Hidden Capital

Capital is a fickle thing.

Well allocated, it helps you deliver returns that are outstanding. When leveraged appropriately you can magnify those returns even further.

But all capital is risk capital.

And capital has options – in terms of where it’s invested, the risk/return profile and the patience it demonstrates.

And capital is broader than you think.

Yes, there’s the obvious capital on the balance sheet, partly or fully paid, represented in assets or otherwise.

But Hidden Capital is just as valuable and often has even more options.

Hidden capital is the intellectual, trust, relationship and customer capital that is seldom reflected on the balance sheet.

• Hidden capital is the relationships your board members have.
• It’s in the secrets your sales staff keep close to their chests.
• It’s the way your receptionist greets and guides every caller, visitor and guest.
• It’s the intellectual and emotional strength, resilience and reasoning that sustains the organisation.
• It’s management’s talent depth so that one illness doesn’t wipe you out.
• It’s the speed at which new hires get up to speed, and can accelerate the performance of the company
• It’s the social fabric of the organisation, clients, suppliers, customers and competitors.
• It’s in the ideas, creativity, suggestions and initiatives that will guide and shape the future of the organisation.

It’s your job to maximise the value and return on all of this capital, too.

Simply because the company doesn’t strictly recognise all of these sources of capital doesn’t mean you don’t have a  responsibility to improve and generate a superior return here, too.

This is, often, code for getting the most out of people. But it’s more than that. Its about creating an environment where the natural drives, the intrinsic motivators and organisational climate allow this capital go grow and flourish.

Unlike “hard assets”, Hidden Capital can grown exponentially in value.

Literally one intervention with a staff member, positive or negative, can create or destroy value for years and years to come.

And that value can compound with one insight, phone call or change in policy.

What are your favourite was for identifying and growing the Hidden Capital in your organisation?