as a means to an end, which is developing a broader problem-solving capacity than Redfin’s competitors, so we can make more money.

What’s Next

And this advantage can benefit more than just Redfin’s income statement. The process we have gone through over the past five years has helped us reimagine what it means to be an engineer or a business person, based on the habits of listening and respect that you often learn by building a diverse team. As we diversify the ranks of engineers, but also the skills we value in an engineer, the result will be a new capacity to make a diverse world better, connecting with problems that inevitably are bigger and more varied than our own direct experience: the problems of health, poverty, the environment, social justice, community development and families.

As the two of us, Bridget and Glenn, march deeper into middle age, we have begun to think about this as our true legacy: not just a major reduction in the cost of buying and selling U.S. homes, or more caring, candid guidance for customers whose lives are in transition, but a new way of thinking about engineering, and a new generation of engineers who will go out into the world like never before.

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