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Very few of the world’s ‘big business’ is owned by women. But yes, women can build big businesses too, overcoming some of the constraints they face.
“Women are the largest untapped reservoir of talent in the world.” – Hillary Clinton
A study in the US revealed that 30% of the businesses owned by women are Small and Medium Businesses (SMBs). A lot of research has been happening to understand the barriers and constraints that stop women from building big businesses.
Prof.Saras D Sarasvathy, Scholar and the author of Effectuation: Elements of Entrepreneurial Expertise tells us the possible reasons and thought processes behind this and explains how Effectuation can help women to overcome this.
Though women haven’t traditionally been creators of big businesses, times have changed and a lot of women aspire to build big businesses. The barriers and constraints that challenges women are as varied as social, cultural, financial and economic. Ways to overcome these have been identified and there is progress in that front. There are also instances where women themselves are happy with SMBs because it gives them enough independence and at the same time flexibility with time that they opt for.
Effectuation, by definition, is “A logic of thinking, discovered through scientific research, used by expert entrepreneurs to build successful ventures”. Prof Saras Sarasvathy has worked closely with 45 expert entrepreneurs to identify principles that could be applied to achieve results. Effectuation principles can largely benefit women as it works closely with limitations and constraints and teaches us how to make them work in one’s favour.
Be it The Bird in Hand principle or the Affordable Loss principle or the Lemonade principle, Effectual thinking can help women break barriers. To understand how these principles can benefit an Entrepreneur, let’s know how Zhang Yin, Founder of Nine Dragons Paper Holding Limited, the 8th richest woman in China did it.
Zhang Yin was working with an import-export firm when she observed that China was importing more and more paper from the US to make carton boxes in which they exported chinese goods to US. With $5000 to begin with, that included her airfare to the US, she traced the fate of those carton boxes and realized that they were just being thrown away.
She then decided to import these discarded boxes and recycle them and to her surprise, she found that people were actually willing to pay her to take away those boxes. She made affordable loss deals with shipping agencies to send these cartons back to US. The shipping agencies were, as a matter of fact, sending back the containers empty to China and had nothing to lose.
As for Zhang Yin, considering a worst case scenario of her not being successful at this attempt, the losses were still under control. However, it turned out that Zhang Yin’s effectual thinking, working with the resources she had and making affordable loss deals made her what she is today.
Watch this episode of The PS Show to listen to Prof.Saras Sarasvathy talk about Effectuation and Women, part 3 of a series of talks on Effectuation. Prof.Saras D. Sarasvathy is Paul Hammaker Professor at The Darden School, University of Virginia and also the Jamuna Raghavan Chair at the Indian Institute of Management, Bangalore.