Five Reasons Social Enterprises Are Applying a Gender Lens to their Businesses

There is article after article about why businesses and investors should seek new ways to be more inclusive of women in their business models. But what we’ve learned at Acumen, where we invest in business that solve problems of poverty, is that leaders of social-purpose businesses are already doing this, and perhaps there’s something we can learn from them.

The Women Deliver Conference – one of the largest events this year focused on women and girls – took place last week in Copenhagen, with a major focus on the link between development and women’s rights. But the role that innovative business models can play in linking women with development goals is still getting little attention. I was excited to see Ayzh, a social enterprise that provides products to improve maternal health, as well as Kidogo, which provides affordable early childhood education in Kenya, presented at the Social Enterprise Challenge at WD2016, and hope that more such examples of business model innovations can be shared here in future. Both of these were launched by members of Acumen’s global community, who are among a growing network of social change leaders that see the value of engaging women in their business model innovation.

We’re convinced at Acumen that one of the best ways to unleash human potential and fulfill the desire of all people, rich or poor, to improve their own lives, is to support entrepreneurial solutions that view low-income people as customers and stakeholders, not passive beneficiaries of charity. Many of the entrepreneurs we work with at Acumen are betting on women across their business models as a way to achieve their business and social goals and I was thrilled to have a chance to share examples of these entrepreneurial models at a session on financing climate change hosted by WEDO at the Women Deliver Conference.

Below are five reasons that social enterprises are integrating women into their business models, which we identified in our recent report with the International Center for Research on Women, Women and Social Enterprises: How Gender Integration Can Boost Entrepreneurial Solutions to Poverty. It is our hope that as a leading investor of patient capital in pioneering social enterprises, we can not only help find and scale new business models that impact the poor, but also learn more about what makes these business models effective. Whether in supporting business growth or enhancing social performance, integrating gender could give fast growing and innovative social enterprises a powerful edge. Here’s why:

1. Social Enterprises Need Great Leaders – And Women Are Great Leaders

More and more research shows the advantages, often in terms of sales figures or equity value for mainstream companies with women in leadership roles, from the senior management team to the board room, and why would it be any different for social enterprises. While social enterprises may face more significant challenges sourcing senior professional talent than mainstream businesses, the enterprises we work with are seeking to hire women as they expand their leadership bench, and will likely reap the rewards of a more diverse leadership team.

2. A Strong Workforce Makes a Strong Company

As social enterprises scale they need a strong workforce to fill critical roles in manufacturing, distribution, sales, marketing and more. Jobs in manufacturing or agricultural production have often been assumed to be roles for men, particularly in more patriarchal cultures, but in reality, women fill these roles across the geographies where Acumen invests, from women smallholder farmers in Northern Uganda, to women in cookstove manufacturing in Kenya. Women office face distinct barriers to being successful in the workforce, whether in terms of training deficits, cultural barriers at home or in the workplace, or domestic abuse. But these can be overcome, and it is often through formal employment that these barriers start to come down.

3. Women Have Purchasing Power – Even Very Poor Ones

Social enterprises in our portfolio aim to serve the poor – either exclusively or in large part. An oft quoted statistic suggest that the 70% of the world’s poor are women, but regardless of the exact number, it can be said that the face of poverty is at least, if not more likely, to be a woman’s. But more importantly, the purchasing power of women is growing, as in India for example, where urban women’s incomes have doubled in the past decade. Whether providing products in energy, water & sanitation, healthcare or education, women often have a disproportionate role to play in making decisions about decisions that will impact the household and other family members. Entrepreneurs are taking note and thinking about ways to reach women with their products and their advertising, since a women may influence a purchase even if she is not the one handing over payment.

4. Vive la Difference – Women and Men are not the same

Human Centered Design has emerged as a powerful tool to build great products from the customer’s point of view. IDEO applied the approach to create the first computer mouse for Apple, and a gazillion great products since that are beloved by customers. The approach has now spread to the development sector and is routinely applied by social enterprises seeking to build products that poor people actually want, rather than the ones that well-meaning designers think they should want. Building products from the perspective of women, especially low income women who are so often discounted or marginalized, is the next frontier of human centered design, and is already shaping how solar lanterns, toilets, maternal healthcare services and training programs are being designed and delivered.

5. Women Invest – And They Use a Gender Lens

Fast-growing social enterprises often need capital as they scale, and many are looking to the impact investing capital market for funds. To oversimplify, these investors seek both social and financial returns on their investment, and many of them now apply a gender lens. As entrepreneurs are able to demonstrate their potential to integrate women, through leadership opportunities, employment, and access to critical products and services, they can approach impact investors applying a gender lens to their investment strategy. According to Veris Wealth Partners, a wealth management firm, this segment of investors is growing, and entrepreneurs seeking more capital can bring their pro-women business models to a growing network of investors that seek to pair financial returns with positive impacts for women across a variety of criteria.

Time and results will tell how these strategies impact the performance of the social enterprises that embrace gender integration. In the short term, change comes with a cost, but the far-sighted and socially minded entrepreneurs that are considering gender as they build their businesses are ones to watch. At Acumen, we’re committed to helping these companies grow and weather the storms that all pioneering social enterprises face. And even more, we’re committed to learning from them about how entrepreneurial solutions can change lives, bring women into full social and economic standing with men, and shift how the world thinks about business and poverty. As much as the movement to focus on women’s justice and equality can inform the social enterprises sector, I believe these pioneering social enterprises offer real insight and value to the women’s rights movement.