Capital Investment and Business Success

November 09, 2015

Capital Investment and Business Success

In business, you cannot succeed if you don't invest in the effort, an absolute truism!  Yet, we don't do it well.  Most of us are unaware of, or don't pay attention to, the multiple investments involved.  There are two types of investments -- tangible (task-side factors or what we do, the things we do) and intangible (attitude, culture, morale, teamwork or people-side factors).  From a strategic perspective, we can expect optimal success if we pay attention to all the invested capitals.  From a tactical perspective, we want to know what capitals are involved and what needs to be optimized.  Finally, we will want to know what balance of capital investments are needed to be fully successful as an organization.  Then, we will have done all we have control of to optimize a Return-on-Investment!

Over the years we have dissected the view that there are seven (7) capital investments that build value in organizations.  Interestingly, 4 of the capitals are on the people-side and 3 are on the task-side.  Hmmm?  that just validates my prejudice that people are more important in this equation!  Here are the 7 capital investments starting with the four people-side ones:

1. Human Capital (HC): HC includes investment in knowledge, skills, and competencies. It reflects the synergies possible with diversity of peoples and thought processes. HC creates knowledge -- the wealth in organizations.

2. Relational Capital (RC):  RC includes the relationships built with partners, suppliers, and customers, where the potential for synergies reside.  RC also includes the synergies within high performing teams.

3. Customer Capital (CC):  The customer is the reason for everything we do. CC includes important feedback from customers and reflects the return-on-investment of all the other capitals. Investing in CC offers invaluable returns in fine-tuning future investments.

4. Spiritual Capital (SpC): SpC reflects the culture and the norms of the organization. It is the intangible input/investment from people in an organization that gives meaning, values, purpose, and feelings of well-being to people.  SpC provides the psychic power and energy in the creation of knowledge and wealth.  Ignoring SpC destroys morale and, subsequently, the performance of an organization suffers financially.

5. Organizational Capital (OC): OC includes investments into systems and processes, intellectual property, brands and corporate image; OC provides the means and ‘accelerators’ that help produce knowledge.

6. Structural Capital (SC): SC includes facilities, hardware, tools and machinery, or the traditional groupings we refer to in capital spending.  SC provides the constraints that support consistency of products/services, including quality assurances and quality controls.

7. Financial Capital (FC):  Tying the People- and Task-sides together are investments in FC. FC (revenue, cash, debt, investments) provides the WD-40® lubricant to accelerate knowledge creation as well as products and services.

Of important consideration is that to optimize a people-side investment, there needs to be a concomitant task-side investment and vice versa.  For example, if we invest in new technology (structural capital) and not invest in the people (human capital) to learn and exploit the new technology, then we will have wasted our investment in technology.  If we invest in an organizational capital (new customer software) and not inform and educate our customers well, we lose out on building customer capital and potentially on relational capital as well.

Finally, as a means to monitor the success in investments, a scoring can be developed for a business by using each capital as a measuring stick. 

© Dr. Baldwin H. Tom CMC, FIMC

Differentiating Yourself to Clients

January 23, 2017

differentiating yourself to clients

This is about my mental journey in deciding to write a book.  At this stage in my business career, I don't really need to write a book for my business.  So why am I writing?  It's about ego.  It's about legacy.  It's about sharing some great idea.  It's about gaining attention for a new venture.  It definitely is not about making money!

I'm just getting started, so I can tell you my starting thoughts.  It will be hard because in order to get a book completed, it is critical to stay focused and keep writing (whether I feel like it or not).  It will be a challenge because I don't think I have enough words to put on a page. On the other hand, it will be exciting to get ideas onto a page.  I love a good challenge and there will be some.  It will be a challenge to see how I find enough words to put on a page.  It will be a challenge to use words that will engage, energize, excite, and even educate the reader.  It is definitely a challenge to complete a manuscript in eight months!  I best get started!!

The backstory:  I have been a blogger for over 10 years.  I started blogging because I had a lot of ideas in my head and did not know what to do with them.  Hence, I decided that if I blogged, I would collect my ideas and thoughts.  In my blogs, I write up whatever is on my mind at the moment, so my blogs are really a glimpse of my thinking.  That means my topics range far and wide and are not necessarily connected one to another.  I really did not start the blog to reach an audience.  In fact, I did not do anything to try to reach anyone!  When I thought a useful blog was written, I would just copy and send it out.  So, I now have a file of over 500 blogs I can review to find a topic from which to write a book.

The event that convinced me to write a book occurred at an Institute of Management Consultants conference in Washington, DC.  One of the workshops I attended was about speaking and publishing.  It intrigued me to consider publishing.  The presenters were very good and laid out the processes for good speaking and effective publishing such that I felt confident that I could do this.  Actually, the key push was that I started a new business and needed something to boost it into the 'view' of potential clients.  So, I signed up with the publishing house, paid a fee, and will now embark on a new venture -- publishing my first book.

When I get the book done, you will hear about it!

© Dr. Baldwin H. Tom CMC, FIMC