Social Capital: The Soft Technology that Enables You to Create Value at Work by Will Phillips Social Capital is the soft network that connects people to people. In an organization or on a project, it connects across levels, across departments, and even outside to your vendors, customers, stakeholders, and allies. Strong social capital occurs when the work focused networks are extensive in number, readily accessible, free from noise, and operate with openness and trust. Social Capital (SC) determines the emotional and ethical bandwidth of people to people communication that enables individual experience and ideas to combine into Intellectual Capital (IC) or knowledge[1]. Combining these with Financial Capital (FC) produces Business Value (BV): BV = FC x IC x SC. The Brookings Institute recently reported that only 25% of the value of large, public companies was due to FC. Why Is Social Capital important? In an era where work focuses less on the reproduction of relatively simple, standard products and more on the continual creation of value through knowledge and innovation of complex, responsive services, four qualities[2] merge which enable the workers in such a knowledge business to actualize their value: Speed of response without glitches, errors, rework. Flexibility to adapt, yet not loose the core focus and values. Integration across traditional boundaries between different functions, levels, and your customers/stakeholders and their customers/stakeholders. Innovation to improve, to learn, to create, to modify. Too often we find that talented people with ample resources and supportive technology cannot deliver the highest value. They misread key inputs from others; commitment was not built; the idea was fine, but the implementation left something to be desired. Social capital enables integration and collaboration. Social capital fosters mutual understanding which enables commitment and common focus. Social capital creates a common process which can explore different content issues constructively. If the husband and wife don’t talk with trust, they can resolve few important issues. Social capital builds trust. Low Levels of Social Capital are the norm in most organizations. Why? No one pays attention to it. Social capital is neither understood nor measured. While individual producers with a strong sense of urgency and a drive for results—especially short term ones—discount social activity as unproductive; the tangible and intangible mechanisms for building and sustaining social capital are not managed. At worst, the organization behaves like a collection of mutually divorced coupes and their allies; at best, the organization with talented people and solid resources never quite clicks. During the National Basketball Association’s 2,001 playoffs, USA Today reported that both the finalist teams—the Lakers and the Seventy Sixers—got to the finals because they had built their social capital. Both teams had very talented players, but they did not have the same talent to play as an organization—a team. Phil Jackson, the Laker’s coach, is noted for his ability to build social capital among talented, egotistical, young, brash players[3]. The other arena in which social capital excels is in the performing arts. When an actor forgets his lines, the other actors ‘carry him’ by improvising new lines until the one who forgot remembers and gets back in synch. Similar examples arise in string quartets. I have heard of a case where a string on the violin broke and the violist filled in with no one in the audience the wiser. Smaller teams seem to build social capital spontaneously. Our challenge is to use these examples from smaller teams to consciously strengthen the larger teams of the full symphony or the business. Tangible mechanisms which foster social capital are all based on physical proximity. Ample, unhurried face-to-face interaction cannot be replaced by memos or cyberspace distance shrinking technology. Experts in human communication point out that the nuances of voice, body language, and even scent supply huge amounts of critical data which is lost on the phone, on voice mail, on paper, on email, or in video conferencing. It is the rare person who can craft words that communicate the full meaning of their thoughts. The critical decision which led to the fatal flight of NASA’s Challenger was a virtual conference call. Those who analyzed the conversation later have made a strong case that if it had been a face-to-face meeting, a totally different outcome would have occurred[4]. How many times have you seen an innocent email comment lead to a flurry of heated and protracted exchanges in cyberspace which only made things worse? Social capital is nurtured by having workspace which encourages face-to-face interaction. Think of Starbucks—good coffee, snacks, wonderfully soft comfortable chairs. Add to this good lighting, white boards or flip charts, and low distractions; then put these sites every few hundred feet. Now add frequent, informal lunches—maybe even breakfasts which attract people from different levels and different functions to engage in relaxed, work focused conversations. The desired result? No one is a stranger; everyone is a community. Organizations which segregate people in different locations or different floors must make the funds available to enable face-to-face time or social capital drains away. A number of more traditional management mechanisms also support the building of social capital. These include regular retreats, strong project management, teamwork and meeting management. Intangible mechanisms for building social capital have a great deal to do with organizational philosophy, values, and culture. Not only what these focus on, but how well the leaders model them day after day. One of the primary elements here is the commitment to such soft (and superficially weak) activities as socializing. Is time made for this? Do the leaders encourage taking time? Or do day-to-day urgencies and fire fighting take precedence? Is decision making distributed or highly centralized? Centralized decision making nurtures one way communication and little social capital. Does the culture currently support open communication and mutual respect? Is the informal, social contract between the organization and individuals honored or proactively renegotiated? Institutional Communication Upgrade (ICU) is a process for improving one-to-one communication, particularly when the interaction is difficult or stressful. The ICU also reengineers the organization’s mechanisms for enhanced communication. These two elements, plus the tangible and intangible mechanisms, are the core components of social capital. 1 Intellectual Equity by Will Phillips and Susan Jasin 2 The Boundaryless Organization by Ron Ashkenas, Dave Ulrich, Todd Jick and Steve Kerr. Published by Jossey-Bass, San Francisco 3 Sacred Hoops for specifics and how he sees spiritual capital as the foundation of social capital. The book is reviewed by Will Phillips. 4 In Good Company by Lawrence Pusak