Men Dominate, Women Orchestrate

Author Margaret Heffernan explains how women entrepreneurs are altering the course, and the culture, of business today

By every conceivable measurement, women continue to comprise one of the fastest growing segments in entrepreneurship. According to the Center for Women's Business Research, between 1997 and 2004, privately held, woman-owned businesses grew at three times the rate of all U.S. privately held firms, and woman-owned businesses created jobs at twice the rate of all other firms. Furthermore, women did all of this with less than 1% of the venture capital that's invested in small businesses.

Margaret Heffernan, having run five different businesses in the U.S. and Britain, including Icast, Infomation, and Marlin Gas and Trading, has some thoughts on why women are altering the course of business today. In How She Does It: How Women Entrepreneurs Are Changing the Rules of Business (Viking 2007) Heffernan has compiled not only her own wisdom on the subject, but the collective experiences of such successful businesswomen as Geraldine Laybourne of the Oxygen Network and Mona Eliassen of the Eliassen Group to describe what she calls one of the most profound developments in the business world today—the female entrepreneur.

Recently, BusinessWeek.com staff writer Stacy Perman spoke with Heffernan, who is also a visiting professor of entrepreneurship at the Simmons College School of Management in Boston. Edited excerpts of their conversation follow:

Is there something inexplicably unique about female entrepreneurs compared to their male counterparts?

I think what is really unique about them is the huge emphasis that they place on values. By this I mean women may think about what values their company will stand for even before they know what the company will do. It is remarkable how much time, attention, and resources that they devote to culture and how broadly they define that, to say culture will include not just employees, but customers and the broader community.

Also, women entrepreneurs are fantastically good at improvisation. That is not to say that they are bad planners, but that they are comfortable with the degree of improvisation that entrepreneurship demands. Additionally, women are more likely to ask for help and build a broad network of advisers. They understand that a company is smarter if it has access to smart people. There is less of a solo concept of leadership. Fundamentally, women lead by orchestration, not by domination.

From the time you started in business until now, what would you say are the most significant changes you've seen in women's entrepreneurship?

In a 15-year period, I'd say that women have gained more confidence—and that's partly from seeing more women around. They are less lonely and there are far more examples of stunning successes than when I started. The networks that exist are much richer than they used to be.

Are there any defining qualities among successful female entrepreneurs in your estimation that separate them from the pack?

They absolutely understand building value by developing people. Mona Eliassen, one of the women in my book, says that apart from having a market to serve, she thinks that culture is the most important part of business. This woman spent a huge amount of time and resources building a tremendous company culture that has weathered the recession and the technology bust.

For most men, their mental model of a company is a machine. For every woman I've worked with or interviewed, their mental model is a living organism. That has huge repercussions. It means attention to culture is mission-critical, not peripheral.

Also, sustainability is absolutely a goal and the way to make a company sustainable is to make it profitable. The other part about sustainability is that the best business leaders all ran their companies based on the understanding that the company was more valuable if it didn't need them. They are far from following the ego mode of leadership. These women saw the litmus test of success as how well the company can do without them.

And these women defy market truisms about small business. For example, that they can't afford health benefits or child care.