CEO Insights
A company of one's own Female entrepreneurs, even more than corporate executives, show smarts, curiosity, and little fear of the unknown.
A study of women who founded new businesses shows that these female executives far outscore those in the corporate executive suite—male or female—on attributes essential for success. Organizations lose such talent at their own peril.
Organizations betting their success on innovation may want to double check that they aren’t losing some essential talent—female executives who are heading out to start their own companies. These entrepreneurial women score higher on key talent measures than their male and female counterparts who hold corporate C-level executive roles. Increasingly, women are the ones leaving corporate jobs to start businesses. According to The 2014 State of Women-Owned Businesses Report, in 2013-14, women started more than 1,200 businesses a day. Since 1997, the number of women-owned businesses in the United States has increased from 5.4 million to 9.1 million in 2014, an increase of 68%. What is it that companies are losing when women leave the executive suite to become their own boss? A lot. Female entrepreneurs’ leadership profiles show strengths in the most sought after attributes in 21st century leaders. The Korn Ferry Institute, in partnership with Springboard Enterprises, conducted a study to assess the leadership profiles of 183 women who started their own companies, and compared scores to those of 306 Clevel executives. The majority of the female-owned businesses were headquartered in the United States (90%); they included a range of industries, with the largest numbers coming from health care/bioscience (33%), technology (22%), and media/entertainment (9%). The study assessed three personal attributes known to contribute to leadership success:
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Tolerance of ambiguity—Comfort with vague or contradictory information and the ability to make decisions when things are uncertain. Intellectual curiosity—The extent to which a person is likely to tackle problems in a novel way, see patterns in complex information, and pursue deep understanding. Emotional intelligence—The ability to influence, collaborate, and communicate effectively with others and use interpersonal awareness in a way that advances collective goals.
Figure 1 Female entrepreneurs compared with the C-suite.
On essential attributes for leadership, female entrepreneurs far outscore executives—male or female—on tolerance for ambiguity and intellectual curiosity.
80% 70%
73%
70%
60% 50% 40%
53% 40%
52%
53% 54%
57%
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30% 20% 10% 0% Tolerance of ambiguity
Intellectual curiosity
Emotional intelligence
Female C-suite executive Male C-suite executive Female entrepreneurs
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Female executive entrepreneurs rate highly on all these, but particularly on the first two. Much more than their peers back in the C-suite, they thrive in ambiguous environments and excel at thinking through complex problems (see Figure 1). Compared with female C-level executives, women who lead their own businesses are twice as likely to be top scorers (above the 80th percentile) in intellectual curiosity and five times more likely to be top scorers in ambiguity tolerance. Both of those attributes contribute to a facet of talent called learning agility, a quality that is known to differentiate those with high potential for top leadership positions. In a recent study, highly learning agile individuals were promoted at double speed compared with individuals with low learning agility (Dai, Tang, and Feil 2014). Learning agility assessment scores also predict who will succeed after a promotion (Swisher et al. 2013). Highly learning agile leaders aren’t flustered by new challenges or situations; indeed, they show a propensity to experiment, tinker, and improve on ideas. They seek out novelty, change, even a certain amount of risk. In other words, they aren’t afraid of striking out on their own. But in a corporate leadership role, these same women are the ones likely to find viable solutions to tough problems or market needs. “Springboard’s female entrepreneurs who exhibit learning agility and a high tolerance for ambiguity would also be key influencers in a corporate world where companies are encountering highly disruptive business challenges,” said Kay Koplovitz, chairman of the board for Springboard Enterprises. But women’s entrepreneurial ventures also can trigger a huge loss in the ranks of innovative talent. Because when women depart to start their own businesses, the brain drain doesn’t stop with one woman. Often they recruit a company’s A players to join them in pursuit of more independence, risk, responsibility, and a chance for increased reward. To staunch such losses, organizations should consider how they might create opportunities and space for those with an innovative and entrepreneurial spirit and tap into the potential of these highly learning agile women. Recognizing that they are a high flight risk is a crucial first step toward retaining these freethinking, inventive, resourceful executives.
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References Guangrong, Dai, King Y. Tang, and Jonathan Feil. 2014. Fast Rising Talent: Highly Learning Agile People Get Promoted at Double Speed. Korn Ferry Institute: Los Angeles. Swisher, Vicki V., George Hallenbeck, J. Evelyn Orr, Robert Eichinger, Michael Lombardo, and Cara Capretta. 2013. FYI for Learning Agility: A Must-Have Resource for High Potential Development. Korn Ferry: Minneapolis. Womanable and American Express. 2014. The 2014 State of Womenowned Businesses Report. Retrieved from: http:// www.womenable.com/content/userfiles/2014_State_of_Womenowned_Businesses_public.pdf
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Cheryl Buxton Senior Client Partner, Korn Ferry Global Managing Director, Pharmaceuticals +1 609 720 7330 cheryl.buxton@kornferry.com
Dana Landis Vice President for Global Assessment and Analytics, The Korn Ferry Institute + 1 310 843 4124 dana.landis@kornferry.com
James Lewis Director of Research, The Korn Ferry Institute +1 310 226 2668 james.lewis@kornferry.com
About Korn Ferry At Korn Ferry, we design, build, attract and ignite talent. Since our inception, clients have trusted us to recruit world-class leadership. Today, we are a single source for leadership and talent consulting services to empower businesses and leaders to reach their goals. Our solutions range from executive recruitment and leadership development programs, to enterprise learning, succession planning and recruitment process outsourcing (RPO).
About The Korn Ferry Institute The Korn Ferry Institute, our research and analytics arm, was established to share intelligence and expert points of view on talent and leadership.Through studies, books and a quarterly magazine, Briefings, we aim to increase understanding of how strategic talent decisions contributeto competitive advantage, growth and success.
Š 2014 The Korn Ferry Institute
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