Social Capital & Sustainable Competitive Advantage
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
...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
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.