The vast majority of people associate capital with financial wealth. When economists talk about capital, they are referring to assets that improve productivity, which should lead to a higher standard of living.
However, when business capital is defined solely in terms of monetary wealth, market capitalization, or sales, it invalidates other broader, longer-term goals and they tend to be ignored or eliminated.
While numbers are important, they are not the most important component of capital for the long-term survival of a business.
The true concept of capital encompasses much more than a simple financial measure. In addition to financial wealth, entrepreneurial capital is about building skills and deep know-how, establishing roots and nurturing a shared culture, improving the livelihoods of individuals and communities, and impacting communities. local, regional and national levels.
The method allows companies to see themselves as more than just profit generators and to see themselves as part of a much larger whole.
Develop skills and abilities
In order to adopt this holistic approach, organizations must focus on building capacity through continuous investment in R&D and skills development.
The development of knowledge capital must take precedence over bringing products to market as quickly as possible. Although this may initially mean sacrificing budgets for marketing and other secondary functions, the benefits become clearer in the long run.
Plus, building knowledge capital shows your customers that you’re in it for the long haul, which builds brand credibility and helps build stronger relationships with customers.
Building this solid knowledge base goes hand in hand with developing talent. But when looking for talent, most companies are still limited to a highly selective talent pool based on degrees and diplomas.
Unfortunately, credentials do not always attest to a person’s true potential and abilities.
Alternatively, when you remove formal education from your job requirements, you have access to a huge pool of untapped talent waiting for an opportunity to be trained and developed. Welcoming potential talent and nurturing it internally with industry-ready expertise also helps build knowledge capital. Such initiatives, moreover, facilitate scaling and pivoting when necessary.
Enriching employee lives
It is also important for companies to remember that their employees are more than the output they produce during working hours. For employees to be the best version of themselves at work, organizations must foster a sense of belonging that combines material and spiritual well-being.
Good pay, benefits, promotions, and office recreation centers may sound good on paper, but they mean nothing unless they’re paired with a sense of freedom, confidence, patience, and acceptance. .
Employees should also feel free to make mistakes and learn from them without being unduly penalized.
Most companies, however, approach this idea of building empowered human capital upside down. They start with the goal of keeping attrition low and then try to analyze why employees are leaving. Instead, companies need to ask themselves “what have we done to earn the loyalty and commitment of our employees? It reverses the focus on “why do people leave us?” to “why should they stay with us?”, and urges companies to be grateful and grateful to employees who choose to stay with them over the years.
Developing a common culture deeply rooted in a set of principles
A company’s culture is its unique personality, which manifests itself in the form of firmly held values, business ethics and a shared sense of purpose. Culture adds meaning to why companies do what they do and also guides how they do it.
The culture gives a clear and collective objective for which the teams must work with passion. This cannot be achieved by maximizing profits or developing quick win strategies; they rarely motivate people or encourage them to bond.
Ultimately, getting it right means fostering the realization that no business is bigger than life and thinking more about how a business fits into the bigger picture.
This helps ensure that the company understands the role it plays in society and how it can be a community asset by balancing impact and growth.
Focus on long-term capital with skills development
Rather than focusing on immediate returns, organizations should recognize the value of building long-term capital that encompasses all of the above.
Business leaders who understand business continuity and the value that comes with building skills, culture, and building know-how will prioritize establishing these core principles of sustainability.
This, in turn, will allow businesses to persevere for longer periods of time, build a positive legacy, and therefore contribute more to community progress and socio-economic uplift.