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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. They defy clichés and go much further in looking after people, their employees, customers, and the community than the average business does.
In your book you talk about women redefining power and the nature of success in the 21st century. How so?
For these women, power is about orchestration, being the conductor of the symphony, the person who doesn't make noise but pulls it all together. It is very different from the military model of leadership of issuing orders. Power in women-owned business comes from the ability to attract and inspire talent, not having the most talent yourself.
Success for these companies is not to be able to sell after two years and make a killing, but making something last and making a contribution to society. These are highly profitable companies, but these are not companies that think there is a tradeoff between treating people well and doing well—they go hand in hand.
There seems to be a trend of successful women who have climbed the corporate ladder opting out to begin their own businesses (see BusinessWeek.com, 2/16/07, "Special Report: Women Entrepreneurs"). What is going on?
You are seeing women leaving corporations with tremendous expertise. And they are just fed up. You see many women entrepreneurs who had successful careers in corporations reach a point where they see that they are not going to get further, or they see that they are not able to work the way that they want to work. Rather than put up with it, they are demanding an alternative. They are finding a degree of freedom in entrepreneurship they can't find anywhere else.
Women business owners are frequently cited as one of the fastest growing segments in entrepreneurship. What do you think accounts for this shift in development?
Partly it's easier than ever to set up a company. We are also seeing women as the most educated percentage of the population. There are more qualified women than ever both in terms of education and work experience. And they are probably more confident now than they've ever been. They don't believe that the only way to get ahead is to work for a man.