The Intangible Capital - I

苹果 wasn't the pioneer in smart phones; it was i-mode DoCoMo enabled Motorola cell phones. Similarly, 谷歌 wasn't the first search engine, that title goes to Archie, and Facebook was not the inaugural social network.

Over the past five decades, various companies had access to new technologies or ideas long before others, yet they failed to fully capitalize on their potential. Despite having talented and intelligent individuals working in most of these organizations, only a few triumphed.

One of the reasons for their success, at a fundamental level, is how these successful organizations converted the agglomeration of smart people <employees> into an inventive network. This inventive network focussed on getting better everyday and not necessarily bigger.

But how can you? effectively orchestrate this inventive network?

There are three fundamental pillars to it:

• People
• Functional Design
• Meta state Culture

Let us look at each on a broader level, and we will get into its depth in subsequent posts.

People

In any organization, every individual holds importance, but our focus here lies on the role of leaders, also known as "people managers." These can be leaders of today or tomorrow. Let us call them catalysts.

Catalysts are the people who are no longer fixated on “I/ME”, they want to devote their professional life to a purpose.

They continually engage in a cycle of learning, executing, reviewing, and guiding, all for the pursuit of a shared purpose. These Catalysts play a pivotal role in building intangible capital within the organization, which is essential for achieving significantly higher levels of success.

This intangible capital is made up of trust, voluntary cooperation beyond the call of duty, and unwavering commitment to the larger purpose. Recognizing and supporting catalysts triggers a positive cascade effect throughout the entire organization, fostering an atmosphere of innovation and progress.

Not all smart and talented employees are catalysts but the companies which succeed have a higher percentage of them or have an intent, and a plan to nurture them.

Functional Design

Functional Design is more than just a set of steps or the ever-evolving user experience (UX). It involves structuring the organization in a way that nurtures, safeguards, and enhances the factors that wield disproportionate influence on achieving specific outcomes. A well-crafted functional design hones in on the most significant factor of disproportionate influence and continuously improves it.

Once these factors are identified, the next crucial step is to empower and support your people to thrive. While the functional design may differ across departments, its cumulative impact should far exceed its individual components.

Some key factors that can help you build a great functional design and significantly influence the output of people within the organization are:

• Metrics for measurement
• Clear expectations
• Transparency in both outcomes and processes
• Recognition
• Staged learning opportunities across levels
• Defined growth paths
• Consistent policies

An equally vital aspect of a successful functional design is building a concise yet comprehensive feedback loop.

The idea is to strike a balance between granting creative freedom and fostering execution focus. It's not an either-or situation but rather a both-and approach. This is achieved through cultivating a great organizational culture, which we will explore in the next subsection.

Meta State Culture

Culture builds the mental meta state of employees. It is the most fundamental factor that turns the agglomeration of smart people into an inventive network. It is much more important for companies that are trying to innovate, or are in a competitive market, because it is impossible to have a breakthrough innovation with a foggy/stressed mind.?

Borrowing from our framework of functional design, there are indeed a few factors that wield disproportionate influence on culture.?

1. Security: This encompasses how employees perceive the support of their organization and colleagues. It is about knowing if their team stands behind them or if there's a sense of hidden hostility.
2. Trust among colleagues: Fostering an environment of trust is paramount. When colleagues can rely on each other, collaboration flourishes, and collective achievements soar.
3. Transparency and Accountability: At every level, transparency breeds trust and reinforces a sense of responsibility. Holding individuals accountable for their actions and decisions leads to a culture of ownership and excellence.
4. Embracing Failure: A culture that perceives failures as stepping stones to success, as long as there is genuine intent and appropriate effort, encourages risk-taking and experimentation. This mindset fuels innovation and learning.

Building generational companies is hard. In this post, we have delved into the critical element that makes organizations successful. In subsequent discussions, we will explore each of the three pillars in greater detail, unraveling their potential and impact.

Feel free to add your thoughts and share your valuable learnings.