The business case for gender equality is compelling, and few still doubt that investing in women as employees and entrepreneurs leads to increased productivity and profitability. But one piece of the puzzle is too frequently ignored: the growing evidence that greater gender equality also leads to increased business innovation. Companies that want to up their innovation game should take note.
“Innovation” in this case refers specifically to the creation of new and potentially disruptive ideas, products, or services—distinct from outcomes typically cited as part of the business case, which rest largely on evidence showing how gender equality can help companies do more of the same.
This differentiation is important, because businesses are entering a time when innovation is a prerequisite to survival. In 1953, the average company spent 61 years on the S&P 500. Today, the average company only lasts 18 years. This dismal mortality rate is partly attributable to increasing rates of technological change. Emerging technologies are making it easier for new competitors to enter the market; they are also rapidly making old business models irrelevant. And the pace is set to accelerate. Megatrends like the rise of the so-called Fourth Industrial Revolution and its concomitant blurring “between the physical, digital, and biological spheres” will leave no business model untouched. Given this, is it any wonder that innovation has become such a buzzword?
Improving gender equality can help companies navigate this tumult through two mutually reinforcing outcomes: improved internal innovation capacities, and enhanced product and service design.
Internal Innovation Capacities
A recent study of research and development teams at more than 4,000 companies found that gender diversity “generates dynamics that lend themselves to radical innovation, which causes a paradigm shift by the introduction of new features, resulting in the emergence of completely new markets.” Note the intentional use of the term “radical.”
In addition to the diversity premium, women consistently score as well or better than men in ability to innovate or related competencies such as “championing change.” These findings lend further credence to the case for equality in the private sector, particularly in STEM and design, both of which will be important drivers of future innovation and have yet to reach anything resembling gender parity.
Finally, recognizing women’s capacity as innovators is particularly important because women will most likely be adversely impacted by the shift to more technologically advanced labor markets as traditionally female-dominated roles (such as administrative roles) are automated while male-dominated ones (such as engineering) become more prominent.
Product and Service Design
While companies tend to think of products or services as gender-neutral, in practice they’re often not. But designing with and for women can open up new markets and make existing markets more profitable. The banking sector is a great example: credit, savings, and insurance products can all benefit from gendered capacity and design.
The International Finance Corporation (IFC), for example, worked with the BLC Bank of Lebanon to target female consumers. By developing new products such as collateral-free loans, legal work-arounds that allowed women to open accounts for their children for the first time, and a suite of non-financial services for women entrepreneurs, BLC established itself as the bank of choice for women. As a result, the initiative saw a stunning 33 percent internal rate of return.
Many, many markets are just beginning to tap the potential of product and service design by and for women. The IFC’s SheforShield report, developed with Accenture and Axa, shows that by 2030 the women’s insurance market could double in value—to more than $1.4 trillion, with certain policy types increasing by up to 1,000 percent—if companies design targeted products.
Leveraging these markets means companies must completely rethink how to design for and market to women. Forbes contributor Bridget Brennan put it well when she called on companies to “move beyond signaling to women, ‘We know you’re important, empowered and strong,’ to a broader, holistic approach to women consumers that impacts every aspect of the business.”
Given the scope of the potential gains, amazingly few companies are at the forefront of gender innovation. Many will continue to classify gender as a soft issue, ignoring evidence to the contrary. These companies will be left behind. Others will see gender-smart innovation for the immense opportunity it is, take the steps to capture it, and ultimately reap the greatest rewards.