Why leaders are using a new recipe to create capital

It has been a while since we held a physical event, so it was great to gather a group of leaders for a leadership roundtable event in Melbourne this week. We were fortunate to hear from Dr Richard Watson who is Regents Professor and the J. Rex Fuqua Distinguished Chair for Internet Strategy in the Terry College of Business at the University of Georgia. Rick is a global thought leader on capital generation and author of the book, Capital Systems and Objects. His talk challenged us to think about a new recipe to create capital. He challenged the idea that maximising shareholder wealth is the sole goal of business.

Rick’s presentation covered what is constant and what is changing. The constant is the capital creation system, with its six types of capital:

1️⃣ Economic – financial, physical, and manufactured resources

2️⃣ Human – skills, knowledge, and abilities of a workforce

3️⃣ Natural – rights to use or extract natural resources

4️⃣ Organisational – institutionalised knowledge and codified experience

5️⃣ Social – the ability to benefit from an organisation’s social connections

6️⃣ Symbolic – organisational reputation, image, brands, and ranking

The recipe for capital creation is continually evolving and mixing the basic ingredients in a new way is perhaps the most important innovation an organization can make.

He addressed four major changes impacting organizations:

✅ Shift in dominant logic & ESG (Environmental, Social and Governance)

✅ Energy transition

✅ Growth and expansion of cognitive computing

✅ Power of knowledge monopolies

Rick argues the endgame for organisations of all sizes and purposes is the enduring goal of capital creation. His framework gives us an opportunity to think about our endgame of capital creation and how to measure success. In his view, leaders know that the endgame is creating some combination of forms of capital.

They also know the plays they have to make and how to put them together and they grasp the modern form of the game.

🙋🏽‍♂️ What is the endgame you are focusing on? 🙋‍♀️

Best regards, Brian

PS: My thanks to Chris Stevens and Peter Hagenauer from Digital Frontier Partners for hosting the event and kudos to the engaged participants who attended.