Wednesday, September 29, 2010

What is the Value of Social Capital?

We’ve all heard about physical capital, it is on your balance sheet.  Human capital is found in they way your people are organized and deployed.  Intellectual capital is found in the ideas born through innovation and deployed in new ways.  But what about social capital?

Networking for Life was founded on the principles of developing and harvesting value in a network.  The challenge is unleashing the value of that network in terms of social capital.  We’d all agree that our networks have extrinsic and intrinsic value and that often, the best result is not an economic one.  Still, we need to protect those networks because they have created value for us personally.  Thus, social capital.

When I give you a lead or introduce you to somebody in my network, part of me goes with you.  The most valuable part – my reputation.  But how did that reputation become valuable?  I would contend that the value of your social capital is directly proportional to work you have done for others.  The “schmooze” will only get you so far but the value you have created for others is the basis for your social capital.

The “moment of value” occurs when two individuals or organizations exchange something of value between them.  A notion of trust is exchanged.  When I spend a life time in a market – following through on what I say I’m going to do –  I create value in my personal brand.  That brand is translates into social capital.  Social capital is monetized when those relationships create value for others.  And, as we we’ve talked before, if you create value for others, your social capital increases!

The concept of social capital is why integrity and servant leadership are so important in Networking for Life.  You’ve heard it said “it takes a life time to develop a reputation, and only seconds to destroy it.” It’s true.  Be the one who is consistently increasing his or her social capital.  You won’t regret it.


Michael Cayley said...


Isn't it so interesting that social capital on an individual level seems like common sense but on a corporate level it seems to be ignored?

I think we have arrived at a rate of change that networks are essential for keeping pace with change.

Finely tuned networks filter quality content.

I also believe that social capital is now the number on driver of corporate value creation and defense.


John Humphrey said...

When corporations figure out what it means to unleash social capital, the power will be huge.

Thanks for the links!