Bringing Power to the People Empowers Women

Two new reports from august organizations – the World Bank and the Ashoka Foundation – draw needed attention to a challenge that many, if not most of us, in the developed world take for granted: the availability of electricity, water and basic sanitation. These studies also help make an important point: that taking care of these basic services can “fuel” entrepreneurial development. In the developing world much human time and energy is spent seeking out fresh water and dealing with the vagaries of intermittent power, time that could otherwise be used to go to school or to start and grow a business.
The World Bank study –“Getting Electricity” – published by the Doing Business team, takes a look at the linkages between getting power and growing businesses. Not surprisingly, there is a correlation, although is is not purely a function of level of economic development but also of the connection costs and the number of steps it takes a business to get wired into a power grid. Further, the study reports that businesses in low income countries suffer an average of 18 power outages per month, compared to 8 per month in lower middle income countries and 3 in upper middle income countries.

The Ashoka Foundation effort focuses at the “bottom of the pyramid” – at the 16 billion people around the world that have no electricity. Their research effort, undertaken in partnership with Hystra and three French energy companies (GDF Suez, Schneider Electric and Total), investigates efforts to bring more power to the people. These efforts are found to cluster in four categories: grid connections, power devices, solar energy systems, and rural cooperatives. Read more by visiting this web link.

Interestingly (and either coincidentally or not), a recent blogpost on the Huffington Post discusses another aspect of this issue, focusing on the fact that 1 billion people worldwide do not have ready access to clean water, and the burden of finding and fetching water falls to women and girls – who might otherwise have more time for education and business pursuits. Read more at “Water and Women: A Gender Crisis, a Global Opportunity.”

Take a minute to think about the 200 million hours that are spent – mostly by women and girls – every single day just to get fresh water, and how much more productively those hours could be spent. So, bringing more “power to the people” can really empower women!

Measuring Impact … The Devil’s In The Details

Last week, some new numbers were announced regarding the impact that women-owned firms have on the U.S. economy. The Center for Women’s Business Research, with support from Walmart and the National Women’s Business Council, reported that women-owned businesses “contribute nearly $3 trillion to our national economy and create or maintain 23 million jobs.” While there is no disputing that looking solely at business revenues goes only part way toward measuring the full impact of a business in a community, exactly how to more fully account for the impact of women-owned businesses is a difficult question.
Bunny surprise
While the Center for Women’s Business Research has opened up an important discussion, they have not, in my view, added to the fabric of knowledge about women business owners and their enterprises in a wholly positive manner. The devil, as they say, is in the details.

Upon closer examination of the study, we observe that:

  • The estimates of economic impact are made using a purposive, non-random sample of only 417 businesses, conducted last year. A more complete set of usable data might have been better obtained from a larger, random-sample survey, or even from using Dun & Bradstreet data. One might also want to question the types of outputs computed in the model, and whether they are pre-recessionary or recessionary in their nature.
  • The model used was one developed to measure “the projection of secondary or multiplier effects from changes in direct sales in one industry within a study region. Multipliers can be estimated for a county, a state or for the entire nation (emphasis ours).” This appears to mean that a model developed for use in a single industry in a single region is being extrapolated to all industries over the entire country. This gives Womenable the heebie-jeebies.
  • While it is sexy to make comparisons between the revenues and expenditures of a company or group of companies with those of a nation, the inputs of the IMPLAN model used by the Center here and the components of Gross Domestic Product are likely very different. While the IMPLAN model is proprietary and not fully disclosed, it is most assuredly a case of “apples and oranges” to try to equate the impact of women-owned businesses with the GDP of nations.

In the spirit of full disclosure, I’m speaking here not only as the President and CEO of Womenable and a member of the women’s business community, but as the former Managing Director and Director of Research of the Center for Women’s Business Research and former Executive Director of the National Women’s Business Council. So, while it pains me to call out my colleagues, I do so in the spirit of making sure that the users of this new information are more fully aware of from whence it came, and with the hope that future efforts along these lines are more methodologically rigorous.

Some may feel that imperfect information is better than none at all, but Womenable believes that unassailable information – provided with more apt comparisons and fuller disclosure – does the women’s business community a much better service than does information that overreaches; that goes too far out on a limb without the underpinning of a more solid methodological framework.

As we all know, once information is out there it can take on a life of its own. While Womenable applauds this study’s goals and supports the overall message that accounting for the impact of women-owned firms should go beyond counting firm revenues (and, indeed, beyond counting currency spent by firms and their employees), we do not back this study’s execution nor its numerical conclusions.

We welcome a dialogue on this issue, and are willing to be proven too cautious. What say you all?