The era of Bill Gates and Andy Groves and Steve Jobs has come to a close, and a new group of entrepreneurs and leaders is emerging—one as talented and driven as any previous generation I can think of. But there’s something profoundly wrong with the next generation of business leaders, as business channel CNBC has inadvertently pointed out.
You see, when doing research for a client, I happened on CNBC’s 2015 list of Top 50 Disruptors. All of these disruptors, defined as private companies whose innovations are having a dramatic impact across their industries, have attracted venture capital. Many of them are destined to change the world. And some – like Uber and SapceX and Airbnb – already have. But when I saw the photographs of the entrepreneur-leaders behind these companies, something struck me as odd.
All five of them were male.
Okay, no big deal, I thought. That’s just the top five. What about the other 45? Let’s see the rest of these business all-stars before I jump to any conclusions. But when I scanned the remaining 45 photos, all I saw was row after row of males. There were but three exceptions, which I’ve highlighted in yellow.
So this the next generation? This is the future of the business world? Virtually female-free? What’s up with that? Look, I’m not a statistician, but even I can recognize a statistical anomaly when it stares me right in the face.
So when I decided to try and find out why, I found a couple of interesting facts.
Fact #1: Very few CEOs in the Standard & Poor’s 500 are women. Most of us could have guessed that. But I was shocked to find that they represent only 4.8% of chief executives
Fact #2: Men are nearly twice as likely as women to launch a new business.
Okay, fine. But neither of these facts explains the huge discrepancy in CNBC’s list. Only 3 startups out of fifty? If my math is correct, that’s a meager 6 per cent. How can anyone explain this massive incongruity?
And no, it’s not that women are less competent at running startups than men. Studies show that women startup founders actually outperform their all-male counterparts, with female founders performing 63% better than all-male teams, according to a study by First Round Capital (ten years of data on over 300 companies and nearly 600 founders were analyzed.)
Perhaps the solution to the puzzle might be found in another interesting fact. It seems that firms with technical co-founders perform a full 230 per cent better than their non-technical colleagues. By technical, they are referring to STEM – those with a Science, Technology, Engineering or Math education.
This clearly tips the scales in favour of men, because women tend to shy away from STEM related fields, even though they are just as capable of excelling at STEM courses as men. So why the aversion? It appears to be a cultural issue according to a U.S. government study entitled “Women in STEM: A Gender Gap to Innovation.” Several factors contributed to the gender discrepancy in STEM jobs, according to the study, including “a lack of female role models, gender stereotyping, and less family-friendly flexibility in the STEM fields.”
Okay. So now we've narrowed it down to culture and stereotyping—at least as far as tech startups are concerned. But that still begs the question, why should we be concerned about the lack of women in tech startups? After all, what’s wrong with women starting healthcare firms or lifestyle companies or social services organizations, which many do? Nothing at all. Except for this:
Those kinds of startups tend not to be scalable.
That means they’re not perceived as being capable of growing at double digit rates. And that means they will not attract VC funding on a consistent basis, which means women-owned startups will have far less chance of becoming the next Uber or Airbnb, let alone the next Microsoft or Apple.
Entrepreneurs are still seen and judged through a male lens
Venture capitalists are smart people. In fact they are some of the smartest people around. But they are people. And in business, people tend to associate with like-minded people. And since the vast majority of VCs are male, they tend to fund the people they know best. That would be younger versions of themselves, i.e. other males. “Men are more likely to nominate men, so if we actually want to recognize the best of the best, we need to actively encourage women to apply,” said Dr. Catherine Anderson in a 2015 Maclean’s article entitled “Why there are still far too few women in STEM.”
But that may not be enough. Sociology professor Sarah Thébaud has unearthed new evidence indicating that women entrepreneurs are at a disadvantage “because people are prone to doubt that they possess the kinds of traits and skills that we stereotypically associate with entrepreneurship.”
In a series of experiments she conducted in the U.S. and U.K., she asked participants to evaluate a mixture of mundane and innovative entrepreneurial pitches by men and women. Some participants were told that women led the ventures, and others that men were in charge. They then scored each business on a series of measures designed to capture the extent to which they thought it would be viable and worthy of investment. They rated each entrepreneur on a series of dimensions, such as how competent and skilled they seemed and their perceived level of commitment.
Here is what she discovered:
“I found that participants, when considering pitches of run-of-the-mill business ideas, rated women-led ones as generally less viable and less investment-worthy than those described as spearheaded by men. And, even though there were roughly equivalent numbers of male and female participants, I didn’t find any evidence of gender differences: Women rated women just as poorly as the men did. (The participants were also mostly in their early 20s, a sign that this form of gender bias is not a bastion of older generations.) In reality, entrepreneurs aren’t lone warriors […]. Creating a less gendered vision of what successful entrepreneurship looks like will undoubtedly be challenging. But one way to start would be for investors, organizations and educators focused on entrepreneurship to actively promote and rely on criteria based on the content of a business plan, rather than the perceived personality traits of a given individual.”
To which, I can only answer, good luck with that! We’ve already established there is cognitive bias, which is notoriously difficult to remove. So what can be done? Is there any light at the end of this seemingly impenetrable tunnel? Could the solution be as simple as finding more high-powered female venture capitalists, like Mary Meeker and Kelly Hoey? That would help. But it's not enough. Filling the VC ranks with women is not easy, given the technical and business requirements of the job. And even if there were more women VCs, women aren’t inclined to bestow any favours on their own sex, as we noted in Sarah Thébaud’s study, earlier.
Perhaps a better solution might be to turn the problem upside down—by changing our educational culture. What if we started embracing science as an art? After all, science is every bit as creative as any of the arts, perhaps more so. Artists and scientists have much more in common than they realize. Experiments and hypothesis testing (trial and error) are at the core of the scientific method. Any scientist will tell you that, just as any writer will tell you that trial and error (rewrites and retakes and do-overs) are at the core of writing and musical composition and movie-making, not to mention painting and sculpting.
To make science feel more like an art, fresh creative air must be blown through the dusty, hidebound corridors of science teaching, which is often bound by tradition instead of creativity. To encourage more people—especially women—to go into technical fields we need to make science more relevant to young children, especially girls, and keep making it relevant as they grow up.
Science teachers need to do a better job of relating science to the real world by finding simple, practical and creative ways to show their pupils how science can help people live better lives—because it can. If science and scientific thinking began to feel like a key part of our daily lives, women (and more men, too) might flock to the sciences.
Who says girls innately don’t like science and STEM? Both Marie Curie and her daughter won Nobel Prizes in two core STEM fields: chemistry and physics. So why can’t the next generation of female leaders be inspired to do something similar? The world is becoming more ‘technical’ every day. We continue to write ever more sophisticated code that unlocks the puzzle behind the body and the mind and our health and our quality of life. Surely the world would be a better place if women were equal leaders in this exciting technological arena. I certainly know the next generation would be better and stronger for it, and so would I.