The great divide among the sexes is one of the biggest enigmas in business. No, I am not referring to the disproportionately high number of males in the executive ranks. I am speaking of the higher number of successful female entrepreneurs versus male entrepreneurs. Successful companies have 7.1 percent female executives versus 3.1 percent at unsuccessful businesses, according to a Dow Jones survey that asks, ‘Do female executives drive startup success?’ One cannot help but also ask, where are all the women in leadership positions?

The more important question is, what attributes make women more successful at business startups and how can you use them to your advantage in business? As females become a larger and more influential force in the business world, the ability to identify their winning entrepreneurial traits can be an important competitive advantage, especially for small, growth companies, an environment in which women out-manage men. Females now comprise one-third of entrepreneurs worldwide. This number is rapidly growing as more accessible financing becomes available through microfinance, venture capital, government-backed loans, and other forms of financing.

Stereotyping female entrepreneurial prowess is the greatest disservice you could do to your business. The convenient explanation has always been the mother model — that is, women are more patient and nurturing. They grow a business with tender loving care and do not take a lot of risks. This overly simplistic analysis not only discounts the talent women bring to the workplace but, disconcertingly, it means that their greater talents are not being put to work. Here, we set out to identify those female traits behind the large performance gap between female and male entrepreneurs.

Ingenuity — The Internet with its very low barriers to entry has allowed more and more women to showcase their business ideas. Women entrepreneurs have shown a knack for taking ideas the market considered tapped out — been there, done that — and finding new angles. Take the crowded social media space. Ning, the social network the closest to taking on LinkedIn for business users was co-founded by Gina Bianchini, who went on to found the creative social collaboration space MightyBell. While men have shown to be more creative in some entrepreneurship studies, women are proving to be more ingenious at finding new markets and niches.

Collaborative decision-making — Women entrepreneurs are more likely to consult with managers and engage in collaborative decision-making. This inclination is evident in the vast networks of innovative programs developed by women to help other women entrepreneurs. Almost all are involved in mentoring other women entrepreneurs through accelerators (e.g., the Pipeline Fellowship provides training in angel investing to women, many of whom invest in female-backed ventures), incubators, angel investing and other initiatives. Even the old-fashioned mentoring model shows ingenuity. Take Caroline Ghosn and Amanda Pouchot’s Levo League, which rents mentors by the hour, including Bianchini and Facebook’s Cheryl Sandberg.

Business confidence — Listen to the tales of women rising to the top and confidence and perseverance are must-have traits in the male-dominated, alpha world. Female entrepreneurs have more confidence in their entrepreneurial skills than men, yet an Edward Jones study observes that only 11 percent of women have confidence in their ability to start a business. When it is time to find a new project leader, you want to choose from that small set of self-starters in your workforce, and put their entrepreneurial skills to work.

Less risk taking — Men are greater risk takers but that does not mean that women are not movers and shakers. On the contrary, women are more likely to seek change and opportunities to work independently. A woman is more likely to pursue new opportunities and, as a measured risk taker, be more successful at capitalizing on them. And look to women, who require less financing and take on lower debt in businesses, to run your project more cost effectively.

Passionate — Being driven by passion is the most important driver behind the success of women-led businesses. Women are more likely to seek jobs that are aligned with their values. For sure, men are passionate about their business ideas but a male entrepreneur is more likely to kick the tires on a bunch of potential business ideas whereas a female’s passion will drive a strong commitment to one business idea. In a business world in which venture capitalists take successful models and seek to emulate them, this is an important distinction. Many of these women have engineering degrees and a passion for changing the world through technological innovation. Others have spun fresh ideas into new fashion and art business models. For today’s woman who wants to plow her earnings back into her businesses rather than designer clothes, there is Jenn Hyman and Jenny Fleiss’ Rent the Runway, which rents out haute couture clothing; or Alex Tryon’s Artsicle, which rents out artwork of emerging artists.

Given the fine talents of women, it is worth asking, how much are you losing by not having more female business leaders? Put another way, how much are you losing by not having female leaders train your future leaders (in entrepreneurial skills)?

Thomas Walsh, Ph.D. is president of Grenell Consulting Group, a regional firm specializing in maximizing the performance of organizations and their key contributors. E-mail Walsh at tcwalshphd@grenell.com

There are two ways to conquer and enslave a nation … One is by sword … The other is by debt. — John Adams

Blame it on Otto von Bismarck, the first German Chancellor.

In 1889, he introduced the concept of social insurance by creating a retirement program. No dummy he, the “Iron Chancellor,” set the retirement age at 70, at a time when the average male lived to 37 and the average female to 40. The funding mechanism was simple: current workers paid for retirees. Those few who lived to collect their pensions benefitted handsomely, especially the original recipients who had paid little or nothing into the system.

Fast forward to 1920. Charles Ponzi, an immigrant, concocted a scheme to buy postal reply coupons in Italy and exchange them for U.S. stamps, pocketing the difference in price. The first investors received a 50 percent return within 45 days. Rather than invest the funds, however, Ponzi spent the money on himself and on new investors by paying dividends with the original investors’ funds. In 2011 dollars, Ponzi defrauded the public out of $225 million before his eponymous scheme ended.

The second big Ponzi scheme imploded in 2008 when Bernie Madoff made off (pun intended) with $20 billion of investor funds. Early investors enjoyed extraordinary returns; later investors were stuck with the losses.

The biggest Ponzi scheme, according to Daniel Stelter in a Dec. 14, 2012 article for the Boston Consulting Group, “… is still ongoing … [T]he developed world has borrowed significantly from future wealth to fund today’s consumption.” The leading economy with the most funds at risk is the USA. Historically, Ponzi and Madoff are pikers compared with Uncle Sam.

Our largest entitlement programs — Social Security and Medicare — are both built on Bismarck’s model: current workers support retirees. Today’s politicians, however, ignore the changes that have occurred in the last 123 years. In 2013, life expectancy has doubled, but the retirement age has remained relatively static. Compounding this problem is a declining birth rate that is less than half the rate when social insurance was introduced, and a declining participation rate in the workforce. The iron chancellor also never anticipated politicians, elected to feel the public’s pain, who couldn’t say “no” to the growth of entitlements by putting them on budget autopilot. Nor have our politicians come to grips with the explosion of technology that demands a highly educated workforce. The failure of our public primary and secondary-education system means fewer educated workers to support the retirees.

The impending implosion is seen in the 2012 federal spending numbers. First, the president’s own Office of Management and Budget, in analyzing President Barack Obama’s 2013 budget, projects publicly held debt will rise steadily until, in 2084, the debt reaches 200 percent of the nation’s GDP. Second, the U.S. civilian labor-force participation is collapsing, according to the U.S. Bureau of Labor Statistics. In 2007, the participation rate was 66.4 percent; today it’s 63.6 percent. Third, the civilian employment-to-population rate is also collapsing, falling from 64.5 percent in 2000 to under 59 percent today. Fourth, the current growth in GDP is falling far behind the trend line of the last 20 years. To date, continued economic growth has been the main factor in propping up Uncle Sam’s extravagance (along with historically low interest rates).

There are numerous other indicators of a pending implosion. In the past 20 years, federal spending has outpaced inflation by 71 percent; the debt of each American, adjusted for inflation, has risen from $23,000 to $30,000 in a decade; in the same period, public U.S. debt has jumped from 33.6 percent of GDP to 73 percent; the feds borrow $3.20 of every $10 expended; and the official $16-trillion debt doesn’t include the $45 trillion owed for Social Security and Medicare, nor does it include retirement promises to federal employees.

What is the cost of not acting now to prevent a Ponzi implosion? If you’re not a numbers person, just look at the impact on the Greek economy today. The country is unraveling because the government currently spends 55 percent of the nation’s GDP, a figure that, if uncorrected, will continue to rise to meet government promises. For years, Greece has ignored dealing with the problems of an aging population, shrinking workforce, slow growth, and chronic under-investing in the country’s infrastructure. Greece’s failure to deal with its structural problems has caused economic paralysis and political disintegration.

Uncle Sam still has not faced up to the structural disintegration of our own country. On Jan.1, the Congress passed legislation primarily to protect the “middle class” against a rise in tax rates and solve the so-called “fiscal cliff.” The deal projects more than $40 in new tax revenue from the “rich” for each dollar in spending cuts, according to CBO calculations. The president signaled his concern for debt and deficit reduction by forging a deal with Congress that cuts only $1.5 billion per year ($15 billion spread over 10 years). Seen in the context of a $3.5 trillion annual budget, that’s a cut of 0.0004285. Let me translate: For every $1,000 of spending, the president and Congress will cut fewer than 43 cents.

I admire the Beltway’s financial alchemy. Only in the Land of Oz could this legislation be considered serious. If the public buys it, it can only be a testimonial of our greed or stupidity.

The country desperately needs a model of fiscal prudence, someone who truly cares about the country. I turn to Harry Truman. When he retired from the presidency in 1952, he drove himself and Bess to Missouri. Truman lived on his army pension, bought his own stamps, and paid for all his travel expenses and food. When offered corporate positions at high salaries, he declined, suggesting the offers were merely for access to the office of the president. In short, the office was not for sale. At age 87, he refused the Congressional Medal of Honor because he didn’t think he had done anything unusual to deserve it.

Consider this quote by Harry Truman. “My choices in life were either to be a piano player in a whore house or a politician. And to tell the truth, there’s hardly any difference.”

While waiting for the next piano player or Otto von Bismarck to rescue us from eating our own seed corn, my suggestion to corporate executives is to consider diversifying, paying attention to the balance sheet, anticipating inflation, and reducing costs. I also recommend innovating, reviewing performance targets and the business model, and reaching out to older workers for staffing as we wait for a refocus on growing the economy.

Happy New Year!

Norman Poltenson is the publisher of The Central New York Business Journal. Contact him at npoltenson@cnybj.com

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