Can Tech Companies Continue To Innovate With No Women At The Table?

Women dominate social networks, according to the latest Nielsen report. This is not news. Women have been ruling social networks like Facebook, Twitter, and social gaming platforms for the past few years. Women also bring in half or more of the income in 55% of U.S. households. And women ages 50 and older control a net worth of $19 trillion and own more than three-fourths of the nation’s financial wealth, according to MassMutual Financial Group. Simply put, women are influential and drive the economy.

Yet when it comes to the boards of directors of companies like Adobe, Facebook, Zynga, and Pandora, women have been excluded, despite the fact that a significant segment of these companies’ user base is women. While some companies don't think that diversifying their all white-dude boards will make a difference on fostering innovation, a business case can be made as to why having women at the boardroom table or as executives can significantly increase companies' profits.

Facebook has become much more profitable and innovative since Mark Zuckerberg brought COO Sheryl Sandberg on board. Sandberg brings a diverse perspective outside of the all white-dude mind frame that previously dominated Facebook’s senior leadership. Despite Sandberg's successes as COO, Zuckerberg has chosen to exclude women from Facebook’s board. So the questions stands: Will Facebook be able to continue to innovate with zero women at the boardroom table, when its demographics are composed of 55% women?

According to the Catalyst report, The Bottom Line, Corporate Performance and Women’s Representation on boards, Fortune 500 companies that had at least three women boards of directors saw on average:

  • Return on equity increase by at least 53%.
  • Return on sales increase by at least 42%.
  • Return on invested capital increase by at least 66%. Diversifying boards also brings different perspectives to companies’ big picture objectives, product development, and problem solving. Companies can’t continue to innovate without diverse leaders at the table.

 

And yet, the boards of one in 10 Fortune 500 companies include no women.

"Beyond that well-worn statistic that women control household spending on everything from cleansers to cars to computers, it's incumbent on tech companies to remember that women also make up more than half of Internet users and drive the majority of engagement and activity for social media and networking apps/sites/tools," said Elisa Camahort Page, cofounder of BlogHer, who will be speaking at the virtual Women Who Tech Telesummit on May 23rd. "That certainly speaks to the need for diversity on development and user experience teams, but since the data also shows that companies with more diversity at the very top achieve better financial results, it's just as important to bring diverse perspectives to the entire chain of command. It's good business from every angle."

While Facebook and other tech/social media companies’ decisions to exclude women from the boardroom is disappointing and a setback, take a look again at the stats cited above. Women rule not just on social networks, but are highly influential in business’ bottom lines. They fuel the economy. And while we certainly haven’t reached gender parity in the tech and startup world yet (not to mention other sectors), we’ve got some wins to celebrate.

"Last year, fewer women sought angel financing than the previous year (12% vs. 21% respectively), but a much high percentage of them actually received financing (20.5% vs. 13%)," said Geri Stengel over on Forbes.

But just because fewer women are going out for angel funding, that doesn’t mean fewer women are launching businesses and startups.

Kay Koplovitz, who chairs Springboard Enterprises, says, "with lower costs of technology, many women entrepreneurs in digital media and e-commerce prefer to self-fund. Companies can start up with a minimal investment and wait longer until they need to seek outside funding."

Check out the infographic below showing how women are breaking down some doors. Key highlights include:

Over 400 women-led companies in the Springboard portfolio:

  • Have raised $5 billion in equity financing.
  • 10 are IPOs.
  • 80% are still in business, generating $4 billion in revenues and creating tens of thousands of new jobs.

The fourth-largest angel investment group in the U.S. is Golden Seeds, which supports women-led startups.

Women are starting businesses at a rate of 1.5 times the national average, which is a 20% increase over the last decade. 187 million women worldwide are currently starting or running a business enterprise (although a recent look a the 2012 Fortune 500 list shows that only 3.6% of Fortune 500 companies are led by female CEOs).

Bottom line? Women dominate the social media markets, drive the economy, and women at the table increase business profits. If companies want to succeed, the Zuckerbergs of the world should start taking these facts more seriously.

Allyson Kapin is the founder of Rad Campaign, a web agency that provides web design, web development online marketing, and social media strategy to nonprofit organizations and political campaigns. She is also the founder of Women Who Tech.

[Image: Flickr user Hector Parayuelos]

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5 Comments

  • Jane Jones

    Apple, Microsoft, Amazon, Google ...

    Men rule because men are innovators and men are leaders.

  • Tdhomer

    Great stats and story, Allyson! It brings to light a change of mind set that is
    still yet to evolve to where it needs to be. Stories like your's help. Thanks
    for promoting the value of women at the table of leadership. 

  • Siobhan

    I've found most tech start-ups aren't even aware they're short on women. The truth is, young men starting businesses start them with their buddies, and when they get around to hiring, they hire guys like themselves. Not because they don't think women have a contribution to make, but because a) they hire a friend of a friend, usually someone of the same gender and background as themselves (since those are the people they know) and b) most people (regardless of gender) think ideas similar to their own are the coolest and the best since those are the ideas *they* find relatable. I really think the best way to overcome this is with continued dialogue about best business practices in general, which include things like hiring people with different experiences, viewpoints and genders to bring fresh ideas to the table. Most experienced managers know not to hire someone just like themselves (it doesn't make sense to duplicate insights and skill-sets) but most founders aren't experienced managers. Awareness is key, and I think articles like this help a lot to open people's eyes to the benefit of expanding their business circle to include all kinds of people. 

  • Frank Faeth

    This is a strange and troubling phenomenon when all the evidence points to the value of having more women (indeed, more diversity) in the workforce.  It's troubling that women don't get the chance to lead the way through board membership, though I have seen a large share of nonprofits populated by women.  Having worked around or in technology for more than 30 years, it is true that females represent less than their fair share of the workforce; but I can say their impact was far greater than their numbers.  Most recently I had the pleasure of working with intensely capable women in technology who had the rare talent of adding business strategy into the mix, which most technologists do not.  In order to increase the number of women on boards, the corporation (i.e., the board itself) should push diversity measures beyond the rank and file to their leadership ranks.  Further, for anyone who watches Jeopardy!, the teen challenge finalists are all brilliant girls.  It would be sad not to be sure that they have the best possible future ahead of them.