About Astia

Thursday, October 27, 2011

Carl Schramm OpEd: The Importance of Women Entrepreneurs

This is a translated OpEd by Carl Schramm, CEO, Ewing Marion Kauffman Foundation published in the Turkish, Radikal, October 20, 2011

The Tenacity and Networking It Takes

The former Canadian foreign minister Pierre Pettigrew was possibly the first to state that the era of globalization would count women among its winners. And indeed, women have made great strides, virtually all over the world, as far as their labor force participation and their level of education are concerned.

According to the World Bank, women accounted for 40.1% of the global labor force in 2009. Women now account for the majority of university students in countries including Malaysia, Libya, Venezuela and Iran.

And yet, for all these successes, there is one arena where the progress of women is still very insufficient, on the crucial front of entrepreneurship. Contrary to what many would readily and rightfully assume, especially given women's impressive range of multitasking skills, the ranks of entrepreneurs globally are still rather devoid of women.

That means that, at a time when the world economy, all the way from the United States to Egypt and Bangladesh, is nervously seeking future sources of growth and jobs, the entrepreneurial potential of, roughly speaking, 50% of humanity has not been brought to bear.

If we wanted to launch one initiative across cultures to stimulate economic growth, increasing the ranks of women entrepreneurs would probably the one that yields the most potential.

But in order to get it right, and achieve more than a mere feel-good exercise, it is important to understand the real sources of constraint that seem to keep women from realizing their full potential in this domain.

It is also very important to go after the right target. For all the attention given to micro lending promoting the ranks of women entrepreneurs, what is at least as critical in a global context is to broaden the ranks of women entrepreneurs leading high-growth companies.

When our foundation looked into what's holding women back in the entrepreneurship arena, we did look at education, especially in the sciences, since that is the springboard for a lot of start-up companies with significant innovation and job growth potential.

In the case of the United States, significant progress can be reported: For the past four years, women accounted for more graduates in all fields of the natural sciences than men, except for in engineering. And even there the tide may be turning, as evidenced by the fact that two years ago for the first time ever, more than 50% of the incoming engineering students at MIT were women.

Our research also showed that women scientists, in their subsequent careers, were funded as much as their male colleagues and published just as much as they, so that neither of these two factors can account for women’s underperformance.

Where women did fall far short, however, was at the most crucial nexus -- the switch from research to commercialization. Women, in fact, launch very few start-ups and account for a vastly disproportionate share of intellectual property generated out of university research.

The root cause of this shortfall, according to studies undertaken at Harvard and MIT, is that women, quite strangely compared to what one would expect, have very weak networks in the commercial marketplace. And that, of course, is where the rubber always meets the road.

This is why the case of Olivia Lum, the CEO of Hyflux, is such an inspiration and point of departure. In early June 2011, the Singapore-based Ms. Lum was awarded the title of World Entrepreneur of the Year by Ernst & Young, making her the first woman ever to win the award.

Her life story underscores the potentially transformative power of entrepreneurship. Adopted at birth and growing up in neighboring Malaysia, she got a science degree and joined GlaxoSmithKline, the pharmaceutical firm, as a chemist.

Then, in 1989, she quit her job in order to focus on polluted industrial water, a problem she had first become aware of in her corporate work at Glaxo. From that moment on, she was determined to seize on what has turned out to be a tremendous growth market, the desalination industry.

Olivia Lum credits hunger and poverty, as well as her experience of selling goods on the street when she was a girl -- a task she had to take on in order to earn the money that allowed her to stay in school -- as helping her develop the tenacity it would take to succeed as an entrepreneur.

Two decades on, her firm now employs 2,300 people in Asia, the Middle East and North Africa and it was recently selected by Singapore's national water agency as the preferred bidder for the country's second, and largest, desalination project. Singapore, for its part, is among the world leaders in water management.

Along the way, Ms. Lum did exactly what our foundation’s research had pointed to — that it is a matter not just of vision and talent, but of relentless collaboration and systematic networking that helps entrepreneurs, women or not, to transform ideas into real businesses that can be scaled up.

Contrast her success story with the little known story of Sandra Lerner, one of the co-founders of Cisco, one of today’s iconic IT companies. Equipped with a Master’s in statistics and computer science from Stanford, she launched the company in 1988 while working as Director of Computer Facilities at Stanford’s Graduate School of Business.

While it is pure conjecture whether her staying on at the company would have changed the dynamics for women entrepreneurship in the United States, and she did become wealthy, one thing is certain: The IT industry, as impressive as it has been over the past several decades, is not rife with stories about women entrepreneurs, which makes Ms. Lerner’s involuntary departure in August 1990 all the more regrettable. At least we all know what difference a single individual, Mia Hamm, made in the development of women’s soccer in the United States, long considered a male domain.

As Americans, we can take great credit for having done right by -- and been open to -- the emergence of U.S.-trained foreign scientists as top U.S.-based entrepreneurs, especially in and around Silicon Valley and the IT field.

It seems that we as a nation, indeed as a global population, and going far beyond the confines of the IT sector, have not done anywhere near as well at getting women launched as entrepreneurs in high-growth businesses. Given the tremendous challenges the world economy faces, and especially the needs for growth, innovation and jobs, why not focus on this challenge and make the 2010s the Decade of the Woman Entrepreneur?

[This is translated from an original OpEd in the Turkish paper Radikal. Read the original here: http://www.radikal.com.tr/Radikal.aspx?aType=RadikalHaberDetayV3&ArticleID=1066892&Date=25.10.2011&CategoryID=99]

Thursday, October 6, 2011

Why entrepreneurs, why women

I recently posted a response to an October 3 blog post by Mark Suster (Why Aren’t There More Female Entrepreneurs?), and I thought my comments should be translated more broadly. Below is a version of my post which is intended to clearly articulate the value proposition for:

Why [high-growth] entrepreneurship?
Why women [high-growth] entrepreneurs?

The simple answer to both - jobs and innovation.

A report prepared by the Ewing Marion Kauffman Foundation recently found that all net new jobs created in the US in the last 30 years have been created by high-growth start-ups less than 5 years old.

And further, research from Babson College found that if women high-growth entrepreneurs had the same access to capital as their male counterparts, we would see 6 million new jobs created within 5 years - 2 million of those within year one.

This is the jobs recovery we all seek.

Add to this the fact that we have women at the ready: women are nearly half the PhDs, more than half the college graduates and half the MBAs. It seems a logical missed-opportunity if women are not fully participating (for whatever the many reasons) in high-growth entrepreneurship.

It's about jobs.

Regarding innovation, there is an abundant body of research that demonstrates that innovation and group intelligence are directly correlated to the number of women on the team. Scott Page, University of Michigan and IBM both published work proving this and are great examples to represent the body of evidence.

IBM's findings were that group intelligence is directly correlated to three things:
1) The group member's ability to read each others expressions
2) The evenness of the conversational participation
3) The greater proportion of women

And further, the researchers postulate that numbers 1 and 3 are closely linked.

It's about innovation.