In­no­va­tion + Gen­der Equal­ity: Be­cause its 2017

In­stead of fo­cus­ing on build­ing a ‘busi­ness case’ for gen­der equal­ity, we need to re-frame it as an in­no­va­tion chal­lenge.

Rotman Management Magazine - - FRONT PAGE - by Sarah Ka­plan

that mo­ment when newly-MOST READ­ERS PROB­A­BLY RE­MEM­BER elected Prime Min­is­ter Justin Trudeau was asked by a re­porter, why he had ap­pointed women to 50 per cent of his cabinet po­si­tions — and his now-fa­mous re­sponse: “Be­cause it’s 2015.”

What is re­mark­able to me about that mo­ment is not the Prime Min­is­ter’s ap­pro­pri­ately-fem­i­nist re­sponse — although that was a welcome sur­prise; but the fact that the ques­tion had to be asked at all. How did we get all the way to the 21st cen­tury, and this is still a ques­tion? How are peo­ple still won­der­ing whether women should have equal po­si­tions of lead­er­ship in pol­i­tics, busi­ness — or any­where else in the world?

If I think back to my own ca­reer, it has been 30 years since I had my first job out of univer­sity; and frankly, I thought we would be fur­ther along than we are. Lately I’ve be­gun to won­der, why haven’t we seen more progress?

In­deed, in many ways, we ap­pear to have plateaued. Some have con­cluded that this is be­cause the case for ‘equal­ity of op- por­tu­nity’ has largely been made on an anti-dis­crim­i­na­tion ba­sis. For a long time, the mes­sag­ing around this is­sue was, ‘It’s just not right to dis­crim­i­nate against women’. In re­sponse to the lack of im­pact of this ar­gu­ment, the mes­sag­ing has shifted in re­cent years to ‘mak­ing a busi­ness case for equal­ity’. Some­how, the think­ing goes, if we can make an eco­nomic ar­gu­ment for why di­ver­sity mat­ters, we should be able to make more progress.

Publi­ca­tions from the Fi­nan­cial Times to The New York Times have been tout­ing the ‘grow­ing ev­i­dence’ for a busi­ness case. This ev­i­dence has come, in large part, from re­ports from or­ga­ni­za­tions like Cat­a­lyst, which are fo­cused on es­tab­lish­ing re­la­tion­ships be­tween the pres­ence of women and com­pany per­for­mance. For in­stance, their re­search shows that re­turns for firms with no women on their board of di­rec­tors are much lower than for firms with three or more women on their board.

For those who pre­fer to look be­yond the elite set­ting of boards, there is also data from Mckin­sey show­ing that

gen­der-di­verse com­pa­nies are more likely to out­per­form their peers. These find­ings are be­ing quoted not just in the busi­ness world, but also in the world of non-prof­its and NGOS, with or­ga­ni­za­tions like the World Bank and Ox­fam jus­ti­fy­ing their poli­cies on the idea that gen­der equal­ity is based in a ‘strong busi­ness case’.

This kind of rhetoric about the busi­ness case for gen­der equal­ity has led to com­ments like the one that ap­peared in the New York Times re­cently, in which the writer said — al­most with re­lief — that ‘The busi­ness case now tran­scends pub­lic pol­icy and moral im­per­a­tives’ — as if moral im­per­a­tives some­how don’t matter any­more.

All of this got me think­ing: Why have we be­come so ob­sessed with mak­ing a busi­ness case, and what is the ac­tual ev­i­dence for it?

I turned to the aca­demic lit­er­a­ture to see what sci­en­tific stud­ies had to say about the re­la­tion­ship be­tween gen­der di­ver­sity and per­for­mance. Based on my analysis of the find­ings to date, it ap­pears that this re­la­tion­ship holds true — in some cir­cum­stances, in some in­dus­tries and at some points in time. More im­por­tantly, the re­search shows that the re­la­tion­ship be­tween gen­der di­ver­sity and per­for­mance is not nec­es­sar­ily causal: It could be that the best com­pa­nies hap­pen to hire a more di­verse work­force and have more di­verse boards, so it is not the di­ver­sity that causes their strong per­for­mance, but that di­ver­sity and per­for­mance are two out­comes of ‘be­ing a great com­pany’.

And yet, the head­lines con­tinue to trum­pet: ‘Just add one more woman to your board, and your com­pany will per­form bet­ter.’ The truth is, we don’t ac­tu­ally know if this sup­posed busi­ness case ac­tu­ally holds. Re­searchers have def­i­nitely found cor­re­la­tions be­tween gen­der di­ver­sity and per­for­mance — but be­cause we have not yet achieved full equal­ity and there are few truly- in­clu­sive en­vi­ron­ments to study (yet), we ac­tu­ally have no idea what the true po­ten­tial could be.

When I get to this point in the con­ver­sa­tion, many of the peo­ple who thought I was ‘on their side’ sud­denly think I’m the en­emy. By call­ing the busi­ness case into ques­tion, peo­ple are con­cerned that I am ‘un­der­min­ing’ their abil­ity to make change. What I’m sug­gest­ing, how­ever, is that dou­bling down on the busi­ness case may ac­tu­ally be im­ped­ing change. I would like, in­stead, to re-frame this con­ver­sa­tion.

Crit­i­cally, the ex­ist­ing re­search does not show that adding women in lead­er­ship po­si­tions leads to worse per­for­mance for an or­ga­ni­za­tion. This leads me to ques­tion why we even need to ‘prove’ that in­clud­ing women is some­how a ‘win-win propo­si­tion’ in or­der to have them in­cluded in busi­ness or pol­i­tics — or any other kind of set­ting. Why is the bar set higher in the first place?

Fig­ure One shows the dif­fer­ence be­tween hav­ing women on a board and hav­ing no women on a board. If you turn the com­par­i­son on its head and look at how firms com­pare rel­a­tive to the av­er­age per­for­mance for their whole in­dus­try, the com­pa­nies with no women on their board have, on av­er­age, much worse per­for­mance than the av­er­age for their in­dus­try ( Fig­ure Two). No one is ask­ing those com­pa­nies, ‘What is your busi­ness case for hav­ing only men on your board?’ Yet, we still seem to be ob­sessed with the ‘busi­ness case for ac­tion’ when it in­volves in­creas­ing the rep­re­sen­ta­tion of women.

Why is this? I don’t have a per­fect an­swer, but I be­lieve it has to do with the no­tion of mer­i­toc­racy.

We all want to be­lieve that we live in a mer­i­toc­racy, where the best and the bright­est peo­ple get the big jobs and the best and bright­est en­trepreneurs get op­por­tu­ni­ties for fund­ing. To ex­plore

Why have we be­come so ob­sessed with mak­ing a busi­ness case for gen­der equal­ity, and what is the ac­tual ev­i­dence for it?

how mer­i­toc­ra­cies ac­tu­ally work, I de­cided to ex­am­ine a do­main where every­one thinks mer­i­toc­racy truly rules: Sil­i­con Val­ley and its ven­ture cap­i­tal in­vest­ing com­mu­nity.

Sil­i­con Val­ley is known for hav­ing some mys­te­ri­ous, mag­i­cal way of find­ing great­ness and sup­port­ing it. By im­pli­ca­tion, it must value mer­i­toc­racy more than any other place in the world, right?

Not so fast: If you look at the data, only two per cent of ven­ture cap­i­tal fund­ing cur­rently goes to fe­male-led star­tups (and that is down from six per cent in re­cent years). How is that a mer­i­toc­racy? When I asked ven­ture cap­i­tal­ists what was go­ing on, they said, ‘Women just aren’t bring­ing us enough good ideas’ or ‘We can’t find enough good fe­male en­trepreneurs’.

This seemed prob­lem­atic to me and, in fact, to sev­eral other re­searchers. These col­leagues de­cided to cre­ate a sit­u­a­tion where the ideas pre­sented to in­vestors were ob­jec­tively equiv­a­lent and asked, ‘Would we still see this gen­dered dif­fer­ence in in­vest­ing?’ They de­vel­oped a pitch for a new startup, along with a script to nar­rate that pitch. Then, they asked po­ten­tial in­vestors to view the Pow­erpoint pre­sen­ta­tion. The only dif­fer­ence was that, in some cases, the nar­ra­tion was read by a recorded fe­male voice, and in oth­ers, it was read by a male voice. At the end, they asked, ‘Would you in­vest in this startup?’

The re­sults were star­tling: When the ex­act same pitch with the ex­act same script was nar­rated by a male voice, it was more than twice as likely to get rec­om­mended for an in­vest­ment.

Maybe ven­ture cap­i­tal and Sil­i­con Val­ley are a spe­cial case, you might say. So, I looked at the world of hir­ing in or­ga­ni­za­tions. In one ex­per­i­ment, re­searchers used two ver­sions of the ex­act same re­sumé to ap­ply for a lab tech­ni­cian job. The only dif­fer­ence was that one ap­pli­cant was named John and the other, Jen­nifer. When hir­ing of­fi­cers eval­u­ated the re­sumés to de­cide, ‘Is this per­son hirable for this job?’, it turned out that ‘John’ was much more hirable than ‘Jen­nifer.’

You might still be think­ing that peo­ple are in­fer­ring some un­der­ly­ing dif­fer­ence in qual­ity that is rep­re­sented by gen­der but not by the ré­sumé or the busi­ness pitch. How could we hold this con­stant and see if a bias still ex­ists?

So, here’s an­other ex­per­i­ment: A group of peo­ple were asked to per­form some spe­cific tasks on a com­puter. Every­one in the ex­per­i­ment used the same ex­act type of com­puter, and every­one was asked to do the same tasks. The only dif­fer­ence was that some par­tic­i­pants were told that their com­puter’s name was James, and oth­ers were told that their com­puter’s name was Julie.

Af­ter they com­pleted the tasks, they were asked, ‘How did the com­puter per­form?’ Every­one said that the com­put­ers worked well—there was no dis­cern­able dif­fer­ence be­tween them. But when they were asked, ‘Given that per­for­mance, how much do you think this com­puter is worth?’ — it turned out that ‘James’ was worth 35 per cent more than ‘Julie.’

The ex­am­ples of bias in the face of equal lev­els of qual­ity and abil­ity are end­less, mak­ing it harder to cling to the no­tion of a mer­i­toc­racy. In my own re­search, I’ve spent a lot of time talk­ing with and ob­serv­ing peo­ple who are try­ing to achieve gen­der equal­ity in terms of ac­cess to cap­i­tal and in the world of fi­nance. So, let’s go back to Sil­i­con Val­ley for a mo­ment. One of the peo­ple I talked to there told me, “Mer­i­toc­ra­cies are no­ble and wor­thy goals, but they are ab­so­lute myths. The only thing that mer­i­toc­racy serves in Sil­i­con Val­ley is as great val­i­da­tion if you’ve made it; it jus­ti­fies your suc­cess. You are just that much smarter than every­one else.” And, by the way, it is the same on Wall Street. As one banker who did a sur­vey of mem­bers of her Wall Street

firm said: “The feel­ing that the firm was a mer­i­toc­racy was much more likely to be held by those in the ma­jor­ity [white, male, hetero­sex­ual] group. Non-ma­jor­ity mem­bers were more likely to say that there were ‘hid­den rules’ for suc­cess, and that it was harder to get the right op­por­tu­ni­ties.”

The take­away: When you look closely, you re­al­ize that the cur­rent ‘mer­i­toc­racy’ is ac­tu­ally re­in­forc­ing the priv­i­lege of the peo­ple at the top. Those in po­si­tions of priv­i­lege want to be­lieve in mer­i­toc­racy be­cause it jus­ti­fies that they have ‘made it’ based on their own skills — not that they’ve some­how ben­e­fited from priv­i­lege. And this, I be­lieve, is why we are be­ing forced to make a ‘busi­ness case’ at the mo­ment: Be­cause we have to prove to these peo­ple in po­si­tions of priv­i­lege that there is ‘some­thing in it for them’.

So, what to do? This is not a story about crit­i­ciz­ing white, hetero­sex­ual men. The fact is, we are all in this to­gether: We are all jointly pro­duc­ing and per­pet­u­at­ing a sys­tem that is bi­ased and so, we are go­ing to have to col­lab­o­rate in or­der to solve the prob­lem.

This is also not a ‘fix the women’ story. We can’t sim­ply say, ‘The sys­tem is bro­ken; women need to fix it them­selves.’ And we can’t say to women, ‘You just need to be more self-con­fi­dent,’ ‘You need to be less risk averse’, or, ‘You need to learn to ne­go­ti­ate bet­ter’. These are sug­ges­tions that are easy to make, as they come with­out costs to those with priv­i­lege and with­out a re­quire­ments that the sys­tem it­self change. If ‘fix­ing the women’ is not the so­lu­tion, then what is? My an­swer is this: In­no­va­tion. It will be hard to make fur­ther progress if we con­tinue to do the same old things within the same old sys­tem. In my mind, the de­mand for a busi­ness case per­pet­u­ates the ex­ist­ing ways of do­ing busi­ness, be­cause we are be­ing asked to make a case within the ex­ist­ing sys­tem — in­stead of think­ing about how to change that sys­tem.

We are all jointly pro­duc­ing and per­pet­u­at­ing a sys­tem that is bi­ased.

I’ve been do­ing re­search on in­no­va­tion for my en­tire ca­reer, and one thing that is un­ques­tion­ably true is that in­no­va­tion is dif­fi­cult. The fact that it is so dif­fi­cult means that or­ga­ni­za­tions put their best peo­ple on it and in­vest sub­stan­tial re­sources in it; and the fact that it’s so dif­fi­cult is what makes it so ex­cit­ing for these smart peo­ple. In con­trast, when peo­ple start talk­ing about di­ver­sity and equal­ity, and how hard those things are to achieve, most peo­ple get de­pressed or frus­trated, rather than ex­cited. What if, in­stead, we thought of di­ver­sity as an in­no­va­tion prob­lem—mak­ing this chal­lenge as ex­cit­ing as other in­no­va­tion chal­lenges?

Fol­low­ing are a few ex­am­ples of what in­no­va­tion looks like in this arena.

‘So­cial in­no­va­tion ac­cel­er­a­tor’ Vil­lage IN­NO­VA­TIVE PRO­CESSES. Cap­i­tal brings to­gether co­horts of en­trepreneurs with new ven­tures to de­velop their busi­ness po­ten­tial. The goal — as with all in­no­va­tion ac­cel­er­a­tors — is to help new ven­tures make their busi­ness more vi­able through train­ing, men­tor­ing and net­work­ing. In this pro­gram, two of the ven­tures from each co­hort are se­lected to re­ceive fund­ing at the end of the pro­gram.

With­out even hav­ing gen­der in mind, Vil­lage Cap­i­tal’s lead­ers had a dis­cus­sion about the mech­a­nism they were us­ing to make these in­vest­ment de­ci­sions. In most en­tre­pre­neur­ial set­tings — Sil­i­con Val­ley be­ing the prime model—you pitch your ven­ture to a panel of in­vestors. But re­search shows that pitch­ing is ac­tu­ally a highly-gen­dered, ‘mas­culin­ized’ process. At Vil­lage Cap­i­tal, they wanted a new model for their due-dili­gence process—so they de­cided to fo­cus in­stead on peer men­tor­ing and peer eval­u­a­tion. They thought, ‘Wouldn’t it make more sense to have the ac­tual par­tic­i­pants — the en­trepreneurs them­selves — vote on which of their peers should re­ceive fund­ing?’

They de­cided to ex­per­i­ment with this ap­proach, and

some­thing amaz­ing hap­pened: While only about 15 per cent of the en­trepreneurs in the pro­gram were women, these en­trepreneurs made up 30 to 40 per cent of those who were voted by their peers to re­ceive fund­ing. Ba­si­cally, Vil­lage Cap­i­tal took proac­tive steps to in­no­vate and change its sys­tem, and as an un­in­tended out­come, fe­male en­trepreneurs are ben­e­fit­ting.

In 1970, women made up only five per IN­NO­VA­TIVE EVAL­U­A­TIONS. cent of sym­phony mu­si­cians. To­day, that num­ber is closer to 30 per cent—and that is be­cause in the 1980s, or­ches­tras be­gan do­ing ‘blind au­di­tions’. Can­di­dates are now sit­u­ated on a stage be­hind a screen to play for a jury that can’t see them. In some or­ches­tras, blind au­di­tions are used just for the pre­lim­i­nary selec­tion, while oth­ers use it through­out the process, un­til a hir­ing de­ci­sion is made. Even when the screen is only used in the pre­lim­i­nary round, it has a pow­er­ful im­pact: Re­searchers have de­ter­mined that this step alone makes it 50 per cent more likely that a woman will ad­vance to the fi­nals.

France is in the process of mov­ing to a 40 per IN­NO­VA­TIVE CRI­TE­RIA. cent quota for women on cor­po­rate boards; and every­one is up in arms: They don’t know how they are go­ing to find these women, be­cause they claim that there is no pipe­line in place. One ex­ec­u­tive at a search firm even said, ‘We might have to look out­side of France.’ Well, why not? This is a global econ­omy; maybe French com­pa­nies should want to have some board mem­bers from out­side of France. Maybe lots of com­pa­nies’ cri­te­ria for ‘what makes for a good board mem­ber’ are out­dated, and if they changed the cri­te­ria, they might see all sorts of ben­e­fits. In­deed, re­search sug­gests that boards that proac­tively seek gen­der di­ver­sity be­come more ef­fec­tive be­cause the gen­der di­ver­sity brings func­tional and in­tel­lec­tual di­ver­sity along with it.

In clos­ing

Many of us be­lieve that we can make eval­u­a­tions based on qual­ity alone. But as in­di­cated herein, the re­search sug­gests oth­er­wise. The next time you are mak­ing a de­ci­sion about hir­ing some­one, giv­ing an em­ployee a raise or in­vest­ing in a new busi­ness, per­haps you can take some proac­tive steps to keep your im­plicit bi­ases at bay and carry out your eval­u­a­tion us­ing only the cri­te­ria that ac­tu­ally matter.

This is not just about check­ing our own in­di­vid­ual bi­ases. Once we rec­og­nize that these bi­ases are built into our sys­tems for hir­ing, eval­u­at­ing and in­vest­ing, we need to think about ways to change the sys­tems them­selves. If we can col­lec­tively rec­og­nize that our sup­pos­edly-neu­tral sys­tems are ac­tu­ally gen­dered in many ways, to­gether, we can make progress on gen­der equal­ity.

And we won’t even need a busi­ness case to do it. We’ll just be able to say: Be­cause it’s 2017.

Sarah Ka­plan is Di­rec­tor of the In­sti­tute for Gen­der + the Econ­omy, Univer­sity of Toronto Dis­tin­guished Pro­fes­sor of Gen­der and the Econ­omy, and Pro­fes­sor of Strate­gic Man­age­ment at the Rot­man School of Man­age­ment. This ar­ti­cle was adapted from her TED talk, which can be viewed on­line.

Rot­man fac­ulty re­search is ranked #3 glob­ally by the Fi­nan­cial Times.



Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.