Welcome to The OA

Welcome to the first edition of my new irregular newsletter The Organisational Advantage (or 'The OA' for short). If you like what you read, please do subscribe and share. Every few months, I will add the latest research, thought-leadership, and quirky stories about 'the future of work' and how leaders can create cohesion in a hybrid world.

THE ORGANISATIONAL ADVANTAGE

At the heart of my book GLUE - Transforming Leadership in a Hybrid World is a simple idea called “glue”.? In management literature, the idea is more often referred to as “social capital” but before I knew anything about the literature, I had spent nearly two decades observing and describing a phenomenon I knew only as glue, and that name just seemed to stick! The following provides a brief summary of the idea of glue, explaining what it is, and why the cultivation of glue can create a compelling organisational advantage for your firm.

More than ever, creating glue is a critical leadership activity.? It is about encouraging collaboration, improving engagement and strengthening relationships amongst colleagues from different parts of the firm. ??An organisational advantage is found in the strength of relationships amongst your most valuable people and in the value that creates.? But for something productive to happen, it needs the right environment and context for those collaborative behaviours to emerge. The onus then is on leaders to actively create the right environment and opportunities for people’s innovation, creativity, and collaboration to flourish.?

SOCIAL CAPITAL

Social capital is a way of describing the internal social and cultural coherence of society, and because of this, social capital has been described as a kind of glue.? High levels of social capital are associated with a number of positive societal benefits including social trust, engaged citizenship, and strong reciprocity, without which communities would not function so effectively.? For individuals, social capital is regarded as important because it is an important source of power and influence that helps people to ‘get by’ and ‘get ahead’. The American writer Robert D. Putnam, succinctly defines social capital as:

"The connections among individuals' social networks and the norms of reciprocity and trustworthiness that arise from them."?

While Putnam explored social capital in a community context, the same concept translates well to business organisations, where in an increasingly disconnected, remote and ‘hybrid’ working world, the social bonds are, if not broken, certainly loosened, or more intermittent.?

WHAT IS THE 'ORGANISATIONAL ADVANTAGE'

The most useful and pertinent explanation of the importance of social capital, in a business context, is one proposed by the late Professor Sumantra Ghoshal, who determined that it was not just of intrinsic value to the firm, but (over time) it created an “organisational advantage.”

His research hypothesises that a firm's “ability to create and utilise social capital contributes to performance differences among firms”.? One of the reasons for this advantage is that strong social capital, through exchange and collaboration, aids the creation of intellectual capital, which adds value to the firm. Ghoshal shows that new intellectual capital is not just borne out of a random process of bringing people together, but importantly,:

“Those firms developing particular configurations of social capital are likely to be more successful.”?

Firms that get this configuration of talent right generate new intellectual capital (new ideas, initiatives, and opportunities), as well as improved relationships, higher levels of trust and stronger bonds amongst the group.? ?He describes some of the many ways you that might observe that in action, for example, through language, stories, myths and metaphors. Colleagues more readily identify with others, mutual obligations and expectations emerge, creating trust and deepening relationships, which helps develop new ideas. Ghoshal argues that social capital, properly harnessed, can create more intellectual capital, which can provide an organisational advantage to the firm.

There is a business case, a commercial imperative even, to ensuring that firms invest in approaches and people strategies that encourage more social capital.? Growing and nurturing social capital in a firm strengthens interpersonal relationships, evidenced by better connected employees, more exchange and more collaboration.? This builds valuable friendships, reciprocity and trust. This in turn contributes to the creation of more intellectual capital, which builds new knowledge, ideas and innovation.? This can lead to better employee engagement, customer focus and, in time, improvements in productivity and growth. External talent is likely to be attracted to firms perceived to have this ‘organisational advantage’, adding to, and refreshing, the pool of resources cultivating social capital.

WHAT DOES THIS MEAN FOR US TODAY?

We neglect the importance of social capital at our peril. The beneficial cycle makes sense, but it makes even more profound sense if you take away social capital as one of the three elements of the model. The firm without social capital will exhaust itself on old ideas and be held back by a lack of innovation and experimentation.? Ultimately, this will further deteriorate engagement, productivity and slow down growth.?

This is the great risk of the hybrid age – of disengagement and diminished collaborative intent leading to declining social capital, thus denuding firms of the very energy and vitality we know creates innovation and ultimately advantage for the firm.? In an increasingly remote, or hybrid, working world, business leaders need to work even harder to encourage these productive connections. We cannot rely on the hybrid firm to generate much glue without intervention.? We need leaders who understand this and actively prioritise the creation of glue. As Pierre Boudieu said, it will only happen in your organisation as “the product of an endless effort.”

Let me know if you agree, or if you think I have over-played the value of glue.

This article is based upon Chapter Three of my book GLUE - Transforming Leadership in Hybrid World, published by Routledge. The Organisational Advantage model was first described in a paper called Social Capital, Intellectual Capital, and the Organizational Advantage, by Janine Nahapiet and Sumantra Ghoshal, The Academy of Management Review, Vol 23, No 2 (April 1998), pp 242 - 266 (25 pages).

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