Friday, 22 January 2010

Social capital and Organisational capabilities


On Tuesday I had the opportunity to talk with Thomas Stewart, author of ‘Intellectual Capital’ and ‘The Wealth of Knowledge’, about a presentation on ‘Capabilities’ – sources of essential – as opposed to transient – advantage that shape the right to win.

I explained my current interest in social capital and asked Stewart which organisations he thought had strong capabilities that resulted mainly from the relationships between their people, ie capabilities built on social capital, rather than the people themselves, ie human capital, or processes, technologies etc.

Stewart' suggested GE as probably the best example of this (and one that he knows well), and we also talked about his current firm, Booz & Company:



GE’s capability is leveraging its huge workforce.  And you can’t do this unless people know each other.

So GE creates communities to help mitigate the fact that it’s generally a fairly aggressive sort of place.  So if you’re a management person, you’ll be a member of several different groups.  For example, as an HR person you might be in the European HR community, the worldwide HR Reward community, and the HR community for the lighting business.  These communities help people understand who they need to leverage to get things done. 

GE also moves people around a lot, and actively manages this process.

The result of both of these activities is that you’ll know lots of people across the company.

It’s a bit like a honeycomb – people get to know each other.



Booz’ capability is providing complex solutions to diverse problems, and a strong client service ethic.  People work hard but have fun because people look after each other.  “We understand business logic very well.  We provide strategic foresight and combine this with deep functional expertise.  We have the size we need to be able to do – a big critical mass – we can scale around opportunities.”

To do this effectively, Booz needs to be able to get teams forming quickly and working seamlessly, getting people on the same page very fast.

Booz pioneered knowledge management but it fell into disrepair and they got into bad technologies - their knowledge system was email sharing stuff on peoples’ hard drives.  They’re now getting into 2.0 technologies.

The firm’s new head of knowledge is called Director of Knowledge Sharing and Collaboration.  And they’ve got a new site, including wikis and micro-blogging.  These are used instinctively and naturally in their younger group who use them to build links and enjoy their activities, and it improves the ability of their projects teams.  Some of the older Partners find it more difficult though.

I asked about whether this approach focuses on sharing explicit knowledge, or whether the intent is to exchange tacit knowledge as well (as I wasn’t too sure whether Booz’ approach to sharing knowledge and collaboration was about social capital or just organisational capital – ie just the explicit stuff).

So Stewart described how Booz are encouraging people to make their profiles deeper and richer, describing their other interests for example.  They’re building ‘fuzzy information’ into their formal systems (given that they run what’s basically an apprenticeship system, it’s already all over the informal systems).

And they need to build it into the culture harder.  For example, there’s still very much a core group or inner sanctum which makes decisions for the company, and they need more transparency around this core group.

In addition, the firm recognises that people can’t deliver if reward systems aren't set up to support delivery across practices and geographies.  So you have to remove barriers and incentivise usage.


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