This is Chapter 8 from my book, You Can't Fix What You Can't See: An Eye-Opening Toolkit to Cultivate Gender Harmony in Business.
Chapter 8 - What Women Offer
Everybody is a genius. But if you judge a fish by its ability to climb a tree, it will live its whole life believing that it is stupid. —Albert Einstein
Having a diverse workforce and being able to leverage that diversity will make your company’s financial performance soar. McKinsey has been analyzing and publishing this data for several years. Its latest report, published in 2018, uses company data from 2017. It looks at this data comparing financial performance of those companies in the top quartile for gender diversity on their executive teams with the companies
in the fourth quartile. Here’s what they found:(99)
21 percent more likely to experience above average profitability 33 percent more likely to outperform on Profitability (EBIT margin) 27 percent more likely to experience value creation (profit margin)
What company wouldn’t want these financial advantages in today’s business world? In fact, maybe the question we should all ask ourselves is: how much are you willing to invest to get this kind of improvement?
A number of studies have examined leadership competencies in business. In a 2019 study published in Harvard Business Review(100), using data taken from thousands of 360-degree reviews, women outscored men on seventeen of nineteen leadership capabilities. Since this come from men. The differences shown in Table 6 are not large, but they are statistically significant.
Table 6: Leadership Capabilities as Demonstrated by Women and Men(101) This data is consistent with previously published data that indicated men are slightly better at strategic perspective and technical or professional expertise.
Based on this data, one would think that percentages of men and women in leadership positions should be much more balanced. Sadly, only 4.9 percent of Fortune 500 CEOs and 2 percent of the S&P 500 CEOs are women.
“Women are perceived by their managers — particularly their male managers — to be slightly more effective than men at every hierarchical level and in virtually every functional area of the organization. That includes the traditional male bastions of IT, operations, and legal,” says Jack Zanger.
Women bring many strengths to the table, such as enhancing an organization’s strength and driving profits higher while increasing engagement. Krawcheck shared six distinct traits that women possess that can improve an organization:(102)
• A healthy risk awareness • The ability to see things holistically, which they use to manage complexity effectively • A focus on relationships • The gift of a longer-term perspective • A love of learning • The drive for impact and meaning To these you can add: • Women seek advice and learn from it
I extracted this last one from Lipman’s book, That’s What She Said(103). This quality is especially important as, more often than not, innovation is driven at the fringes of industry. So, the more people you have on the lookout for and willing to learn from what is happening in other industries, the more likely you will be able to spot and act on emerging trends before your competitors do. Also, here’s your spoiler alert: look at the list above and compare it to the list of imperatives needed to create an authentic organization in the final chapter. I believe these strengths will become more and more important in the future.
DIVERSITY DRIVES INNOVATION
Sylvia Ann Hewitt did a study (104) examining the intersection of diversity and innovation. Her research included surveying 1,800 professionals and a review of forty case studies, along with several focus groups and interviews. In her study, she identified two kinds of diversity: inherent and acquired. Inherent diversity is based on traits you are born with, like gender, ethnicity, and sexual orientation. Acquired diversity originated from traits you gain based on your life experiences. For example, acquired diversity might come from living in another country or doing nonprofit humanitarian work, anything that allows you to have in-depth knowledge. Companies that had leadership with both of these traits were shown to out-innovate and outperform other companies whose leaders did not have them. Hewitt found that employees at these companies were 45 percent likelier to report their firms market share grew and 70 percent likelier to report the firm was able to capture a new market.
Having these two dimensions of diversity in the leadership team creates an environment in which outside-the-box ideas actually get heard and consequently can be executed. As Hewitt explained:
“When minorities form a critical mass and leaders value differences, all employees can find senior people to go to bat for compelling ideas and can persuade those in charge of budgets to deploy resources to develop those ideas.”
Unfortunately, her research also revealed that 78 percent of the people surveyed worked at companies that don’t have this depth of diversity in their leadership. At these companies, she found that various minorities were less likely than straight white men to win endorsement for their ideas with the following breakdown:
• Women were 20 percent less likely (than straight white men) to win endorsement for their ideas, • People of color are 24 percent less likely, and • LGBTQ people were 24% less likely.
This problem has a devastating impact on these companies’ abilities to understand the unmet needs of markets.
“A team with a member who shares a client’s ethnicity is 154% likelier than another team member to understand that client,” Hewitt points out.
Her statement rings true for all kinds of diversity. Lipman shares a poignant example of this in her book That’s What She Said.105 The male executive running the Kotex business had been asked to explain their strategy at a board meeting. Afterward, one of the board members asked if perhaps he could get a woman to present the strategy. He looked at this org chart and realized that 81 percent of the top jobs were held by men. Lipman sums up the situation nicely in her book:
“If you’ve ever wondered why tampon commercials feature gleeful women twirling around in all-white spandex — something no actual women having her actual period has ever willingly done — now you know,” she writes.
Of course, you have to look at the acquired diversity aspect as well. What the study found is that six behaviors that come with acquired diversity are key to unlocking innovation:(106)
• Ensure that everyone is heard • Make it safe to propose novel ideas • Give team members decision-making authority • Share credit for success • Give actionable feedback • Implement feedback from the team
“Leaders who give diverse voices equal airtime are nearly twice as likely as others to unleash value-driving insights, and employees in a ‘speak-up’ culture are 3.5 times as likely to contribute their full innovative potential.”
INNOVATION DRIVES DIVERSITY
Here is an interesting story that shows how you can create an upward spiral with diversity driving innovation and then innovation driving even more diversity. In this example, the diversity driver is not gender, but race. In my mind, diversity in any form can drive great business results, which, in turn, can drive the understanding of the importance of diversity to bottom-line business results.
Julius Pryor was working with TAP Pharma (a partnership between Takeda and Abbot, now part of AbbVie), which had just released a drug for the treatment of prostate cancer. This new drug worked differently by suppressing testosterone that was indicated to cause the rapid growth of prostate cancer cells. It represented a new development in the treatment of prostate cancer.
According to the Prostate Cancer Foundation, black men are nearly 1.6 times more likely to develop prostate cancer and 2.4 times more likely to die of the disease. Furthermore, the recidivism rate for this cancer for black men was 60 percent. When Julius learned about these statistics, he immediately started discussions with the sales team, to ensure that their primary target was black physicians.
“I was shocked at the pushback I got from the team,” Julius tells me. “They did not plan to target this demographic at all! The team came up with all kinds of excuses, like: ‘this group does not pay their bills on time,’ or ‘the patients do not come back for treatment’ (this drug required a once per month injection). I was floored. So, I went to the VP of Sales and said: ‘Let’s do a demonstration project. We can target just three African American physicians and see if we can get them to convert their patients over to this drug.’ They set an arbitrary metric for success at conversion of just 30 percent of each physicians affected population.”
Within the first six months, they converted not 30 nor 50 percent, but all of their affected patients over to the new drug from the three physicians in the demonstration pilot. It didn’t stop there. Once the company saw the impressive results, the sales team got new directions. By twelve months, 20 percent of the total sales of this drug were coming through black physicians, even though they represented only 3 percent of the total physician demographic.
This development represented a big win, both for the patients and for the company. But the story doesn’t end here. A year and a half later, the company began to use the same drug for women. It turns out that women with leiomyomas (fibroid tumors) would also benefit by this drug, which also suppressed estrogen. Black women were 80 to 90 percent likely to develop fibroids by age fifty (compared to 70 percent of white women). This new indication for the drug, along with the new demographic, added even more revenue to the company, with sales now measured in billions of dollars.
“The real kicker was the collateral benefits that happened at the company as a result of the demonstration project. Within three years, they tripled the number of minorities in the company,” Julius explains. “That population went from 10 percent to 30 percent. The number of women in the company also rocketed from 10 percent to 30 percent. It was all because the leadership team could ‘see’ the impact this demographic had on the company. They ‘got it’ and acted accordingly, hiring more people who could effectively tap into these markets.”
RESPONSIVENESS TO MARKETS & CLIENTS
It doesn’t matter whether you look at the business to consumer market or the business to business market: women are now controlling a huge portion of the spending in these markets.
Women decide on 85 percent of consumer purchases.
As shown in Figure 25 below, women control 60 percent or more of the decision-making for many consumer categories.(107)
Figure 25: Consumer Spending Decision by Women
Women are responsible for controlling $40 trillion in spending across the world in 2018 ( 108). That’s a lot of spending power. You can ignore this reality only at your own peril.
Perhaps even more scary for the consumer companies that should be selling to these women is the following statistic:(109)
“91% of women feel that advertisers don’t understand them.”
I don’t know about you, but with women controlling that volume of consumer spending, I think I would start quickly trying to understand them. And who would be the best people to employ to drive that understanding? Well, women would probably be an excellent place to start.
Now, if you shift your focus over to the business to business market, you will find that:
Women are currently making 41 percent of company purchasing decisions.(110)
The question remains: is your company fully equipped to navigate this territory?
You will find some interesting dynamics in meetings where these business decisions are being made. When men and women meet to discuss a potential new contract, women view the meeting as a chance to explore options in collaboration with an expert resource. Men, on the other hand, may see the same meeting as a final step in the process and expect to be narrowing down and choosing options. These two very different intentions can cause a deal to fall apart before it even has a chance to coalesce.
Additionally, because of our differences, men might be inclined to end a meeting as soon as they get one good idea or a solution they connect with. Women, on the other hand, ask more questions and more rigorously explore options and vendors. With one person jumping up from the table to implement a solution and the other still in the exploratory phase, you can see again that the potential for a deal to fall apart is high. Unless, of course, your teams are gender-savvy and experienced at navigating our differences.
Women bring some other interesting strengths to the table around markets. Did you know that women are more likely to make referrals to others based on their positive experience? Based on one study, a woman would refer her financial adviser to others twenty-six times during her lifetime. That’s a lot of referrals. Men would only make eleven referrals, less than half that of the women.(111) Your female clients can really amplify your reputation!
PREPARATION AND ADVICE
Frequently, as business leaders in today’s world, we find ourselves facing new challenges where perhaps our knowledge is not as deep as we would prefer. Recognize that women have a willingness to both prepare for these situations and to seek outside advice.
According to Huston, when it comes to preparing ahead of time:(112)
“Men are comfortable winging it 65-70% of the time and only needed to prepare 30-35% of the time. Women believe they have to be prepared 80% of the time.”
She also identified some interesting gender differences in terms of seeking advice: “Upon receiving a takeover bid, companies with more women on the board chose to hire the top M&A advisors. Where all male boards hired second tier advisors. Were the men extremely confident in their decision-making ability? They hired consultants, but it was a check the box, pro forma exercise. Also, those who hire the top tier (and pay top dollar), actually listen more closely to the recommendations.”
So, if your company plans to “go where others have not gone before”—and what company doesn’t?—you’d be much better off with a diverse mix of leaders throughout your organization, especially at the top.
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99 Hunt, Vivian; Prince, Sara; Dixon-Fyle, Sundiatu;, and Yee, Lareina; “Delivering through Diversity,” McKinsey & Company, Jan 2018.
100 Zenger, Jack; and Folkman, Joseph; “Research: Women Score Higher than Men in Most Leadership Skills,” Harvard Business Review, June 25, 2019.
102 Krawcheck, Sallie. Own It: The Power of Women at Work. Currency, 2017.
103 Lipman, Joanne. That’s What She Said: What Men Need to Know (And Women Need to Tell Them) About Working Together. Harper Collins Publishers, 2018.
104 Hewlett, Sylvia Ann; Marshall, Melinda; Sherbin, Laura, “How Diversity Can Drive Innovation.” Harvard Business Review, Dec 2013.
105 Lipman, Joanne. That’s What She Said: What Men Need to Know (And Women Need to Tell Them) About Working Together. Harper Collins Publishers, 2018.
106 Hewlett, Sylvia Ann; Marshall, Melinda; Sherbin, Laura, “How Diversity Can Drive Innovation.” Harvard Business Review, Dec 2013.
107 Yankelovich Monitor and Greenfield Online for Arnold’s Women’s Insight Team.
108 The Boston Consulting Group (BCG), “Women Want More: Updated Findings on the World’s Largest, Fastest-Growing Market,” Webinar Presentation, September 2013. 109 Yankelovich Monitor and Greenfield Online for Arnold’s Women’s Insight Team.
110 Benko, Cathy and Pelster, Cathy. “How Women Decide,” Harvard Business Review, Sept 2013.
111 Osterland, Andrew. “Female Clients more likely than men to make Referrals”. Investment News, Apr 24, 2012.
112 Huston, Therese. How Women Decide; What’s True, What’s Not, and What Strategies Spark the Best Choices. Mariner Books, 2016.