Quantitative data on diversity and business results from McKinsey and Goldman

Note: I’m experimenting with publishing content first in my newly-launched newsletter, Fieldnotes, and then here on my blog. Aside from some minor edits, this blog post is taken from the first edition of Fieldnotes sent out earlier this week. Subscribe here or feel free to take a peek at the first issue.

Diverse boards (and executive teams) lead to better results for shareholders and there is rigorous research from reliable sources to prove it. McKinsey released a report on diversity this month that got a fair amount of coverage but I also uncovered some intriguing data from Goldman that barely got any coverage. Below is what you need to know from each.

McKinsey’s “Delivering through Diversity” report (PDF) contains an analysis of 1000+ companies in 12 countries. This WSJ story has a good summary. Key data:

  • Companies that ranked in the top 25% in terms of the ethnic mix of their executive teams turned out to be 33% more likely to outperform competitors on profits than those in the bottom 25%.

  • Companies with the most women on their management teams were 21% more likely to achieve above-average profitability, compared with those with relatively few women in senior, decision-making roles.

  • Still a LOT of work to do. Among the 346 companies included in its 2015 study, the collective share of women on executive teams has since risen only 2 percentage points to 14%, while the proportion of ethnic and cultural minorities has climbed just 1 percentage point to 13%. This is, of course, pathetic.

Research that got very little coverage but is must-read is Goldman’s detailed 40-page report “The PMs Guide to the ESG Revolution: From Article of Faith to Mainstream Investing Tool” (PDF). The report focuses purely on ESG measures that boost stock price and generate “alpha” (see this for extended definition of “alpha”) over a 3-5 year period. The key finding: gender diversity ranks the highest of all of the factors they studied as companies with higher ratios of female employees saw an average annual alpha of 3.3% across all sub-sectors. If you don’t want to read the report, listen to Derek Bingham of the GS research team discuss it in this podcast (btw, Goldman’s podcast series is quite good).

At this point, if you’re a CEO or other senior leader and you don’t have a direct hand in building a more diverse company, you’re being negligent as a business leader and working against the long-term interests of your company.

(Yet. . . activist investors are more likely to target female CEOs. Firms with female CEOs were 50% more likely to be targeted by activists and approximately 60% more likely to be targeted by multiple activists as noted in Harvard Business Review. Go figure.)

The Slow Burn podcast on Watergate

Slate’s Slow Burn podcast on Watergate is amazing. As they describe it:

You think you know the story, or maybe you don’t. But Watergate was stranger, wilder, and more exciting than you can imagine. What did it feel like to live through the scandal that brought down a president?

Join Leon Neyfakh for an eight-episode podcast miniseries that tells the story of Watergate as it happened—and asks, if we were living through Watergate, would we know it?

As advertised, the podcast covers Watergate in a way that feels like you are experiencing it while it was happening rather than simply looking back at an event where you already know the outcome. Not surprisingly, the events of Watergate have some interesting parallels to our current political landscape.

I’ve read Woodward and Bernstein’s books All the President’s Men and The Final Days and find Nixon a fascinating political figure and the podcast covers ground I didn’t know about. I’ve been a bit of a “Watergate junkie” for many years in part because the events of Watergate coincided almost perfectly with my early life. The Watergate break-in itself happened on June 17, 1972, just two days after I was born. The chairman of the Senate Watergate Committee was Sam Ervin, the senator from my home state of North Carolina, and I grew up hearing people talk about him in reverent tones. Ervin was a very particular kind of Southern man that I knew well growing up. He came off as a folksy, down-home grandfather, often referring to himself as “just a country lawyer” without noting that he was actually a Harvard Law graduate. I grew up with lots of similarly-modest people in the South like Ervin who had crushing intellects and I’ve always enjoyed how those people tended to get the best of others who thought they were smarter. Ervin also recorded an album (!) called Senator Sam at Home in which he did readings of popular songs like “Bridge Over Troubled Water” and told stories like “Jus’ Right Likker.” You really can’t make this stuff up.

In any case, check out the podcast. It’s really great. Each episode is about half an hour and entertaining all the way through.

First issue of Fieldnotes newsletter is out!

Earlier this month I wrote that I was launching a newsletter called Fieldnotes. I just sent out the first issue which covers:

  • a management framework you can use immediately
  • readings on social responsibility, business, “shareholder value,” and capitalism
  • research on correlations among diversity, profit, and stock price
  • Leonard Bernstein on jazz

Aside from the core task of putting the content together, I enjoyed all of the hands-on learning that you get when you start with an idea and deliver an end product. Email marketing, design, analytics, and everything else. This was completely a one-man show so if there’s anything you love or hate about it, it’s all on me (btw, I already know I’m not a good designer!)

If you’re interested in future issues, subscribe here and/or take a peek at the first issue.

Becoming a Reboot CEO coach

I’m really honored and excited to announce that I’ve joined forces with my friends at Reboot and am now a CEO coach and facilitator under their umbrella. Reboot is helping shape the next generation of leaders who are reimagining the way business is done and I deeply identify with the vision. Jerry Colonna is a co-founder of Reboot and has been my coach since the summer of 2011, when I stepped into the CEO role at Etsy. When Jerry started coaching me back then, he was more or less a solo operation. Jerry reached a point where he wanted to scale his vision for coaching but realized he needed to build an organization to do that. I was honored to witness Jerry conceiving of Reboot and scaling it with his equally amazing co-founders. Jerry and Reboot have life-changing impact on the lives of entrepreneurs as evidenced by some of the testimonials and this beautiful portrait of Jerry and his work in Wired. Working with Jerry and Reboot has definitely been a life-changing experience for me and very much shaped my high-level philosophy on leadership as stated in my Reboot bio:

I believe “strong back, open heart” leadership is the key to building great companies. The strong back is represented by fiscal discipline, strong process, and accountability. The soft, open-hearted front are values, purpose, connectedness, and compassion. Organizations and people are at their best when they manifest both in equal balance.

I’m profoundly honored to be coaching under the Reboot umbrella and to have the opportunity to help and support CEOs in their leadership journeys. (Yes, I used the word “honored” a lot above because I truly am!)

With that bit of news out of the way — what is “coaching” anyway? Doug Silsbee’s book The Mindful Coach: Seven Roles for Facilitating Leader Development offers a simple definition that I really like: “any relationship where you are interacting with another person in service to his or her learning, growth, and change.” Being a CEO can be absolutely insane all by itself and Jerry helped me deal with the pressures of the roles during a period of extraordinary growth and change at Etsy, from chaotic startup to public company. But it wasn’t just “business.” During my time as CEO of Etsy, my wife and I adopted a child and I became a father. The coaching experience was highly integrated, meaning that it took my whole life into account. The same heart and soul that you put into being a CEO are the heart and soul you put into the rest of your life and relationships. As much as our culture demands the separation of “personal” and “business,” they are fundamentally integrated. Thinking of them separately means “dis-integration” and ultimately harms organizations and teams.

I see the work ahead as paying forward at least a small part of the generosity, care, and presence that I have received in being coached by Jerry. One Saturday morning last May, I got the call that meant my time at Etsy was over. My last day was Tuesday, just three days later. I hung up, stepped away from the phone, told my wife the news, and then immediately called Jerry. In the blur of the next three days, I was in regular contact with Jerry as all the logistics of my departure left little room for anything else. On my last night as CEO, Jerry came over to the Etsy office and we sat in the dark on the roof and talked. I don’t remember much of what we we talked about but I remember that Jerry was there and present for me during a difficult time. If I do nothing else in my role as coach, I hope to model the presence that Jerry taught me through his presence.

I am focusing on a very small number of high-impact engagements with my coaching practice. If you think I can be helpful to you, feel free to reach out or fill out the contact form over at Reboot and someone will be in touch.

Dr. King’s dream is my dream, too

Today, we in the US pay tribute to Dr. Martin Luther King, Jr. in a national holiday honoring his legacy. I am grateful that we have such a holiday to honor Dr. King. The meaning of the holiday is expressed beautifully through the words of King’s widow, Coretta Scott King:

On this day we commemorate Dr. King’s great dream of a vibrant, multiracial nation united in justice, peace and reconciliation; a nation that has a place at the table for children of every race and room at the inn for every needy child. We are called on this holiday, not merely to honor, but to celebrate the values of equality, tolerance and interracial sister and brotherhood he so compellingly expressed in his great dream for America.

It is a day of interracial and intercultural cooperation and sharing. No other day of the year brings so many peoples from different cultural backgrounds together in such a vibrant spirit of brother and sisterhood. Whether you are African-American, Hispanic or Native American, whether you are Caucasian or Asian-American, you are part of the great dream Martin Luther King, Jr. had for America. This is not a black holiday; it is a people’s holiday. And it is the young people of all races and religions who hold the keys to the fulfillment of his dream.

The expression of Dr. King’s dream in his famous “I have a dream” speech (full video) is all the more remarkable because it wasn’t planned. It came forth spontaneously when gospel singer Mahalia Jackson — there on the podium behind Dr. King — raised her voice and said, “Tell ‘em about the dream, Martin!” You don’t hear her exclamation in the audio, but you can see the change in Dr. King in the video. He had been looking down at his notes throughout the speech but after Mahalia Jackson’s plea, he looks up from the podium (video) and doesn’t look down again for quite a while as he utters his soaring words, sometimes with his head tilted towards the sky. Even setting aside the incredibly inspiring content of the speech, it is a remarkable display of rhetorical skill.

Dr. King’s dream has grown more personally meaningful to me with every passing year. Five years ago, my wife and I welcomed an adopted son from Korea into our family, making our family a multi-race family. Our family is a tribute to the purity of love — my wife, son, and I are not related to each other by blood but bonded only by our love for each other. That unconditional love for my beautiful son has opened my eyes to racism in a way they had never been opened. My son has been asked what is “wrong” with his beautiful eyes. People have said upon just meeting him, “I bet he’s good at math” (he isn’t particularly good at math). I’ve learned that these comments and other things are “normal” and that Asians are the most-bullied in school. We simply do not live in a color-blind, post-racial society even in 2017. That is why Dr. King’s words remain so important today and more meaningful to me than ever before: “I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.” (video)

Like Dr. King, I can see a world where we can reach across the boundaries of race and culture to build lasting bonds of love based on our common humanity. I know this is possible because I’ve experienced it with my own family. I’ve learned that one of the tragedies of racism is that it prevents people from seeing the humanity of others and opening themselves to love and be loved by people who are only superficially different from us. I’ve experienced the profound love that can happen when you erase those boundaries and it gives me hope.

On this “people’s holiday,” Dr. King’s dream is my dream, too. And I will always be grateful to Mahalia Jackson for saying to Dr. King: Tell ‘em about the dream, Martin!

Best books for new, first-time managers

I recently asked on Twitter: “what book would you recommend most for new, first-time managers?” It’s been a while since I’ve been a first-time manager or managed first-time managers directly, so I was curious. Below is the list of what folks recommended. The categories were added by me after realizing an unstructured list of 35+ books would be too overwhelming. I certainly haven’t read all of these books but put some notes in the list next to books I have read and a few notes next to ones I haven’t read but know something about. If you have a book you think should be here and isn’t, email me (hello@chaddickerson.com). I’ll also include this in the newsletter I’m launching (more info here).

General management & leadership

Tech management and leadership

Note: having been a CTO and CEO, I recommend reading these books alongside the more general management books. An engineering leader with strong general management chops and business skills is a rare and valuable breed. 



 Prioritization and results

Psychology and how people think

Other (literature, non-fiction with important themes)

Michael Dearing suggested taking his very well-regarded general management course, so I mention that here. Even if you can’t take the course, check out page two of the syllabus for some great readings. Thanks, Michael!

Again, if you have a book you think should be here and isn’t, email me!(hello@chaddickerson.com) I’ll try to keep it updated.

Why I’m launching a newsletter

I announced on Twitter that I’m launching a newsletter. It’s called Chad Dickerson’s Fieldnotes (more about the inspiration for the name). I expect it to be roughly monthly starting later this month. Subscribe here. Some people have asked me why so I thought I’d explain.

In general, I plan to be writing a lot more and the newsletter is part of it. My vision for my newsletter is a focal point for all of my writing (on this blog and elsewhere) while aggregating and commenting on some of the interesting things I find along the way. Topics will include business, music, books, culture, what I’m up to, and what I learned as a CEO and CTO. I have a lot to say and I’m excited to be able to say it as a free agent with a high degree of editorial independence.

My time at Etsy was also very profound and there are lots of insights from that experience that I haven’t had a chance to lay out yet. Writing is a great way to process and refine one’s thinking. Very few people have the chance to take on two major executive roles (CTO and CEO) in a company like Etsy from building a team and rebuilding a platform as a startup CTO (the proverbial changing of the jet engine while in flight) to leading a high-profile public company as CEO and Chair of the board. I did that and I’m confident that I took that path in a way that was true to my self and to a set of larger principles. I know other people are trying to do the same thing and I hope some of my writing will give them insight and strength.

Many people reach out to me and want to talk about Etsy as a socially responsible company. I will certainly write about that, probably a lot and in a very pragmatic way. Socially responsible business remains a passion of mine. That business orientation was super important to me in my time at Etsy but I also think the focus on that aspect of Etsy can obscure the sheer improbability of *any* venture-backed company making it through all the stages we made it through at Etsy. In my time there, Etsy wasn’t just special in a cultural sense, it was very special in a pure business sense. If you look at this CB Insights analysis of the cohort of companies who raised seed rounds in 2008-10, only 5 out of 1098 had a $1B+ exit. 3 of those went public and 2 were acquired. These kinds of odds are astounding for any company, much less a spirited and unconventional company like Etsy. We were doing a lot of things that simply hadn’t been done before or even attempted. (Oh, and we also faced down Amazon in the process. No big deal. When the New Yorker visited one day, the headline of their story was “Visiting Etsy, Amazon’s Next Prey” and SNL Weekend Update had a great bit on the competition around the same time — see 2:45 mark in this video)

I wrote a lot while at Etsy and always always loved doing it. A few still take me back to the moment I wrote them as if it was yesterday. Only two weeks into my arrival, I wrote about the massive challenges I immediately encountered as CTO in September 2008. I wrote the first post and the About page on the Etsy engineering blog, Code as Craft. I wrote about my long-term vision for Etsy in May 2012 as CEO when we became a B Corp, dropping a reference to fellow Brooklynite and (I think) Etsy kindred spirit Walt Whitman. When we went public, I wrote a post referencing James Joyce and quoted Ovid. I was never doing this to be a pretentious show-off. My view of the world is just very integrated. Liberal arts, tech, art, business, technology, literature, music — they are all connected and the more we make connections across all of those disciplines, the better we will be for it (side note: who among us isn’t wishing that tech leaders didn’t have a stronger handle on ethics, gender issues, history, and politics?) Expect that to come through in my newsletter and this blog.

So, if you’re looking for business advice neatly prepared into one-size-fits-all hermetically-sealed listicles, prepare to be gravely disappointed. If you want pragmatic insight into business from someone who experienced a lot and you also appreciate the occasional link to a video of the very last Sex Pistols show at Winterland in SF in 1978 or Orson Welles interviewing Andy Kaufman or an illustrated guide to Guy Debord’s “The Society of the Spectacle,” I’m your guy.  (Subscribe here.)