Matthew Rafat

Notes from Brocade Communications' Shareholder Meeting

Here is what I call "Rafat's Law of Diversity" ©:

1. One constant variable in life is that change will occur.

2. The ability to keep up with change and adapt to changing environments provides an advantage.

3. Entities and people who adapt the quickest to change will have an advantage and will be ahead of their competition. In economic terms, this is called the ability to adapt to "creative destruction" (See Joseph Schumpeter).

4. As of 2009, the world population is becoming and has become more and more inter-linked. Globalization is occurring rapidly, causing persons who would have never interacted fifty years ago to now interact and to engage in numerous economic and social transactions.

5. Organizations and entities that have more knowledge and ability to interact on a positive basis with numerous cultures will have an advantage over entities that either lack this ability or that have less of it.

6. Due to globalization, the world is becoming more diverse.

7. Entities that lack diversity appear to be slower to adapt to change.

8. Entities that lack diversity as their surrounding local or non-local environment becomes more and more diverse show that their internal culture is more resistant to change or that they are unable to gain talent from a diverse range of sources.

9. Entities that are unable to draw talent from a diverse range of places or that are resistant to change will be disadvantaged against more fluid, diverse entities.

10. As globalization increases, entities that are more diverse will have both tangible and non-tangible advantages over non-diverse entities.

11. Therefore, more diverse entities will be more competitive than non-diverse entities.

12. As of 2009, Asians are approximately 60% of the world population. As of 2009, persons of African descent are approximately 20% of the world population. As of 2009, the United States has only 5% of the world population. Mandarin and Spanish are more commonly spoken worldwide than English.

13. The United States is a consumer-based economy that relies on domestic and international consumption of its products to increase growth, profits, and influence.

14. To fully maximize one's successful interactions with worldwide entities, one must be fluent in more than one language and well-versed in several cultures.

15. Multinational entities that fully maximize their ability to engage with several cultures will maximize their ability to gain new customers and allies.

16. Entities that fail to maximize their their ability to engage with several cultures will be disadvantaged against multinational entities.

17. Familiarity with different cultures and languages will maximize a multinational entity's ability to compete globally, providing it an advantage over entities that fail to maximize their ability to compete globally.

18. "Familiarity with different cultures and languages" may be called "diversity."

19. Multinational entities that favor diversity will be more competitive than entities that do not favor diversity.

© Matthew Rafat

Notes from Brocade Communications' Shareholder Meeting

To edb:

You don't have enough data to analyze whether more diverse companies' stock prices do better than non-diverse companies. Almost every publicly traded company in the U.S. has non-diverse upper management. In the future, assuming more publicly traded companies gain diversity in their upper ranks, you may be able to make comparisons.