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Social Capital & Sustainable Competitive Advantage

Updated: Jul 7, 2023

By Marcus Robinson

There is more to working relationships that yield competitive advantage than meets the eye. Underneath the pressing time lines and stretched goals for meeting customer demand, there is a network of relationships between a wide range of functions, disciplines, and people that actually do the work. At issue here is the structure, vitality and value of these underlying networks within the corporate setting.

At the heart of any organization is the motivated individual contributor that brings talent,

skill and ability to deliver great work. As you may well know, it takes more than a group of

dedicated individuals to drive sustainable advantage in today's competitive environment.

There once was a time when we thought having good management was the essential key to

beating the competition. Somewhere along the line, we learned that to truly be competitive,

organizations not only needed good managers, but also good individual contributors who

could collaborate with themselves and their managers to drive value to the customers and

stakeholders. At that point, it seemed that teams, combined with good management, could

deliver the competitive advantage needed to achieve market dominance and sustainable


Now, it seems that our best efforts at team building, business management and process re-

engineering are not enough to meet the goals we've set for ourselves in response to the

conditions of the marketplace. New economy rules of engagement make it possible for

competitors to deliver real value at near-zero cost to consumers in a bid to gain market-

share and erode the dominance of leading companies and brands. In response to this

pressure, many market-leading companies have resorted to cost management strategies

that have reduced overhead and head count to deal with these competitive pressures. In my

view, these organizations gave up more than they bargained for when pursuing this


Here is what I mean.

When organizations reduced in size to lower cost, protect margins and defend market share,

they lost more than that sum total of skill, talent and ability of each person laid off. What

also was lost was the invisible network of relationships and value known as social capital

Social capital can be best described in three ways:

 The value and intelligence inherent in the close professional relationships in the local

work setting that facilitate quality, speed, and delivery of product and service (strong


 The value and intelligence inherent in cross-functional relationships that facilitate

knowledge-brokering, organizational mobility, and the flexibility required for

lean/agile business operations (this second form of social capital is called weak ties)

 The value and intelligence inherent in cross-boundary relationships between

functions, departments and organizations to facilitate, translate and advocate for the

creation, transfer and application of knowledge to increase process and product

innovation and overall business performance (this kind of social capital focuses on

structural holes).

...we learned that to truly be competitive, organizations not only needed good

managers, but also good individual contributors who could collaborate with

themselves and their managers to drive value to the customers and stakeholders.

In plain language, social capital is about people who can work closely with others to deliver

high performance across the business, technical, and social dimensions of the company.

People who are capable of engaging in these bonded professional relationships are said to

possess a kind of social capital called "Strong Ties" These strong ties allow individual

contributors and managers to openly share ideas, self-manage their daily objectives, and

deliver work products that are fully aligned with the business strategy. I call these people

"the players".

Social capital can also be found in people who seem to know who the real players are across functional and organizational boundaries. The relationships these people have with others across the organization can be used to connect people with resources and information that reduce cycle time and throughput. These are people that can help organizations people, technology and process to increase flexibility and agility and thereby drive value to customers. I call these people "the connectors".

The third form of social capital can be found in people whose knowledge of various

organizations that are structurally disconnected can be used to drive strategic alliance to

increase operational and business performance. By virtue of their own developmental path

through various business assignments, they are able to connect-the-dots and speak the

language of otherwise disconnected functions, disciplines, and teams that may be crucial to

developing a competitive advantage in the knowledge era. I call these people "the translators".

Transformational leaders in the new economy will need to develop social capital and apply

its advantages to organizational objectives. By fostering a work environment and culture

that enables people to play, connect and translate, the new leader can help its company

develop a sustainable competitive advantage that is not easily matched by its competitors.

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