James Holland Jones is a professor of environmental social sciences at Stanford.

The normative perspective on diversity is that in a free, representative democracy, our institutions — governmental, educational, commercial — should reflect the composition of our populace. Diversity has become controversial because the ascendant political right has chosen to attack this fundamental principle of American society. We can and should be morally outraged by these attacks. However, diversity has another dimension that is often lost in public debates about its merits. Aside from its measurable upsides, diversity is most likely to deliver its instrumental premium during times of uncertainty and rapid change, conditions that surely characterize our current historical moment.

In the Trump administration’s war on diversity, the clear strategy has been to equate efforts at promoting diversity, equity and inclusion (DEI) with undermining meritocracy. The suggestion is that the existence of a diverse workforce is prima facie evidence that hiring and promotion are based on criteria other than merit. In addition to being transparently prejudicial, this perspective is simply wrong empirically.

The benefits of diversity for society — and for the bottom line — are well documented. For example, the management consultancy McKinsey has repeatedly noted that more diverse companies perform better financially. Innovation-based banks enjoy greater returns on investments when they have more diverse boards. Diverse management teams foster greater innovation. Diverse teams solve problems better. Diverse companies are more likely to grow and enter new markets. Diverse markets generate more accurate prices and are less likely to crash when financial bubbles burst.

Part of the benefit for these commercial successes comes from the fact that diverse teams are more likely to create products and services that appeal to a broader audience. However, another essential part is that diversity in teams generates conditions that favor creativity and greater scrutiny of the quality of ideas. In essence, diversity makes us smarter. This means that diversity is a key element in both innovation and adaptation, two desirable qualities for a world in crisis.

In science, Stanford-based research led by Dan McFarland has shown that underrepresented groups are more likely to produce research that is scientifically novel and innovative, despite being systematically undervalued. Ethnic diversity of scientific teams is the strongest correlate to high-impact research. In experiments on group problem-solving, the solutions proposed by ethnically diverse groups are judged to be higher-quality and likely more effective. Diverse teams are more creative and more innovative.

Diversity is especially important in times of turmoil, when groups need to solve complex problems. A remarkable insight into the power of diversity came 20 years ago by complexity scholars Lu Hong and Scott Page. Using computational models that abstracted away all sociodemographic notions of diversity, they showed that diverse teams nearly always out-perform homogeneous teams, even if the homogenous teams are uniformly composed of top-performers.

The key insight was that at any given point in time, the best problem-solvers are essentially identical to each other, making a team of best-performers completely redundant. There is only one way to be the best, but there are many ways to be otherwise. Team diversity creates complementarities essential to solving novel or complex problems. Complementarity means that a team’s strengths are super-additive, when the whole is greater than the sum of its individual parts. As our valuation models typically assume additivity, we can see how, despite its fundamental importance, diversity is often under-valued.

Financial investors have long understood the instrumental benefits of diversity. A smart investor does not place all their bets on a single asset. Diversification is an essential quality of any investment portfolio. Indeed, the very idea of a portfolio speaks to the power of diversity — by judiciously combining assets, a portfolio investor can secure a higher return with lower risk than if they invested in a single asset.

The investment strategy of hedging specifically echoes Hong and Page’s insight. A hedged portfolio necessarily contains under-performing assets, at least in the moment. The idea of a hedge is to have assets in your portfolio that move in the opposite direction from its other elements. Ideally, a hedge moves up when your other investments move down. If your portfolio is doing what it’s supposed to do and growing, this means that you have assets in it that are either declining or at least not growing at the highest possible rate. This is what protects you when the market changes, particularly if it does so abruptly.

Despite its many benefits, diversity is not costless. It can make maintaining social cohesion more difficult. Diversity is often uncomfortable. Of course, this is actually one of the fundamental mechanisms that make diversity work. The friction caused by colliding backgrounds and cultural assumptions leads teams to break their conformity, question their assumptions and discover better solutions. Diversity requires deliberation and deliberation, as members of the Stanford community should know better than most, is a key element of a functioning democracy. 

When companies like Meta, Google, McDonalds and Target drop their previous commitments to diversity, they reveal their true values. In the best case, this is simply fear of retribution from an unpredictable executive branch. But importantly, it also indicates that innovation is not among their core values. In the short term, these companies may continue to do fine, but their turning their backs on diversity does not bode well for longer-term prospects in our uncertain, rapidly-changing world.

The Trump administration’s war on diversity — and much of the Academy’s and corporate America’s easy capitulation to it — undermines American innovation and national security. We need to innovate to deal with the wicked challenges we face: climate change, democratic backsliding around the world, novel (and possibly existential) security risks and mounting economic inequality. Our riotous and sometimes-uncomfortable diversity is truly our superpower in rising to these challenges. The war on diversity is also a war on innovation and excellence.