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 / Summer 2003 / Issue 31(originally published by Booz & Company)


Build Your Organizational Equity

• Fungible Financial Equity.  Can you accumulate, through savings or other means, enough money to be able to walk away from an organization if you can’t live with the Core Group? Can you accumulate enough money to invest in your own development, even if your employer doesn’t? Having this amount actually makes it easier to live with the organization, which will sense that you are staying with it through genuine interest, not financial dependence.

• Rainmaking Equity. The ability to raise money or drum up business is another form of capital. It depends, in part, on your contacts in the outside world, and even more on your ability to approach them. If you are not in the Core Group, you can still command enormous respect for this skill.

• Credential Equity. Once you have held a position or acquired a credential, it remains with you for a lifetime. Those who have been presidents of companies can become presidents of companies again. Those with degrees in a field, from engineering to education, are qualified for life for employment in those fields.

• Reputation Equity. People who live by their wits, like lawyers, consultants, and writers, have always known the value of this equity. “If Marconi says something about ultra-short waves,” Ezra Pound wrote, “it means something.” You build your reputation less through the accomplishments you stack up (what you do) than through the way you operate in life (who you are). Sooner or later, you can attract opportunities — such as speaking, teaching, appearing on television, or writing — that further enhance your reputation. At that point, your reputation has become a form of self-generating equity. I know several innovative managers who have protected their right to innovate by continually writing for outside publications and speaking at outside conferences, thereby demonstrating that someone, at least, honors their ideas.

• Relationship Equity. Some people never have a problem widening their personal network or making trusted friends. People seek them out. And relationships breed more relationships. As Malcolm Gladwell noted in The Tipping Point: How Little Things Can Make a Big Difference (Little Brown & Company, 2000), Paul Revere was able to roust the farmers of Middlesex because he was a natural convivialist, a frequenter of bars and a member of social groups, including the budding groups of revolutionaries then emerging. In corporate America, such relationship equity (particularly the ability to know the Core Group) can save people from losing their jobs even when they challenge the top.

• Capability Equity. Perhaps the equity that does the most for you is your ability to gain new capabilities and skills, because these accelerate your accumulation of all the other forms of equity. Most organizational learning literature and emotional intelligence literature (all types of how-to literature) is about building capabilities.

Some forms of organizational equity are measurable, and others are not; but whatever form it takes, it has two key features. First, it gives you leverage in an organization. Second, it accrues exponentially; emotional dynamics grow in the same way that a savings account increases through compounded interest.

When you first consider building a nest egg (say, in your 20s), it seems impossible that your small contributions will ever add up to anything significant. But suppose you stick with it. You even pick up the pace of savings as your income increases, eventually crossing a threshold of confidence: the recognition of your own ability to acquire a significant stake. In other words, you’ve demonstrated your ability to save. Sometime in your 40s or 50s, your account crosses another threshold — the threshold of sustainability. It is large enough to generate a significant income just from the interest. You have created what economists call capital: A resource that replenishes itself.

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