Formula for Success: Understanding Human Capital, Culture and Institutional Knowledge
All the people who work at your company are, of course, its most vital resource.
As a resource, your employees contribute to and retain institutional knowledge, an asset that’s difficult to quantify but is nonetheless real and valuable. This unique knowledge is all- important for the assimilation, maintenance and propagation of your company’s corporate culture. The leading exponents of institutional knowledge are typically founders, C-level executives, department managers, senior technical and go-to-market talent, long-time investors, advisors and others.
Ultimately, the employee base at your company is an asset that can be ascribed an economic value called “human capital”. This economic value is based on the sum total of institutional knowledge, skills, characteristics, backgrounds, experiences, education, training, other knowledge, input from and influence of contact networks, and other factors.
Both the company and Individual workers accrue human capital over time. Workers amass human capital throughout their working lives. People build up their human capital directly from the various roles they have held and work experiences they’ve had throughout their careers. But people also accumulate human capital indirectly through their life experiences outside of work.
Unlocking the full capabilities of your leadership team, managers – and your entire workforce – entails tapping into the unseen fabric of human capital that exists in your startup or emerging company. Relying on that value is critical when an executive makes a bold move to try and stretch the company’s or an individual employee’s potential. Unless the company has hired leaders, managers and individual workers who are predisposed to tapping into their individual and company’s human capital, those bold moves and stretches are far less likely to succeed.
I recently talked with a CEO who was frustrated with her team’s lack of progress. She was also unduly influenced by other CEO’s distribution of a book about realizing high-performance at work. She purchased a wholly different book – one might say more of a “touchy-feely” nature – for each employee. She expected everyone to read, assimilate and live by the book’s aspirational (and ‘squishy’) advice. Nobody at the company appreciated or understood why they were given the book. All were confused by the move, and many felt that it was a soft way to point out their deficiencies. As it turns out, employees hired by this company weren’t in the habit of reading or listening to many books. Further, few had worked for a company where books – and the sharing of insights gleaned from them -- played a big part of their culture. The CEO was more frustrated than ever.
In a separate but related observation, I’m forever amazed at the differences in milieu, energy and other idiosyncratic factors of what we refer to as startup culture. Walk into one startup and there’s one culture; walk into another – on the same floor of the same building – and get an entirely different culture and vibe. Clearly, culture goes well beyond the SWAG worn by startup personnel. It’s something fundamental, more organic.
How does culture hold sway as a startup goes through different phases of growth, consolidation and expansion? How does culture build and develop as the common startup changes occur? These include:
· Transitioning from leadership by founder(s) to new chiefs (sometimes many CEOs), executives and managers,
Various rounds of financing with various investors and their influences,
The crucible of customer interactions,
Expansion to various locations and frequently, cities and countries,
The coming and going of Innumerable employees, and consultants, and
Other influences on the organization.
The answer is that the intermixing of culture, human and financial capital, and institutional knowledge results in cultural preservation in startups.
In the great startup formula, these three key elements – institutional knowledge, human capital and culture – are separate factors that are inextricably bound together. Harnessing them all in unison – like playing a properly tuned 3-stringed instrument – leads to successful company initiatives, the growth of individual team members, and a company that not only survives, but flourishes, even in turbulent times.