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Why your business needs social capital

Why your business needs social capital

You’ve no doubt heard the term “social capital”. It’s a long-standing concept that refers to the cumulative resources that form and flourish through relationships and networks of human beings.

Those resources can be tangible – information, ideas, financial capital, time and effort – and intangible – influence, trust, goodwill and emotional support. The latter can be even more powerful than the former. In the right balance, they animate each other and create lasting outcomes.

The ‘social’ in social capital means no single person owns these resource – they exist in the collective and are amplified by it. In a nutshell, we’re better together. The ‘capital’ means that it’s productive – it gets things done and creates outputs.

Here are some of the reasons it pays to cultivate social capital in your organisation – both internally, and as part of a wider ecosystem:


It drives learning

Formal systems of learning and knowledge management are rarely as powerful as learning by informal interactions. We learn by watching each other, talking, telling stories and hanging out.

Where these interactions are allowed to flourish tends to lie a productive organisational culture where learning is continuous, intrinsic and celebrated. Mentoring and collaboration trumps competition and information hoarding.

The result? Social capital boosts organisational competence.

It cultivates reciprocity

Would you like to work more cooperatively, generously and sustainably? Of course. Investing in social capital increases the odds that this way of working will become the norm.

Reciprocity means mutual aid; give and take, counting on each other. Creating an environment where people can help each other out directly and indirectly, understanding that it lifts the entire network up, is priceless. Be helpful, be helped.

Beyond individuals, the group can start to take on a collective identity – thinking of themselves as a ‘we’ (whether that is formalised or not).

It breeds diversity

If you’re amassing capital, you want to diversify to ensure its gains are sustainable. In the same way, the networks and communities that come together to form social capital function best when they’re diverse.

If you want to unlock different skills, assets, resources and perspectives, a group comprised of highly similar people from highly similar backgrounds aren’t as effective as a network of difference.

Social capital supports healthy diversity by interconnecting people that may not normally interact with each other and illuminating the best of their experiences and insights.

It promotes loyalty

The trust, emotional support and sense of belonging that comes along with social capital means people feel they can turn to others when they need to. This, in turn, means they’re naturally loyal to the group or network where they get these need fulfilled.

If you’re battling to engage employees or struggling to build fans and advocates, investing in social capital can be an antidote. Let alliances come together organically, attracted by shared values, reciprocity and a sense of ‘we’.

A loyal network will amplify your mission and message exponentially faster and infinitely more persuasively than individual talking heads or one-way advertising.

It sparks innovation

Understanding that continuous innovation is essential to thrive in today’s world, businesses are trying to create working cultures where their people feel comfortable taking risks and thinking outside the box. This demands a level of trust and emotional safety; two elements that go hand in hand with an environment rich in social capital.

Without networks and communities, and the social capital they yield, an organisation will struggle to connect, understand, innovate and grow. A business dense with relationships enjoys a freer flow of information, exposure to a greater range of idea and perspectives and expedited collaboration between individuals and groups to solve problems and meet challenges.

It’s financially smart

If you build social capital with integrity over time, it helps your bottom line. Add up the outcomes above and they’re best practice formula for profitability.

Businesses that understand and nurture social capital also tend to have a deeper understanding of their role in wider ecosystems. This often leads to a focus on ways of working and producing that build social good, rather than contribute to social ill – allowing a flourishing triple bottom line.

Social capital is a currency, but don’t make the mistake of treating it like one.

It requires a more holistic approach and a fundamentally human one. We can’t survive without it, but we typically overlook or dismiss it in lieu of obsessive key performance indicators.

In the haze of the corporate domain, we slough off the connections that carry us through life in every other context. Those businesses that embrace and nurture it, experience tremendous advantages.

Put your capital into focus.

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