Diversity in the workplace gets a lot of lip service. But for Dan Tennebaum, Managing Director of India Capital, the value of an eclectic team shows up clearly in his bottom line. The India Capital Fund is a hedge fund that invests exclusively in Indian equities and Tennebaum, an American who runs a research team out of Mumbai, has deliberately assembled an unusual crew.
“In India, what people tended to do was hire a lot of former investment bankers and sell-side equity analysts,” he says. Though he does have those on his team, he’s also hired staffers with backgrounds in computer science, private equity, accounting, management consulting – and even a former cloth trader in Mumbai’s Mulji Jetha market.
“What we’ve tried to do is give ourselves as many angles as possible to look at a company,” he says. “Doing your own research seems to be the way one makes money, but that’s hard to do if you approach it entirely with people from the same background who have worked at the same firms. If you throw a lot of people at the problem with an eclectic and unusual background, you’re more likely to come up with a different answer.”
India Capital has also embraced linguistic diversity – a crucial tool when it comes to on-the-ground company research. While many investment professionals in India hail from a few specific states, Tennebaum’s team comes from across the country and speaks 10 languages. “When we went to a mining company in the east of the country, my colleague could go there and speak to line employees in their native language. It’s a very different conversation than if you go to the CEO and speak to them in English or Hindi.”
Managing employees with so many different backgrounds isn’t always easy, says Tennebaum. “Everyone thinks they want diversity, but as a manager, you have to be prepared for the consequences. There are a diversity of opinions, and sometimes there are 10 different answers to a simple question.” There can even be simple cultural misunderstandings. “In my first job in India [at another company],” Tennebaum recalls, “I walked in and heard screaming coming from the boss’ office. I asked someone what was going on, and he said, ‘oh, someone’s being fired.’ I was really alarmed until I realized in India, ‘being fired’ means you’re being yelled at, not losing your job.”
But Tennebaum believes his team’s diversity is ultimately its competitive advantage. “When IT systems turn out to be an important feature of what a company does, our employee with a computer science background can say, let’s look at that – can you show me the code? That’s not something a typical investment banker can do.” He recalls one instance where his team sensed opportunities in an old-school, state-run enterprise that others did not. “People looked at the company as a sclerotic dinosaur of an organization with the feel of a socialist apparatus,” Tennebaum recalls. “Foreign investors said they didn’t want to touch it.” But his team knew, from talking with relatives in villages across India, that public trust in the institution was high, and its local leaders were among the most respected community members. “That gave us a level of comfort that others didn’t have,” and the investment has paid off handsomely.
On the flip side, India Capital was able to look critically at the textile industry, thanks to the experience of its employee with a background in cloth trading. “Indian textiles looked appealing to some investors,” says Tennebaum. “It was a reasonably large sector, and it traded cheaply compared to global peers or even to the replacement cost of their machinery. But having someone who had dealt with the companies on a business basis and seeing the challenges they faced when dealing with customers, sourcing raw materials, and the costs of capital led to a dimmer view than you’d have if you read a bunch of brokerage reports.”
Hiring a diverse team isn’t just a nod to political correctness, Tennebaum has found. In his business, so dependent on identifying undervalued assets, it pays to have a myriad of perspectives. “I genuinely have been impressed how powerful [diversity] is in this business,” he says. “It can create extra work and confusion at times, but it’s made a real difference.”
What’s your company’s diversity strategy? Have you found that diversity enhances your bottom line?
This post originally appeared on the Forbes website on August 10, 2012.
Dorie Clark is CEO of Clark Strategic Communications and the author of Reinventing You: Define Your Brand, Imagine Your Future (Harvard Business Review Press, 2013). She is a strategy consultant who has worked with clients including Google, Yale University, and the Ford Foundation. Listen to her podcasts or follow her on Twitter.