The real subtitle: Implicit “Theories of Change” that folks don’t want to acknowledge

Most people and most governmental organizations have inadequate understanding of what it really takes to help women in business.  Their implicit theories of change– the cause and affect links between the actions a business takes and the change outcomes it wants — are usually “inadequate” (to put it mildly).

One of our Entrepreneurial Feminist Community members, Petra Kassun-Mutch, was recently called out for suggesting that a government organization’s strategy for investing in “women led and women owned businesses” might be falling short of its overall goal of improving the economic situation for women and gender non-binary citizens. Petra was questioning whether the nominal criteria being used to certain that a company is benefitting women has any relationship at all to producing outcomes that support women. (For example, does one woman on an executive team of 8 really make that company work on women’s behalf?

This is an incredibly important issue.

I’d argue that, in the main, the qualities used and the amounts necessary to qualify are close to pitiful. As in, nearly meaningless. Or, more positively, “extraordinarily optimistic”.

The commonly-accepted criteria for being ‘women oriented’ seem slight, insignificant, easy to game, and — most importantly — without a ‘theory of change’.

A theory of change is a simple explanation, a cause-and-effect statement that describes how the action you’re pursuing will ultimately make a difference.

My theory of change is that if I add salt and baking powder to pancake batter, the gas released by the acidic interaction will inflate the batter with tiny gas bubbles, causing the batter to lift and rise, ultimately creating a puffy cake instead of a flat cracker.  The theory of change directly explains how my action (adding salt) causes the outcome (puffy cake) because of an actual mechanism (additional gas bubbles raise the batter as it’s cooked).

Most of the criteria used by groups wanting to invest in businesses that will in some way help women (and/or reduce important gender gaps) are features — not actions. They are the equivalent of having “1/2 tsp salt” on the ingredient list of the recipe. Not necessarily acting in the batter. Just on the list.

Investor criteria count the number of women featured, as owners or as executives (and sometimes as customers). They do not assess what these women are doing, whether their actions are influential, and whether their influences actually help women. They lack a theory of change.

What is the mechanism of change that these investors are assuming as they select companies to invest in? 

I’m not sure if they even know. So, I thought I’d put together a preliminary chart to begin to make these theories of change more explicit.     See the table “Levels of Change Potential Based on Funding Criteria”.

In the table, below, we’ve got a column for the Criterion for Decision. This is the specific feature that the investors are counting as an indicatory of the company helping women, such as being women-owned or women-led.

The column Expected System Impact tries to answer three questions: What happens?Where does the wealth/ profit go? What does the wealth get used for? The idea here is that, if women are helped by companies, it’s because these companies generate new wealth. (Generally, that’s how businesses work.) How that wealth is deployed also influences the company’s impact.

The column Theory of Change is my preliminary/draft effort to answer the questions Why does this change women’s overall situation? What causes these improvements?.  Here I’m trying to make the causal chain explicit. How is one thing expected to influence the next, to create positive change?

It’s important to be clear that in any theory of change, you won’t always get the outcome you seek. For example, you can put Betsey DeVos in charge of education (a woman in power!) but you won’t get educational policies that benefit women, girls, and gender nonconforming people. But you have to be explicit about the steps so that when something isn’t working, you know where to change things.

Finally, I grouped these criteria according to their Implicit Equality Goal, the vision of ‘equality’ that they seem to be working towards.   “Parity” is simply the idea of spreading the same proportion of women across organizational levels, often with the assumption that the ratio of women to me should be 50/50. This is a basic goal of representation and fairness.   “Equity & Justice” goals are about making sure that (1) different groups get different resources according to what they need to flourish while we eliminate the biases that prevent them from participating in the system fully, and (2) about changing the system so that supports everyone as needed in a system that’s been changed so that no group is privileged over others and no group is oppressed/subordinated/dominated by another.

Levels of Change Potential Based on Funding Criteria

What does it mean to be “women-led’?

This is a great question, recently raised by Nancy Wilson, Founder & CEO, Canadian Women’s Chamber of Commerce.  Often the criterion of “women-led” gets operationalized by simply counting the number of women on the company’s executive team (EVP level and/or C-suite). But no consideration is given to the concern that one woman is not enough to show that the company is “women-led”, or the other critical consideration that not all leadership positions are created equal. We all know that the EVP of Human Resources or Marketing is rarely (never?) as powerful as the EVP of Product or Finance. There’s a hierarchy, and if a firm is women-led then women need to be at the highest points of this hierarchy.

Wilson makes this intuition clear, writing:

Finally, if a fund is directed to support women in a particular industry, at least one of the women in a senior leadership role must be in a position directly related to that industry. In the case of technology, that requires a woman to be chief executive officer, chief technology officer or other tech or development role at the most senior level.

When a person holds a position where their expertise is indispensable to the company’s success at its core activity it’s more likely that this person will have organizational leadership.

These women leaders’ influence on the company’s direction can’t merely be inferred by her/their titles. It must be perceptible, constant, and long-term.   

What does it mean to be women owned? 

Wilson also offers important texture to this question, since with many star5tups and going enterprises the ownership structure can be complicated, with no one group or person owning enough of the company to direct it by near fiat as the Zuckerbergs and Bezos of this world.

Women-owned can mean that women owners of capital get a significant and perhaps majority of the return on investment (e.g., profits, wealth). It can also mean that women owners – regardless of their percent ownership – have a significant influence on the direction of the company.  What we’re looking for in this case is one or both of these situations.

Even where there are formal criteria for assessing “women-owned’ and ‘women-led’ companies, it is possible for these criteria to be gamed.  Astute ‘gender lens investors’, philanthropists and government agencies should have their own due diligence procedures to make sure that the companies they invest in meet these women-first criteria in substance and not just on a check off list. What does it mean to be women-led? How many/ what proportion of women is expected to make a difference and be the tipping point of influence?

Your thoughts? This table is my first step, so there are sure to be typos, errors, oversights, and ideas we should add. Please offer your suggestions in the comments or side notes and I’ll incorporate them into the next version of the table.

I’m hoping that decision makers at investment funds, government agencies, accelerators, and any other institution that’s hoping to support gender equality in entrepreneurship and business will find this table useful in helping them understand their own implicit theories and make clearer decisions about which “women led” companies they want to support, and why.

Apologies in advance for typos, etc. I’m trying to get ideas out, not to get them perfect. Onward!