Q11- Social Capital: Peace Creation = Value Creation?

You have probably read or heard of these terms (the first two are KM terms): stakeholder capital, customer capital, brand, old boy network, goodwill, corruption network, business development officer, social capital, customer relations management, etc. The same concept underlies these words. Speaking technically, these terms revolve around the common fact that relationships can and do create value. Speaking bluntly, one can make money out of relationships. We know from our own experiences that relationship is a form of asset. The generic term underlying all these is Relationship Capital.

Below is how we can break down the concept of Relationship Capital (this is a refinement of the earlier breakdown I introduced in a previous blog post, “D12- Relationship Capital versus Stakeholder Capital versus Customer Capital”)

branches-of-relationship-capital

The red text are negatives or opposites: when these are present, then they can and do destroy value. Another way of saying this is: trust in a relationship can create value, but mistrust can destroy value. Stephen M. R. Covey in his book “The Speed of Trust: The One Thing That Changes Everything” is saying that when trust is high, speed of work performance and transactions goes up, and business costs go down. Francis Fukuyama discovered that wealthy countries are also societies characterized by high social trust (see his book “Trust: The Social Virtues and The Creation of Prosperity”).

Trust and goodwill are among the most important intangible assets for good business. The same thing is true for world peace: building trust creates peace and opportunities for value creation. Losing trust can lead to conflict, war and value destruction.

It is a simple equation: building trust and peace = creating value.

Don’t you think so?

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