Beyond Putnam

Talk to most very successful people in any business field and they will tell you that their success has been built on their ability to build relationships. It sounds a little old fashioned, transporting you back to the days of the two-martini lunch and the old boys’ network perhaps, a far cry from the modern world of omnipresent data and online networks. Nonetheless there is truth in the statement. The strength of an organisation’s relationships is the key to maximising long-term shareholder value. Relationships are a firm’s most priceless intangible asset.

Perhaps the least understood and proactively managed of all forms of relationship capital is what we at forward thinking inc refer to as internal relationship capital—akin to a less well-known concept, that of SOCIAL CAPITAL.

The idea of social capital was popularised by a man sometimes described as the most influential academic in the world today, Robert Putnam. A Harvard professor, Putnam introduced his idea of social capital back in 2000, as follows:

“Whereas physical capital refers to physical objects and human capital refers to the properties of individuals, social capital refers to the connections among individuals.”

Putnam was particularly interested in the value of building social capital across communities in the USA. His book, ‘Bowling Alone’, is a fascinating and entertaining commentary on the subject. We believe that we at forward thinking inc were the first to consider the importance of organisational social capital in a BUSINESS context. It is clear that organisations with strong social capital will not only be better places for employees to work but also more valuable. Such organisational communities will foster an environment in which people feel secure enough to champion new ideas, are willing to share valuable insight, collaborate effectively and promote and develop talent from within.

In effect, strong social capital is like the ‘oil’ which helps an organisational engine run smoothly. It’s possible to measure and manage it and to do so is a valuable exercise if value creation is top of your agenda.