Joni Mitchell’s lyric, echoes that it’s sometimes easier to understand how intangible capital works by illustrating what happens when it’s “gone.”
Teams or companies with this syndrome are missing the human capital they need to succeed. They fail to hire the right people. They fail to retain the right people. Or, all too often, they lay off the right people for the wrong reasons. Examples of this include:
- The financial software and services company is losing its young engineers because they don’t feel appreciated at the same time that the company is running a big innovation project to fuel its future.
- The unforgettable story of how Circuit City’s choice to fire its most experienced (and expensive) salespeople pushed the struggling company over a cliff within 18 months
- The countless companies that lay their key people off today and then struggle to grow a year later
The message of intangible capital is that the machine driving the success of companies includes four kinds of knowledge. You need all four to succeed. But human capital plays a special role because it is through people that you introduce learning into your organization. The rest of the system gets stale without smart people coming to work every day.
In the United States, we tend to think of people as a cost more than as an asset. This leads managers to make short-term decisions that save money but reduce the productive and innovative capacity of their organizations. Actions like these turn the organization into the walking dead.
We’ll see many “walking dead” organizations struggle in 2013. Meanwhile we’ll also witness “running alive” organizations who recognize the requirements to thrive in the Social Era. The requirements start by choosing to be a smarter company.