What is social capital?

Similar to notions of physical, human and financial capital, Social Capital is a powerful resource. It refers to the things available to you through personal and business networks: resources like information, business opportunities, collaboration, sales leads, goodwill, trust and emotional support.

Social Capital is productive: it has value, it enables you to get things done, achieve your goals, fullfill your mission in life, and to make a contribution to your community and to the world¹

If you think of Human Capital as WHAT you know (your knowledge, skills and experience), then Social capital is WHO you know. But more importantly it's also - who knows YOU, so your ability to engage in networks is crucial to your Social Capital. These networks include;

• Business networks
• Personal networks
• Friendship networks
• Peer networks
• Family networks
• Political networks

The structure of these networks influences almost everthing you do - where you find resources, how you solve problems and how you get information. The ability to understand, influeunce, shape and interact with these networks adds powerfully to your ability to achieve. Without this ability, resources can remain hidden, out of reach or remote.

1. Baker, W Achieving Success through Social Capital (New York: John Wiley & Sons, 2000)

The power of generosity

The idea of 'givers gain' is based on the priciple of generalised reciprocity: the notion that you get back in kind what you give. If you are rude or dismissive to someone they reciprocate and are rude to you. However, if you give generously and assist people, resources, sales leads and revenue flow back to you in abundance - Therefore, the giver gains.

However, when you think it through to its conclusion, its logical to expect something in return for a favour given and to some degree, you might be disapointed or even offended if you weren't repaid in some way. But if you approach your networking with a plan to build Social Capital through cold-hearted, economic calculations of ROI and tit-for-tat exchanges, then the response you elicit will be much the same. This kind of behaviour is unlikely to lead to flows of any sort in any direction.

Helping another person simply because you can, with no thought of repayment, is a powerful investment in Social Capital. Generosity is the driver of reciprocity. Reciprocity is a powerful human social norm. An act of complete generosity generates the inclination in people to repay favours and good deeds well in excess of what they would be willing to give up in a tit-for-tat exchange. Not because they have to - but because they want to.

Invest in social capital

If you’re attending networking events with a primary expectation of selling something, you’re in for a shock.

If you want your networking to be successful do not confuse it with direct selling. Effective networking is about developing relationships and investing in your social capital. It’s true that sales are made as a direct result of attending a networking event there and then – I’ve seen it and done it. I’m not saying it doesn’t ever happen–it does. Anyone with a product or service that offers value and has some demand can stumble across business at a networking event from time to time. However, if you consider that most of the people at an event are there trying to sell and almost no one is there to buy, then you’re wasting your time if your primary reason for attending is also to “sell” at the event.

So why do you go? You go because networking is infinitely more about “farming than hunting”. It’s about developing relationships with other business professionals. You go to a networking event to increase your visibility, to establish further credibility with people you know, and sometimes you go to meet a business ally and do some business. Primarily you go to networking events to invest in your social capital.

Follow-up or fail

There’s no point of going to the effort to meet someone if you’re only going to drop the ball after you’ve made a good first impression. It’s hard to believe in a world so competitive that someone would not follow-up and help cement a relationship with a new contact. However it’s generally argued that about 95 percent of all new business meetings are not followed up on. Make sure you’re one of the ones who do and stand out from the crowd.

An initial goal with follow-up is to make sure your new contact retains your name and you should set this in motion fairly quickly. Take between 12 and 24 hours and cite something in particular that was discussed – a shared hobby, business interest or whatever struck a chord between you at the meeting. This is a good way for the person to make a mental reminder of who you are. This can also be an opportunity to look toward the future. Keep the focus on what you can do for them – reach out to people through your generosity – remember there is potentially so much you can do for people without too much effort.

Today, most follow-up is done by email, it’s fast and convenient but something written adds a personal touch and is more memorable in a fast paced world. Don’t forget, follow-up also includes thanking the person that introduced you to the contact in the first place if that’s how your meeting occurred. Tell them you really appreciated the introduction and that the conversation went well.

Make follow-up a habbit!