It’s all too easy to lose sight of the endgame when there are so many distractions. That is a key takeaway from a presentation by Dr Rick Watson, from the University of Georgia, at a leadership roundtable in Melbourne. In his book, Capital, Systems, and Objects, he argues that the endgame for organisations of all sizes and purposes is the enduring goal of capital creation. In Rick’s view we face a continuing barrage of distracting new ideas and technologies, such as agile organisations, digitisation, blockchain and many others. He wants us to understand that they are a means to an end, but they are not the endgame.
Rick has defined six forms of capital, which give a rich measure of an organisation’s purpose and a way to assess its effectiveness.
Economic – financial, physical, and manufactured resources
Human – skills, knowledge, and abilities of a workforce
Natural – rights to use or extract natural resources
Organisational – institutionalised knowledge and codified experience
Social – the ability to benefit from an organisation’s social connections
Symbolic – organisational reputation, image, brands, and ranking
“If you don’t know where you are going, any road can take you there.”
Lewis Carroll – Alice in Wonderland
The automotive industry offers some good examples of different forms of capital creation.
Henry Ford famously offered his customers, “a car painted any color that he wants so long as it is black.” Ford focused on economic capital as the prime success factor.
When Alfred Sloan became president of GM his aim was to produce a car “for every purse and purpose.” His more complex organisation and annual strategic planning required the creation of organisational capital, which enabled it to take away Ford’s market leadership.
Sakichi Toyoda, founder of Toyota offered consumers high quality vehicles. He said, “Workers are the treasure of the factory. They are important to me.” The Toyota model views human capital as the key success factor because it raises quality and productivity.
When Chris Bangle became design chief for luxury car maker BMW, he said, “We at BMW do not build cars as consumer objects, just to drive from A to B. We build mobile works of art.” BMW is focused on symbolic capital and consequently reaps higher profits per car than many of its competitors.
Elon Musk’s view is, “If you are trying to create a company, it’s like baking a cake. You have to have all the ingredients in the right proportion.” Tesla’s success is based on new forms of organisational capital, software for connected cars as well as dealing directly with customers. Tesla can adjust the brakes on all the cars it has made by distributing an electronic software patch. There are no costly and lengthy recalls.
Volvo CEO, Håkan Samuelsson is repositioning the company to focus on selling mobility rather than a car. He said, “Volvo Cars is becoming more than just a car company. We recognise that urban consumers are rethinking traditional car ownership.” Volvo is creating a new mix of organisational and symbolic capital.
Rick’s framework gives us an opportunity to similarly think about our endgame of capital creation and how we will measure success. In Rick’s view, game-changing leaders know that the endgame is the creation of some combination of forms of capital. They also know the plays they have and how to put them together and they grasp the modern form of the game.
Are you focused on the endgame?
Best regards, Brian
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