Harnessing the Four Intangible Business Capitals for Growth and Sustainability.
For every business owner or entrepreneur who desires longevity for their business, there is a great need to consider crafting internal procedures and measures to effectively harness, manage, and leverage human, customer, social, and structural capital in order to create value for their customers and shareholders.
Although these capitals are invisible, they play vital roles in the sustainability and growth of businesses, as causes for the failure of many businesses in the past have been attributed to some and in some cases, all of these capitals.
Therefore, this article seeks to aid entrepreneurs and business owners in understanding these capitals, which will help them make informed decisions on matters that impact their businesses in this regard.
Understanding the Four Intangible Business Capitals
- Human and structural capital
No business exists without the active involvement of key stakeholders necessary for daily operations and strategic decision-making in terms of customer satisfaction and retention, revenue growth, profitability, shareholder satisfaction, and employee satisfaction, amongst others. Human capital refers to the agglomeration of skills (soft and hard), experience, and knowledge of employees in a business entity. In lieu of this, business owners and entrepreneurs must ensure that the right and qualified individuals are employed.
Furthermore, in order to ensure the consistency and motivation of employees, business owners, managers, and entrepreneurs should ensure that they create the necessary and enabling environment where there is inclusiveness, openness, and transparency. Employees should also make their wellbeing, personal growth, and career growth of utmost priority.
It is also important to note that entrepreneurs should avoid employing more than their financial capacity can bear, as this will help maintain an optimal or lean workforce for effective communication, commitment, and appraisal.
- Customer and Social Capital
Entrepreneurs and business owners must seek to establish and maintain cordial relationships with their external stakeholders. These include customers, suppliers, partners, host communities, among others as they are critical to the day-to-day operations and business growth.
Business owners and entrepreneurs must ensure that they earn the trust and loyalty of their customers by ensuring they keep up to their promises in terms of quality and deadlines for service delivery. There is a need to always ensure that customers have the opportunity to give their reviews of the product or service offered. This can be actualized through creating an active, responsive, and engaging social media platform where concerns raised by customers are documented and addressed promptly.
Furthermore, businesses need to ensure and maintain a healthy working relationship with suppliers and partners, and this possible through setting and monitoring relevant performance indicators to ascertain product quality and reliability from suppliers. Nevertheless, corporate social responsibility (CSR) should be considered in an attempt of establishing cordial and lasting relationships between businesses and their host communities.
Conclusion
In line with the commitment of businesses to ensuring consistency in the creation of value for external and internal stakeholders, entrepreneurs and business owners must acknowledge that the world is becoming more dynamic and interconnected. A strong social network and an active communication line must be put in place with its customers, suppliers, partners, and host communities. Entrepreneurs need to be deliberate about building a business where everyone is given the opportunity to put in their effort to achieve both organizational and individual success.