Insight
Five eyes on the fence: social capital
January 2018
In my book Five Eyes on the Fence, I debunk the myth that the health of a business can be judged by its bottom line alone—by its financial capital. Instead, I assert that financial capital is a by-product of four other capitals:
- Human capital includes the personalities, intelligence, behavioural traits, values, attributes, and motivators of a person, a family, or a company.
- Intellectual capital is a company’s and its employees’ knowledge and experience.
- Social capital is a company’s network of people and associates.
- Structural capital includes a company’s processes, systems, and ways of delivering its products or services.
A company that pays attention only to its financial capital has a high probability of failing: The company is keeping only one eye on the fence. The recipe for a company’s success is much broader and includes the interrelationship between all five capitals.
In this series of articles, I examine how the five capitals form an intricate web, and how you can make decisions based on how the five capitals interact. In the March 2017 and September 2017 issues of Business World, I discussed human capital and intellectual capital. In this article, we will look at social capital.
Social capital
Who do you know? Your social capital includes the network of people you know, including family members, friends, clients, employees, vendors, and associates. You get something from these relationships, and what you get is much more valuable than money.
For instance, from your family members and friends, you receive love. From your associates, you benefit from affiliation, networking, advice, mentorship, and referrals. When these relationships are nurtured, your social capital grows stronger.
Building social capital through values
What binds you to another person are the values that define that relationship. These values can be shared—for instance, two business partners might share the values of hard work and productivity. Values can also be complementary—for instance, one partner might be strategic, and another might be a tremendous visionary.
Relationships are strongest when they are the ‘stickiest’, meaning the people in the relationship are highly committed to one another.
The best way for a person to feel your commitment is through your words and actions. Honour commitments, go out of your way to build relationships, check in on the people in your network, and make sure that everyone in your network knows that you are committed to them through the words you say aloud and the actions you take.
Building more social capital
Within the network of people who constitute your social capital, the people who are the most important in helping you or your company grow are the ones you know the least.
This might sound surprising. After all, isn’t your innermost circle the most important?
While it is true that your innermost circle of friends, family members, and associates are the most important emotionally, the people who are most distant from you are the ones who offer the most power in terms of forming new ideas and creating new opportunities.
This seems counterintuitive, so think of it a little like your friends on Facebook. You and your business partner probably have many mutual friends. You know everyone that your business partner knows. And, by now, you and your business partner have probably shared all the ideas you have for the growth of your company.
Now think about a professional associate you don’t know very well. You and this person have few (if any) mutual friends. This person, therefore, could be a powerhouse in terms of his or her ability to introduce you to new people and ideas.
The power of casual relationships
Often, we fail to spend time with distant relationships or create new relationships. We think: I have so little time already. Why waste it on people I barely know when I know so many people whose company I already enjoy?
But if you are interested in bringing new ideas and new opportunities to your business, be sure to take time to nurture new relationships.
The most opportunity lies in setting foot in new and distant territories. When you keep isolated among your own group, you will be less likely to hear new ideas and expand your own perception of what is possible. You will become insulated, unaware of the different people out there who are doing new and innovative things.