Women and Strategic Risk

Michael E. Raynor says: Strategies with good prospects for success also contain the biggest risk for failure. This Strategy Paradox highlights the huge possibility of a company’s decision being wrong, resulting in a product failure such as Sony’s Betamax. But a strategy does always come with a decision that in retrospect can either be right or wrong. A company therefore tries to minimize the risks that are assumed with its actions. However, this isn’t easy when it comes to evaluating scenarios in the remote future. Especially top management, advisory and executive boards need to consider and plan within a long time frame which makes risk evaluation extremely difficult and insecure. Why do I mention that?

Well, I think this plays an important role in our discussion about female leadership. Numerous studies have been published that analyze strategic behavior across gender and the differences in competition while trying to explain the gender gap.  Karoline Barthel, professor for Human Resource Management says “Women are more risk-averse than men when it comes to decision concerning finance, health & safety, ethics etc. However, in social areas (e.g. advance unpopular views in front of a peer) women have the same readiness to assume risk as men.” If you ask me, this sounds like the perfect characteristics for sustainable economic activities, but maybe because I am a woman.

Unfortunately, in our society the phrase “Nothing ventured, nothing gained” was long the predominant opinion.  In a management game by  Ebbers and Rehm the probands (all entrepreneurs) were observed in terms of their decision-making processes. The results proved that above average men chose the riskier option which often lead them to disproportional success but also losses. Women, on the other hand, acted more cautious, but materialize success and growth at a later point. In the end, men have not been more successful than women. They acted on a large scale right from the beginning and are therefore either earlier more successful or earlier out of the market again. However, with their slow sustainable growth, from my point of view, women have the greater staying power.

After the financial crisis many companies might have wished that they had more women in their management boards and voices are that the crisis wouldn’t even exist in that case. Although we cannot be certain about different outcomes it would still be a good balance for the future. Risk vs. risk-averse: I think the truth lies somewhere in the middle.

What do you mean?

3 Responses to “Women and Strategic Risk”
  1. katjo2010 says:

    Thank you for this very interesting and well-written post!
    I totally agree that the truth lies somewhere in the middle. Therefore I think diversity management in terms of gender issues will become even more important, especially since the financial crises in my opinion will push the trend for sustainability even farther forwards.
    So maybe, if we are lucky, companies have realized the benefits of a diversified workforce and management and gender doesn’t have to be an issue anymore in the near future.

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