and
people really possess in terms of “capital.” The success or failure of a
business lays in understanding the potential and actual consequences of more
than financial capital. In fact, there are four other capitals that might be
even more consequential than money. The interrelationship of these four
capitals—sometimes coupled with financial capital—is what actually produces
expansion or contraction of financial capital.
The financial consequences of a business owner’s decisions are driven by:
- Human capital—Who are the owners? What are their
intelligences, instincts, and values? This is important because every decision
is knowingly or unknowingly a manifestation of the value set of the business,
family, or individual.
- Social capital—Who do the owners know and work with?
When they are intentionally nurtured, these relationships can be leveraged for
opportunity.
- Intellectual capital—What do the owners and other members of
the company know? Are their gaps in knowledge that could be closed to
strengthen the product or service?
- Structural capital—What processes do these people use to
accomplish things?
In short, all the decisions
surrounding these four capitals will either subtract from or enhance financial
capital.
