Human Capital is the Only Capital

“When people with real talent approach any endeavor, they look for a method, a process, that will lead to success. They follow that process every day. They set themselves up to succeed.” -Bob Rotella

William Thorndike published The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success, in 2012. One of the major themes of the book was capital allocation. The assertion was that effective capital allocation (investments, buybacks, dividends, acqusitions) was a hallmark of success. The book makes a compelling case. But one point of the book is often overlooked. Thorndike writes, “there are two basic types of resources that any CEO needs to allocate: financial and human.” As people are often inclined to do, the majority of the book and reviews focused on the financial type. But, in my view, financial capital is only as effective as the humans deploying it. Therefore, human capital is really the only capital.

I posted this on Twitter recently and received numerous comments and questions. Interestingly, most of them focused on recruiting and hiring. Recruiting and hiring are indeed critical, but retaining may be the most critical. There are obvious ways to retain people (compensation, challenging work, mission-driven work), but I believe growing people is the most critical. If people believe they will grow, where they are, they are more likely to stay.

I believe there are three aspects to a successful career:

1) Personal growth

2) Helping others

3) Achievement

Those 3 things are highly related. I’ve found that helping others often helps you grow personally; which in turn helps you achieve your goals. So, together there is a compounding effect.

I am fortunate to have growth and mentoring discussions with a variety of people. In order to make those discussions a bit more scalable, I’ve written down some of my beliefs and how I try to guide others:

Skills

Principles of Great Performance

100% Effectiveness

12 Attributes of a Great Leader

Executive Presence

Reading

Career Growth

Career Decisions

Interview Your Boss

Mentoring

Human capital is the only capital. When you find great people, it is critical to retain them. Which means there has to be a focus on growing them. While there are formal ways to do this (training, mentoring sessions, etc), I believe its more of a mindset than a tactic. It’s the mindset of a teacher. Often, the best way to learn something is to teach it; which has the compounding effect I described above. As William Ward said, “The mediocre teacher tells. The good teacher explains. The superior teacher demonstrates. The great teacher inspires.” Teaching only begins, when you accept that human capital is the only capital that matters.

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Author of ‘The AI Ladder’, ‘The End of Tech Companies’ & ‘Big Data Revolution’ amzn.to/2uVu84R.

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Rob Thomas

Author of ‘The AI Ladder’, ‘The End of Tech Companies’ & ‘Big Data Revolution’ amzn.to/2uVu84R.