What is your relationship to risk? Do you identify as risk averse or as a risk taker? Is your approach to risk influenced by gender?
Written by Heatherjean MacNeil
Global WIN Lab Director, Center for Women's Entrepreneurial Leadership at Babson College
In a workshop that I facilitated with Ashley Lucas, WIN Lab Boston Director, we invited participants to think about the gendered messaging around risk, and to break down the barriers that reinforce the perception of women as risk averse. Research on risk-taking in the financial markets has presented a mythology where women are the calming force tasked with “reigning in” or “cleaning up” after the wild testosterone-fueled binges that have led to financial crises across the globe. This narrative is deeply problematic – it sets women apart from the potential successes gained by risky behavior and discounts the value of being “risk-rational” – a term first coined by Susan Duffy, Executive Director of the Center for Women’s Entrepreneurial Leadership at Babson College.
Research shows the key motivators of risk-taking build on concepts familiar to readers who study women’s entrepreneurial leadership – power, compensation, self-efficacy, and networks. Firstly, risk-taking is motivated by a desire for the power to make an impact. “The stronger the desire for power, the more likely a woman will take on the more risky options of major new change initiatives or programs, or new jobs or assignments.” Relatedly, all people are driven by the possibility of increased compensation and career rewards. In a recent study, 60% of women attributed their achievement of high compensation to risks they have taken to move their careers forward. Self-efficacy also plays an important role in risk-taking – if individuals believe they have the capacity to reach a goal, they will take a risk to do so, but without that confidence, they simply fail to act. The natural result of low confidence is inaction. In addition, women’s professional networks – the input from their tribes – stimulate risk-taking activity. The support of those professional networks is actually a stronger driving force than organizational culture. Risk-takers are more likely to look at the merit of an individual risk-taking act, rather than relying on organizational support or tolerance for risk.
When women are seen as risk-rational, rather than risk-averse, they are given the opportunity to grow from failure, to incorporate feedback, and to take continual risks that support their entrepreneurial goals.
These elements go to the heart of the entrepreneurship pedagogy driving the Women Innovating Now Lab (WIN Lab) at Babson College. This pedagogy, known as entrepreneurial thought and action – or ETA – is the art of Thinking BIG, while taking small, data-driven steps to accomplish your business goals. The process starts with desire – how you would like to act on your passion to build, create, or change something. Next you have to identify one step to take toward your vision – based on the resources you have at hand. Next is to experiment – take a step you can afford to lose – this is all about managing risk. Finally, start to enroll others in what you are doing – others that will support you in making it possible. Based on the results of your action, you recalibrate, and start the process again.
Consider the case of Yooree, a member of the WIN Lab who decided that she wanted to open a bookstore. Her first small step was to purchase a book inventory that she could afford – a risk-rational plan – and open a stall at her neighborhood farmers market. From the cash that she made at the market, she was able to rent a space in a nearby café to offer her books. She was able to start a business while paying less in rent than if she had her own location, but she is building from an existing customers base. This example illustrates that there are ways to pursue an entrepreneurial vision in bite sized pieces.
ETA also illustrates the art of prototyping. Prototyping is a way of testing your ideas with potential customers – to collect their opinions and feedback. By opening a small-scale shop at the farmers market, Yooree was able to interface with her first customers to find out the types of books that were interested in purchasing. This is the art of prototyping, collecting customer feedback, and repeating the process. Prototyping allows the risk-taker to be risk-rational allowing opportunities to learn from failure, and to continually iterate.
The research shows that women process failure differently than men and tend to blame themselves more when things go wrong. Failure provides what we need to know in order to be successful. Failure is an essential ingredient in ETA and an inherent part of risk-taking behavior. To the extent that stereotypes serve to inhibit women’s risk taking, however, “the net effect is that men are likely to encounter failure more often than women … If confidence comes from perseverance after failure, then lack of failure can become a reinforcing cycle.” When women are seen as risk-rational, rather than risk-averse, they are given the opportunity to grow from failure, to incorporate feedback, and to take continual risks that support their entrepreneurial goals. To learn more about the ETA process and the work of the WIN Lab, visit thewinlab.org.
 V. Gupta, S. Maxfield, M. Shapiro, & S. Hass, “Risky Business: Busting the Myth of Women as Risk Averse,” CGO Insights (Briefing Note 28), 2009.
 Entrepreneurial Thought and Action® and the Risk-Rational Woman, https://www.youtube.com/watch?v=sOsNwJrG2Pw.
 Id. at 2.
 K. Kay and C. Shipman, Confidence Code, 2014.
 S. Kaplan and N. Walley, “The Risky Rhetoric of Female Risk Aversion,” Stanford Social Innovation Review, Spring 2016.