Every year billions of dollars are spent on training aspiring men and women in the hope that they can scale their businesses. Prof Mona Mensmann of Warwick Business School looks into the PIT – a new type of training approach that makes all the difference for women entrepreneurs.
This usually takes the form of learning such management and financial skills as book-keeping, stock control or marketing to name a few. The importance of these skills is so deeply felt that such training is given not only by educational institutions, whether physically or digitally, but also by international bodies such as the International Labour Organization and the International Finance Corporation.
A key role in the entrepreneurial education endeavour is that of women, for boosting the number of female entrepreneurs is a global concern, with the World Bank launching a $1 billion fund in 2017 to increase the number of women-led businesses—30 per cent of all registered firms globally. But how effective is this knowledge-heavy training? Does it actually work? And do women need it?
In order to better answer these questions, Prof Mensmann and her fellow researchers partnered with the World Bank to test a new type of training for entrepreneurs, based on research that showed that psychological factors played an important part in entrepreneurial success. This new personal initiative training (PIT) developed key behaviours to build a self-starting, future-oriented mindset, with additional mentoring in which entrepreneurs worked on projects in their own business to build confidence in their abilities.
All in a good year’s work
The researchers gathered 1,500 entrepreneurs in Togo for a randomised controlled trial (RCT) and divided them into groups of 500 each. One group was given a traditional knowledge-based management educational programme, another was provided with the novel personal initiative training while the third served as the control group. After the 12-week programme was over, the groups’ progress was tracked for 2 years. The results were stark. Those who undertook the personal initiative training saw a rise in sales of 17 per cent and an increase in profits by 30 per cent. The results for the traditionally trained group pale in comparison to a statistically meagre 11 per cent increaseThe new training had effectively paid for itself within a year.
The results were even more encouraging for women entrepreneurs. Those who took part in the personal initiative training saw a 40 per cent rise in their profits as compared to a low 5 per cent rise in profits of women entrepreneurs who got traditional business training. Proof that the personal initiative training is empowering for women.
Minding their own business
Prof Mensmann is convinced that entrepreneurs know better than anybody on how to improve their business—training can only give them the means to do so. The personal initiative training can teach people to develop a mindset with traits that are often assumed to be innate in entrepreneurs. They become self-starters, future-thinkers and are not afraid of failure, instead, seeing it as part of the process and learning from it. As such, entrepreneurs were asked to be self-starting in setting goals for a new project they wanted to pursue. For instance, a tailor wanting to buy a new sewing machine to make their garments more unique.
Both the traditional knowledge-based training and the PIT impacted entrepreneurs’ business behaviour despite the fact that the PIT didn’t focus only on business practices. In addition, those in the PIT, who effectively taught themselves, were better at all of these activities (except for book-keeping) and produced better performance.
Other key aspects were developing persistence and being future minded. What do entrepreneurs do when problems arrive? It is very easy to let go of a business and start another, but this is not how a business grows. As such, the training taught them how to prepare for problems—current and potential—how to overcome them and how to cope psychologically so that they could keep the business running given the barriers they faced.
Falling into a pit of success
Another discovery was that entrepreneurs in the PIT group were significantly more innovative than the traditionally trained entrepreneurs and produced more new products. They were also more likely to diversify into new product lines. Moreover, they borrowed twice as much money—proof that they were not afraid of taking risks.
In the mentoring phase, the mentors helped participants reflect on their behaviours rather than focusing on numbers alone—often the case in traditional methods of mentoring. For example, mentors didn’t walk-in and abruptly announce, based on the mentees’ books, a method to change the way they worked. Instead they asked questions that had emotion in them—what they did the previous week, what hurdles they faced, and how they could improve. In addition, the mentoring focused on the three training elements of being self-starting, future-oriented and persistent.
Pain only makes her stronger
After answering questions on the effectivity and impact of the PIT, it is important to understand why women benefitted more. According to theory, men and women developed different roles over time, with women usually seen as being more caring and men usually assigned more daring roles. This leads to stereotypes that are internalised.
But the personal initiative training threw women—and men, alike—into the deep end, forcing them to be proactive and helping them realise they are capable of taking risks and improving their businesses. Women realised they could cope with any negative outcomes, develop resilience and new capabilities. It built a passion for entrepreneurship, rather than being only a means to feed the family. They saw they could grow their businesses. And enjoy it.
Forging a road into the future
This research into a new training paradigm does not mean that knowledge is not important. Only that women need to be given the opportunity to develop an entrepreneurial mindset and self-belief to develop their own business in a safe space.
To this end, institutions and organisations at all levels may wish to develop and/or augment their training programmes to help women—an under-tapped source of inclusive wealth creation and economic growth—to overcome cultural barriers to develop an entrepreneurial mindset. As such, it could create a new path into business for millions of people left cold by traditional education.
- View Prof. Mona Mensmann’s academic profile
- Study at Warwick Business School
- Download this article and others in Global Voice magazine #13
- Read a related article: Women: On the road to professional fulfilment by Prof. Viviane de Beaufort.
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