We Got It Wrong: The Transition from Human to Social Capital

For many years, the emphasis on talent in organizations has meant hiring and retaining the best and brightest people. This approach was advocated in McKinsey’s groundbreaking “The War for Talent” (2001) twenty years ago. There were some early dissenters (e.g., Malcolm Gladwell), but most people believed this made sense: Bring in a bunch of really smart people, surround them with traditional talent management practices, and the organization will prosper. 

This approach seemed to work, but then warning signs appeared.  There were seismic failures of organizations comprised of very smart people (e.g., Enron), and numerous examples of IQ/smarts not being nearly as important to high performance as we thought (e.g., Google’s Project Aristotle).  There is also now a growing recognition that ‘the way we have been working, isn’t working’ in this world of constant change. Among the problems: productivity is declining, once-successful management models are now barriers, innovation is waning, and organizations are not changing as fast as the world around them. 

Dave Ulrich read the tea leaves (again) with his book “Victory through Organization—Why the War for Talent is Failing Your Company (2017).” His view—backed by research—is that by improving the workplace; the workforce, not just selected individuals, can flourish. It is about building organizational capabilities to improve innovation, enhance collaboration, reduce bureaucratic barriers, and open participation for all. Dave’s research showed that by focusing on these organizational capabilities and strengthening how people worked together, the return is four times greater than developing individual talent. That is an incredibly significant finding.

Michael Arena (2019) reinforced Dave’s findings as he said it is not enough to bring in the best people, but to bring out the best in all people. It is about creating organizations where the genius is not what happens inside people’s heads, but between or among them as they work together.

Valuable Insights

Clifton and Harter: “Maximizing human potential is now the primary purpose of all organizations.” 

Satchell Paige: Ain’t none of us as smart as all of us.

Margaret Mead: “Never underestimate the power of a small, dedicated group of people to change the world. Indeed, it is the only thing that ever has.”

Reid Hastings: I we  . The value a person brings to an organization is directly related to the breadth and depth of his or her professional network.

Gary Hamel: “Communities outperform bureaucracies every day of the week.”

Buckingham and Goodall: 82% of work done in organizations of greater than 150 people is done in project teams.

Patrick Lencioni: “Not finance. Not strategy. Not technology. It is teamwork that remains the ultimate competitive advantage, both because it is so powerful and so rare.”

The Rise of Social Capital 

Talent is more important than ever as we strive to address unpredictable events and futures, but we must use a more complete lens.  It is less about individuals, and more about cross-functional and self-governing teams. It is less about the explicit knowledge in our heads than how we collaborate, share, and learn from each other.  It is less about trying to manage and control talented individuals than unleashing the potential of all colleagues. Increasingly, what you know (human capital) is dependent on who you know and collaborate with (social capital).

But if we look closely, the shift to social capital has been apparent for a while. Studies in World War II have shown that the primary reason why soldiers put their life at risk was not for some ideal (such as protecting freedom), but not wanting to let their band of brothers (in this case) down. At least half of the original Q12 Gallup questions pertain to relationships with colleagues and co-workers. A recent survey of global preferences for job seekers and employees shows that their number 1 preference is to have a good relationship with colleagues (World Economic Forum, 2019).  And Paul Zak’s work (2017) shows that our bodies produce different chemicals when we collaborate and trust other people. We are changed when we trust. The power of colleagues, community and collaboration have been there for all to observe, if we had been able to see them more clearly.

Perhaps this shift is even more visible in our daily lives. In democracies, what matters is We the people, not I the person. In the world of sports, individuals win trophies, but teams win championships. In horticulture, beauty does not come from picking a single flower but cultivating a diverse garden. And as Yuval Noah Harari reminds us in “Sapiens,” we are social animals and have survived over the millennia, not because of our ability to work independently; but because of our ability to collaborate.

Social Capital is not new, but now certainly deserves our full attention. It is prime time and should take center stage. Why?  Because in this uncertain, interconnected world, we need smart organizations that learn from experience, change as fast as the world around them, and become greater than the sum of their parts.  If we do not tap the wisdom of the crowd (us), we cannot reach these goals. Remember Satchell Paige’s thoughts about smarts. He is perhaps the greatest baseball pitcher of all time, throwing strikes well into his sixties. Just like Yogi Berra decades later, Paige is often quoted for his funny, but deceptively wise observations.  Another Paige original: “Age is a question of mind over matter. If you don’t mind, it doesn’t matter.” His insight on social capital remains as true today as it was almost 80 years ago.

                           “Ain’t none of us as smart as all of us.”