Managing Personal Human Capital

European Management Journal Vol. 21, No. 1, pp. 1–10, 2003 2003 Elsevier Science Ltd. All rights reserved.Pergamon

Printed in Great Britain0263-2373/03 $30.00 + 0.00doi:10.1016/S0263-2373(02)00149-4

Managing PersonalHuman Capital:New Ethos for the‘Volunteer’ EmployeeLYNDA GRATTON, London Business SchoolSUMANTRA GHOSHAL, London Business School

The relationship between individual employeesand their employing organizations is undergoingfundamental changes. Increasingly, the employee isless a malleable resource for the company and morea mobile investor of his or her own human capital.Defining human capital as the composite of an indi-vidual’s intellectual, social and emotional capitals,this article suggests some new ethos that such ‘vol-unteer’ employees need to adopt as they takegreater personal responsibility for both developingand deploying their personal human capital. 2003 Elsevier Science Ltd. All rights reserved.

Keywords: Human capital, Volunteer employees,Career success, Employing organizations,Employees

Introduction

We are witnesses to some sweeping changes in thenature of the relationship between individuals andorganizations. The geneses of these changes lie notin the managerial rhetoric to empower the workforce:they have occurred as a response to fundamentalchanges in society, in the nature of labor markets andin the talents and aspirations of individuals. Thepresent temporary reversal notwithstanding, changesin the demographics of most countries have placedyoung talent at a premium across the globe, and withthis ‘war for talent’ has come the opportunity for thenew generation to shape the way they work. At thesame time the ‘generational markers’ of thoseentering the workforce are very different from thoseof the ‘baby boomers’ who are currently running

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industry. The new entrants prefer working in teams,demand an exciting and stimulating work environ-ment and, most importantly, value autonomy incareer. Many have seen their parents sacrifice theirpersonal needs to meet company requirements. Theyhave vicariously experienced the tragedies of the‘organizational man’ (Whyte, 1956) and are determ-ined not to fall victim to the forces of depersonaliz-ation in the traditional model of individual-organiza-tion relationship.

These changes in the relationship between theemployer and the employee echo a broader revol-ution which is reshaping social institutions all aroundus. At the heart of this revolution lie the democratiz-ing forces that push for modernity. The concept ofdemocracy is built around some foundational prin-ciples: the creation of circumstances in which peoplecan express their potentialities and their diverse qual-ities; protection from the arbitrary use of authorityand power; involvement of people in determining theconditions of their association; and expansion ofopportunity to develop available resources.1 Theseforces of democratization are transforming individ-uals’ relationships at all levels — with other individ-uals, with organizations, and with broader collectivessuch as the State. In this sense, the changes we arewitnessing in the employment relationship are verysimilar to the changes Anthony Giddens hasdescribed in the nature of human intimacy and in theinstitution of marriage2 — the shift, for example,from investing in life-time relationships to ‘serialmonogamy’ characterized by a series of closerelationships governed by the expectation that theserelationships need to be made to work, yet will inevi-tably not last.3 These changes also follow closely the

PERSONAL HUMAN CAPITAL

implications that Deepak Lal has traced of the rise ofindividualism on the social structure and economicfunctioning of nations.4

The concept that links these various elements ofdemocratization is the primacy of individuals andtheir capacity to behave with autonomy, i.e. theircapacity to be self-reflective and self-determining ‘todeliberate, judge, choose and act upon possiblecourses of action’ (Held, 1986, p. 270). At the sametime there has been an enormous flourishing of var-iety in the models of working: work part-time or full-time; work for a large company or a small start-up;work as a freelance or as a member of the core; builda company or work for a company. The aspect of theongoing transformation from an industrial to a post-industrial society that perhaps deserves the greatestcelebration is the blossoming of this variety and theaccompanying liberation of the individual from theiron cages of both organizational and occupationalhierarchies. Success today can come from a muchmore diverse set of occupations than in the past —with much less predictability ex-ante. With the broad-ening of the routes to economic prosperity, there hasbeen the inevitable broadening of social respectabilitytoo. In other words, together with the growing senseof autonomy among individuals, there is also a grow-ing variety of work opportunities for people tochoose from.

How have companies responded to these broadchanges? For many the mantra of ‘employability’provided a useful over-arching philosophy to downs-ize in the face of renewed competitive pressure andthe need for greater flexibility of skills. They couldand would no longer promise lifetime employment,but their side of the deal was to support the individ-ual employee to build his or her human capital. Inreality it has proved to be enormously difficult todeliver this deal in an institutional form.5 So, in manycases, company investment in job-related training hasdecreased rather than increased, and the opport-unities for broadening beyond current job roles havenarrowed rather than widened. Bad news perhaps,but we believe these trends are a harbinger of whatis to come and an important ‘wake up’ call toemployees.

In previous generations the conventional practicewas for the employee to play the part of the innocentwith the employer as the sophisticate. The relation-ship today is reversed; the innocent plays the sophis-ticate. This places responsibility for development ofthe self squarely in the hands of the possessor, in theindividual’s ‘rights of self-expression’. It is increas-ingly individuals who control their development,their careers and their destinies, not the organizationsthat employ them. This does not mean that peoplecontinuously change jobs — some do, and somedon’t. But they take charge of their careers, whichessentially means that they actively manage the pro-cesses of developing and deploying their own

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resources. In essence, the traditional paternalisticmodel of employment is being replaced by a ‘volun-teer’ model, in which the interests of both the indi-vidual and the organization have to be met and com-mitment to work, which once could perhaps beassumed, has now to be negotiated and bargainedfor. At least for managerial and professional careers,this is the growing trend all over the world.

So given both autonomy and variety, how does theindividual construct a work life of meaning? Theemerging ‘volunteer’ model of employment relation-ship requires the creation of a whole new language ofdevelopment. Much of the historical discourse aboutdevelopment has been around what the organizationcan do for the individual. In this article we examinewhat individuals can do for themselves to constructnovel ethics of day-to-day work life while simul-taneously building and leveraging their personalresources.

The Three Elements of Human Capital

The notion of individuals participating in the demo-cratization of work implies they have sufficientresources to participate in an autonomous way. Inconsidering the notion of resources we have used theterm ‘human capital’. This refers to things peoplehave. But, people have, are and do many things,including many wonderful things, that have nothingto do with human capital. The operating word hereis capital — i.e. a productive resource — and theadjective is human. What things do people have thatare productive resources? What is it about peoplethat translates into value for themselves and theorganizations of which they are part? We believe thatthere are three kinds of resources that people possesswhich, collectively, constitute their individual humancapital (see Figure 1).

Figure 1 Human Capital consists of the Intellectual,Social and Emotional Capitals of Individuals andOrganizations


The first element is intellectual capital. It refers to fun-damental individual attributes such as cognitivecomplexity and the capacity to learn, together withthe tacit and explicit knowledge, skills and expertisean individual builds over time.

In the recent past, much management attention hasbeen paid to this issue of intellectual capital, andrightly so.6 For organizations, knowledge rather thanmoney is increasingly the key competitive differen-tiator — certainly in service industries like con-sulting, investment banking, IT services and so on,but also, increasingly, in manufacturing-based busi-nesses like pharmaceuticals, consumer electronics,and electrical machinery where, historically, largeasset bases and strong balance sheets had held thekey to success. This has naturally created a large pre-mium for the intellectual capital of individuals. But,if people with great knowledge and expertise wereall it took for achieving outstanding business per-formance, a society of Nobel laureates would havecreated the most successful global company. Knowl-edge is an essential element of human capital, but notall that there is to it.

The second element of human capital is social capi-tal7 — which is about who one knows, and how wellone knows them. And, just as cognitive complexityand learning capacity provide the underlying indi-vidual traits on which specialized knowledge andskills are grounded, similarly sociability and trust-worthiness provide the anchors for developing andmaintaining a network of relationships. Theserelationship networks constitute a form of capitalbecause they provide access to the resources mem-bers of the network possess, or have access to. Thisis why those who have studied at Tokyo University,Oxford, Ecole Polytechnic or MIT tend to have anadvantage over others — irrespective of whether theyare smarter than the others or not, they tend to havefriends in influential positions in other organizationsto access new business opportunities and to solveproblems. This is also why Silicon Valley and otherglobal ‘hot spots’ yield such enormous value for indi-vidual members of these communities. The depthand richness of these connections and potentialpoints of leverage build substantial pools of knowl-edge and opportunities for value creation and arbi-trage.8

But specialized knowledge and a great network offriends are not enough — to get things done, to moveinto action, individuals need one more thing. That isemotional capital.9 Like aspects of intellectual capital,individual emotional capital is underpinned by fun-damental traits such as self-awareness, self-esteemand personal integrity. Individuals need self-confi-dence, based on self-esteem, courage and resilience,to convert their knowledge and relationships intoeffective action.

These different elements of human capital (see Table


Table 1 Elements of Human Capital of Individuals

Intellectual capital Social capital Emotional capital

Cognitive Network of Self-awarenesscomplexity relationshipsLearning capacity Sociability Ambition and

courageSpecialized Trustworthiness Integrityknowledge and ResilienceskillsTacit knowledge

1) are highly inter-related; it is the combination, thefeedback-loops and connectivity which bring advan-tage. Social capital, in the form of extensive, fluid andreciprocal relationships with people, helps individ-uals develop intellectual capital by accessing theknowledge and skills that those people possess.10

Emotional capital brings the integrity and self-aware-ness to build open and trusting relationships whichunderpin the creation of social capital. The learningpropensity of intellectual capital can be a driver forself-development, resulting in the self-awareness ofemotional capital. And within this reinforcing feed-back loop, the self-knowledge built through openand meaningful relationships further enhances self-awareness and self esteem.

Together, emotional, social and intellectual capitalsare the basis for building strong and supportiverelationships, and for developing the courage andgrit necessary for entrepreneurship and action taking.In turn, action leads to knowledge — people learn bydoing, by experimenting, by testing out ideas. Thereverse is also true — knowledge and skills are a pre-requisite for effective action. A similar kind of sym-biotic relationship exists among all the elements ofhuman capital. But, at the same time, they also createtensions and contradictions. While knowledge facili-tates action, it can also impede action. Knowing cancome in the way of doing. Relationships facilitateaction but commitments to relationships can also pre-vent necessary but unpleasant actions.11

Managing Personal Human Capital

The challenge of competing on human capital is thechallenge of managing this interactive cycle of build-ing and leveraging intellectual, social and emotionalcapitals. This is just as true for individuals as it isfor organizations.

For individuals, the democratization of work liferequires each to take responsibility for his or her owndevelopment, instead of passively relying on othersto manage it for them. In a fast changing world, allthe elements of human capital erode rapidly —knowledge becomes obsolete unless it is updated,relationships weaken unless they are continuously


refreshed, self-efficacy and courage diminish unlessexercised. Each individual has to become aware ofthese risks of diminution and make active choicesabout where to work and what to build based onthat awareness.

In recent times, few business leaders have achievedas much recognition and success as Andy Grove, theChairman of Intel. Starting his life in the UnitedStates as a penniless emigrant from Hungary, Gro-ve’s career is an epitome of not just professionalaccomplishments but also of lasting contributions —building a highly-admired institution and, throughit, playing a key role in the development of the digitalworld. Grove’s first advice to all employees of Intelis worthy of attention:

No matter where you work, you are not an employee. Youare in business with one employer — yourself — in compe-tition with millions of similar businesses worldwide…Nobody owes you a career. You own it as a sole pro-prietor.12

Perhaps there is an element here of the Hobbesianwar of all against all but, in a competitive, knowl-edge-based economy, this is the starting point formanaging human capital at the individual level. Eachindividual must now accept the responsibility formanaging his or her personal human capital. Becauseof this responsibility, participants in the new ‘volun-teer’ model for individual-organization relationshipwill increasingly have to adopt four new personalethos.

First, the opportunity created by the forces of auto-nomy and variety will place a premium on individu-ation, and, therefore, on peoples’ courage to under-stand and be who they are. Second, to manage theinteractions between development and deploymentof human capital, there is a need for a changed mind-set: instead of thinking of themselves as assets, to beused by the organization, individuals must see them-selves as investors in the company, not unlike theinvestors of other forms of resources, such as finan-cial capital. Third, to continuously develop their ownknowledge and skills, they have to open their heartsand minds to the invigorating force of continuouslearning — an ethos that, following Jack Welch’s col-orful term, we have labeled as ‘everyday, being thedumbest you can be’. And, finally, with the increas-ing value of innovation and new ideas, they have toconsciously position themselves at the intersectionsof intellectual and social domains, so as to be able tobridge diverse spheres of knowledge and other kindsof resources.

Ethos 1: The Courage To Become Who You Are

The industrial society was built around a logic of sub-dividing and specializing the occupations and contri-butions of individuals. Over time, the logics of Adam


Smith and Frederic Taylor led to clear boundarieswithin occupations and specializations, as well as ahierarchy among them. The incentives were not fordiscovering one’s own talents and propensities andbecoming the best one could be, but for participatingin the highest-ranking occupation one could getadmission to. The pathologies of the ‘organizationman’ that William Whyte portrayed so brilliantly(Whyte, 1956) was indeed broader than the subju-gation of the individual to the needs of the organiza-tion — it encompassed an overarching subjugation ofthe individual to the socially-defined hierarchy ofoccupations.

But with the transformation of the post-industrialsociety has come variety and liberation from occu-pational hierarchies. If individuals do indeed ‘volun-teer’ then what is the basis of this volunteering, andgiven the new autonomy, on what basis is meaningconstructed? Jung uses the term individuation todescribe the opportunity each individual has to reachhis or her fullest possible development, to be whole.The vocatus for all individuals, according to him, isto become themselves as fully as they are able; thechallenge is to find out how.13

The autonomy and variety available to the ‘volun-teer’ bring enormous potential for joy and satisfactionthrough the discovery of the vocatus. Work representsa large occasion for creating meaning, or its denial,and in each individual’s life journey, work inevitablyplays a central role. But how can individuals accesstheir deepest needs and values? A starting point isto have a broad frame of reference and Jung’stypology of preferences, operationalized in the MyersBriggs Type Inventory, has brought clarity for manypeople.14 The attitude of introversion and extroversion,for example, describes whether reality is processedby an individual as something within or something‘out there’. Accordingly, an extroverted sensationtype is likely to be drawn to the outer world andderive greater satisfaction from work as a projectleader. An introverted thinking type might enjoybeing an academic but would be, in all likelihood,unhappy and unsuccessful as a salesperson.

Another important support mechanism for self-dis-covery is to create a ‘feedback rich’ context. For somepeople, developing this level of self-awareness isfacilitated by the organization. Many companies haveintroduced 360° feedback, based on team membersand colleagues reporting on an individual’s perform-ance and attitudes. For most, it is something that theorganization does for them. But it does not have tobe that way. At both Hewlett Packard and Intel, forexample, individuals actively seek feedback by e-mailing their colleagues in the immediate andextended networks, asking for information and opi-nions about themselves. This information is notrouted via the organization, but is elicited, sythesizedand discussed by individual employees.

Analytic frames such as the Myers Briggs instrument


and tools such as receiving detailed feedback have arole to play in developing personal awareness, butthis data can only be accessed through a reflectivemind-set where feelings and emotions are acknowl-edged. Many individuals find this very hard to do,and are more confident in their evaluative, thinkingmode15 To access values and preferences, however,requires the development of the less developed feel-ing function and the self-reflection which comes fromit. This is achieved through listening more closely toone’s own feelings and those of others, acknowledg-ing the feelings one has about a situation, and by cre-ating periods of self-reflection to promote this innerdialogue.

The reason most people develop a learned helpless-ness in dealing with their feelings is to avoid thedoubts and discomforts feelings often create. The oldpaternalistic employment contract may have createddoubts and discomforts, but these could be attributedto the vagaries of the company. Variety bringsopportunities for developing multi-faceted lives,autonomy brings the realization that these periods ofdoubt and discomfort are inevitable. The life of the‘volunteer’ will inevitably involve anxiety and loss:when they stretch too far and fail; when the risks theytake leave them vulnerable and alone; when they areforced to confront their values and aspirations… per-iods which Jung termed the ‘swamplands of thesoul’.16 It is possible to manage this anxiety throughthe defenses of denial or repression. Having the cour-age to become who you are comes from the realiz-ation that in each of these swampland states there isa developmental task, and of understanding thatdoubt is the necessary fuel for change, and there-fore growth.

Ethos 2: From An Asset To An Investor

Taking the courage to become who one is demandsa reflective, conscious process of self-development. Inthe old paradigm much of the role of developmentwas assumed by the company, with employees sim-ply following the laid down trajectories. But as demo-cratization of the work place grows, and with increas-ing autonomy and variety, the old paternalisms areno longer valid. Individuation requires a more con-scious and continuous building of intellectualcapacity, of emotional strengths and of social net-works. Hence, the second ethos: individuals mustmove from viewing themselves as simply an asset tothe business, to becoming investors in the business.They invest in building their personal human capitalwhich, in turn, they invest in the business in whichthey choose to work. Investors have a particular viewof a business. If building human capital is a business,then the same logic applies — the logic of having abroad purpose and vision, of resource allocation, offlexibility and adaptability.

Great businesses are built from a broad purpose and


a deep understanding of current capabilities. Thesame is true for building great personal human capi-tal. From personal reflection comes an understandingof goals, values and aspirations. The next challengeis to translate these goals in terms of their humancapital requirements — what kind of knowledge andskills will be needed, what relationship networks willbe vital, what will be the emotional demands? Whilelife is never so linear, without a rough plan, one can-not cope with the unexpected exigencies and stillmaintain course. Indeed, people engage in such plan-ning routinely for their personal financial capital, butnot for their personal human capital. The challengeof competing on human capital, above all is the chal-lenge of counteracting that state of apathy withregard to any individual’s most important asset.

Managing personal human capital as if it was a busi-ness is about having absolute clarity of where to bestallocate scarce resources (personal human capital) forshort and long-term leverage. It is about choosingamong equally attractive options which may yielddifferent benefits. Increasingly the ‘volunteer’employee will want to make an informed choice ofallocation by accessing deep information about thepotential of different work options for building theirintellectual, emotional and social capitals. While inmany companies there is tacit knowledge about thedevelopment potential of work options such as pro-jects, some companies have sought to make thisknowledge more widely available. At Applied Tech-nology, for example, new engineers rotate through aseries of five-week projects designed to give therecruits a taste of the different parts of the business.While working on these projects, they confidentiallyshare via the company’s intra-net their views on thework and the capability of the project leaders to men-tor and coach. This sharing deepens the engineers’information and increases their capability to makechoices and to actively manage their personalhuman capital.

At the core of creating personal human capital is thedetermination to take personal responsibility fordevelopment, and a preparedness to invest personalresources in development. This may be the financialresources to participate in training programs. It ismore likely to be a resource trade-off between capi-talizing on the returns from current human capitaland investing in development of new human capital.Structured training programs have some impact onthe creation of personal human capital, but the pri-mary impact arises from day-to-day experiences inwork: from mentors who become ‘talking partners’;from sponsors who open new opportunities; fromstretching and challenging projects; from engagingand stimulating colleagues who are prepared toshare their knowledge; from ‘feedback rich’ workingenvironments. For the determined investor thechoices are where and whom to work with.

Businesses are compelled to report on their manage-


ment or financial capital, but the capacity to createhuman capital is still shrouded in mystery. The inves-tor, therefore, has to become an acute observer andseeker of human capital related information. Theyneed specific answers to the following questions:what is the company’s history of mentoring? Howmuch time do the leaders of the business spend oncoaching activities? Are senior people willing tosponsor young people? Is any part of the remuner-ation of team leaders determined by their ability toattract and retain talented people? What is the pro-portion of exciting projects? How is membership toprojects assigned? What is the knowledge base ofpeople? How is feedback on performance given andreceived? Do people trust each other? What is theindividual latitude of discretion?

In business, people make hard decisions about theallocation of scarce resources, making deals, negotiat-ing and bargaining for what they believe is right.Actively building personal human capital requiresthe same up-front attitude: the attitude of keepingoptions open; of developing general, portable skillsrather than company-specific skills; of having thecourage to make substantial personal investments inknowledge acquisition; of negotiating hard for theopportunity to build social networks. The investormind set is more active, more self aware, more cour-ageous.

These are the most obvious parallels between manag-ing personal human capital and managing a business:the importance of purposeful choice; of makingtough decisions on the allocation of scarce resources;and the rationality of planning and purpose. But theanalogy extends further than that.

Companies often suffer by becoming prisoners of thepast — unable to free themselves from their history,they remain lumbering and inflexible. The ties of thepast create strategic inertia: processes and routines,once useful, become moribund and bureaucratic;values and norms become ossified and inappropriate.The same often happens to people. The escape fromsuch ossification lies in the imaginal capacity that allindividuals possess but many do not use.

While individuals are limited by their complexes torepeat historic response patterns, they can enlargetheir vision of the possible and learn to overcome theconstraints of the past. To be adaptive, businesseshave to confront and discard those aspects of theirheritage that are no longer appropriate. Similarly, todevelop as a person, it is sometimes necessary tocross lines once thought too formidable. This mayentail transgressing a mentor’s will or a colleague’shopes and aspirations; it may mean no longer cling-ing to impossible fantasies, or freeing oneself fromroutine and, therefore, comfortable ways of behav-ing. Each individual is constrained within the narrowconfines of a specific combination of time, place andhistory. In a world of autonomy and variety, each


individual is obliged to find his or her own way, andcrossing over sometimes confronts the need to standagainst the forces of personal history.

Ethos 3: Everyday, Be The Dumbest You Can Be

Over the last four years, the two authors have jointlyrun an executive program. It is a consortium pro-gram, consisting of six large, highly visible, globalcompanies. Each company sends a team of six verysenior-level general managers to the program, whichruns in short modules over a ten-month period. Thebasic philosophy of the program is built around theconcept of learning from one another — individualslearning from their peers in companies from very dif-ferent businesses, cultures and histories, as well aseach company team learning from the perspectivesand practices of the other companies. Over the tenmonth period, we travel around Asia, the Americasand Europe, visiting each company, looking at itsoperations, talking to a wide range of people — allin the hope of maximizing both individual and col-lective learning from these experiences.

Over the four years that we have run the program,both of us have been struck by one remarkable differ-ence among the individual participants in how theyapproach these visits. A vast majority use their criti-cal faculties — to see what is wrong, what is notworking as well as it might, and where the companypractices are inferior to their own. At the end of thecompany visit, these participants summarize theircritiques in sharp, focused ways. Their feedback isusually both uncomfortable and useful to the man-agers of the host units.

But there are a few — typically very few — who goabout the visits very differently. They look for whatis working, where the practices of the company arebetter than their own, and what can be learnt duringthe visit that can be implemented with some benefitsin their own organizations. Inevitably, they find suchareas — sometimes in very specific actions, such assome unique aspects of the company’s quality man-agement processes, and sometimes in much broaderaspects such as the company’s ability to create a highenergy work environment. They ask sharp questionsto ensure that they fully understand why and howthe practices work as well as they appear to do, oftengoing down to a level of detail that the others con-sider to be trivial.

Members of the first group are smart. They use theirknowledge and skills to see what is missing, wheretheir own knowledge and expertise are superior. Themembers of the second group are smarter. Theyexploit the opportunity to learn and to enhance theirown human capital.

According to GE’s Jack Welch, the essence of aboundaryless, learning organization is that ‘Every-


day, people are the dumbest they can be’. As heexplains, ‘there is always someone who is doingsomething better than us. The challenge is to be opento the learning opportunities that life provides every-day’. Some individuals tend to be inherently moreopen to such learning than others, as a personalitytrait. But it is a skill that can be improved throughconscious effort.

The volunteer ethos requires each individual tobecome a determined developer, to continuouslylearn. At the heart of this determined developmentare three core learning processes that individuals use:application, induction and reflection. The processesare the learning engines through which personalhuman capital is continuously refreshed and created.

Application starts from exposure to broad, context-free concepts or theories, such as ‘core competency’,which are then applied to a particular, context spe-cific situation, relevant to the individual’s own com-pany or job. As a learning process, it is based on whatDon Schon has described as ‘technical nationality’(Schon, 1983). Induction, the second learning process,is driven by the search for patterns and consistenciesacross different experiences — what Mintzberg hascalled ‘detective work’ — and then the generalizationbeyond data, which he described as the ‘creativeleap’ (Mintzberg, 1979). Much of the learning fromtrials and experimentation follows an inductive pro-cess, based on tentative formulation of hypotheses,and enriching them through testing and feedback.Finally, reflection, the third learning process, is builton in-depth understanding of a particular and con-text-specific situation that ultimately leads to insightand intuition — an outcome that is very differentfrom both the knowledge-acquisition and internaliz-ation process of application and the creative gen-eralization from diverse experiences through induc-tion. Insights generated through deep reflection onone situation do not reveal general ‘truths’; insteadthey shape perspectives and assist in identifying,defining and framing problems. As argued by Schon,reflection is an alternative route to generalizationpremised not on scientific analysis, but on what, forwant of a better term, may be best described as thedevelopment of ‘wisdom’.

To become a determined learner, individuals needthe capacity to learn through all three processes. Tolearn through application, they will need continuousexposure to the latest ideas and concepts, and mustbe willing to invest significant personal resources tostay current in their areas of interest. Part of theseinvestments may be in the form of time and moneyto participate in on-going educational activities, butmore of it is likely to take the form of trade-offsbetween appropriating returns from their existingknowledge and committing resources to developnew knowledge. Reading, taking sabbatical leaves forretraining, and becoming part of the networks inwhich relevant new knowledge is created are all


activities that support learning through the appli-cation process.

Important as it is, however, application is likely tocontribute a relatively small part of the total learningof the determined developer: he or she is likely toobtain greater leverage from both induction andreflection. These are also the learning processes thatmost people tend to be less comfortable with, simplybecause of the dominance of application in the learn-ing process of formal education.

Both induction and reflection require intellectualcuriosity together with the courage and personalsense of autonomy to form one’s own ‘theories’.While the quality and usefulness of such theoriesdepend, to some extent, on individual attributes suchas creativity, capacity for pattern recognition andcognitive complexity, the courage to engage in suchtheory-building endeavors can be enhanced throughboth practice and reinforcement from mentors whobecome ‘thinking and talking partners’, and stimulat-ing colleagues who help create an intellectually aliveand challenging environment that facilities action-learning. For the determined developer choosingfeedback-rich, stimulating work and knowledgeablementors and sponsors is crucial to building personalhuman capital.

Ethos 4: Work The Boundaries

About half a century ago, Joseph Schumpeter, theAustrian economist, had a profound insight. Progresscomes from new combinations. It was this insightthat led him to an understanding of the process ofcreative destruction that lies at the heart of competi-tive economies (Schumpeter, 1934 (reprinted in1962)).

New combinations of existing knowledge create newknowledge. The combination of biology, physics andchemistry creates molecular biology. Combination oftechnical and marketing knowledge creates winningnew products. Understanding the needs of manufac-turing and of customers leads to innovative logis-tical solutions.

The same is true of relationships. The individual whobridges two disparate groups of people who are notconnected among themselves gets the benefits ofbrokerage across them. In academic terms, this iscalled ‘structural holes’ — gaps in relationship net-works that yield productive bridging opportunities.17

Social capital is developed through networks builtupon trust and reciprocity. It is these networks whichcan bring the knowledge and excitement that propelindividuals to action. Skilful builders of networks arepassionate about people and have the emotionalcapacity to create strong, intimate relationships withothers. But building networks comes at a price; in


particular the resource cost of maintaining networkswhich can fast erode. Here the individual is facedwith an investment dilemma; whether to put his orher resources into establishing strong ties with asmall network of closely linked individuals, or toinvest available time and resources for developingnetworks of weak links to many, disparate people.

Both can bring benefits. Strong networks have theadvantage of focusing attention on a smaller groupof people and, in doing so, creating the intimacy,trust and reciprocity which provide the foundationfor transference and combination of rich, tacit knowl-edge in multiple ways. These strong links are crucialto the development of deep, specialist expertise. Butestablishing and maintaining these strong exclusivenetworks reduce the opportunity for establishing awider network; and while they can yield tacit knowl-edge, these tight networks have fewer people and,typically, a high degree of redundancy since there isso much shared common knowledge. In short, whilethe individual acquires greater tacit, specialist knowl-edge, he or she is unlikely to encounter knowledgefrom outside a limited domain.

On the other hand, individuals who develop multipleweak networks have the opportunity to access awider diversity of knowledge and therefore thepossibilities of connecting these networks and theiractivity domains to create value through new combi-nations.18 This is why working at the boundaries or,rather, working the boundaries, is so often so ben-eficial for both building and leveraging one’s humancapital. Bridging across two disparate groups — say,R&D and marketing — helps build new knowledge,skills and insights that neither group has. Bridgingbetween two industries creates new opportunities asthey converge. Bridging the worlds of science andventure capital yields new business possibilities.

The arbitrage opportunities in these loose networksarise from the information asymmetry across the net-works and the value of bringing ideas and knowl-edge from one to another. This is not easy, however.It is more comfortable to stay within the bounds ofone’s own kind of people, who do similar things andbehave in similar ways. Membership of multiple net-works involves a great deal of effort. Similarly, bridg-ing across diverse knowledge domains is more com-plex than maintaining one’s specialization within asingle domain. But, biographies of successfulentrepreneurs, CEO’s, authors or academics arereplete with tales of bridging in action.

The starting point for bridging and also the most dif-ficult step is to have the courage to put oneself innovel situations. Having been born and brought upin Boston, the prospect of spending three years inTokyo is nerve wrecking, as is a move to marketingafter having built a successful career in finance.Novel situations lead to a loss of all the comforts ofknown surroundings, familiar systems and old


associations. But, it is only from such starts — awayfrom the comforts of ‘life as usual’ and into new andunfamiliar situations and surroundings — that allbridging begins.

The issue here is one of investing to build social capi-tal through combining strong ties which yield rich,tacit knowledge while simultaneously investing inweaker ties with disparate groups capable of build-ing ideas through combination. The strategy ofinvesting and building social capital sounds instru-mental, and in some aspects it does play back to theconcept of investing in personal human capital as ifit was a business. But while rationality and strategicchoices may identify the balance to be struck betweenweak and strong ties, they do not of themselves assistin the subsequent development of these ties or thecapacity of these ties to yield benefit.

The ‘badge sniffer’ at conference gatherings, intenton establishing loose ties with those they consider‘important’ is no more likely to build these relation-ships than the individual who shuns these events.Even loose networks require a degree of trust andmutual reciprocity, which is leveraged through self-esteem. Similarly, establishing close network tiesdoes not of itself create an opportunity to ‘vacuumup’ tacit knowledge. Individuals can choose to giveor to withhold their knowledge and when faced witha transactional mercenary, the likelihood is that theywill withhold. It is the capacity for empathy and inti-macy built from emotional capital which providesthe context in which people choose to freely give andto receive.

Fundamentally ‘working the boundaries’ may andindeed should be conscious, but it is not trans-actional. It comes from a deep and passionate interestin people, from the capacity to give as well as to take.Networking without empathy fails to build either theintimacy which supports tacit knowledge sharingwithin strong links or the broad sociability which cre-ates arbitrage opportunities across weak links.

From Human Capital To MeaningfulLives

In this article we have argued that fundamentalchanges are occurring in the nature of the relation-ship between individuals and the organizations ofwhich they are members. At the heart of thesechanges lie the democratization of this relationship,stemming in part from increased personal autonomyand greater work variety. This democratizationplaces enormous emphasis on individuals’ selfawareness and courage to build and leverage theirpersonal human capital. But it brings with it enor-mous promise. Autonomy and variety provide theopportunity for people to become who they are, to


pursue their natural talents, to build meaning and tocreate more emotionally satisfying lives.

It is necessary to relate this argument about peoples’work lives to the broader context of the role workplays in modern life. Historically, people had at leastthree different spheres in their lives: the family,work, and a third place — the pub in the U.K, com-munity organizations in the US, the tea shops inChina or India. Gradually, this third place is becom-ing a void because of a variety of disruptions includ-ing geographic mobility, the breakdown of communi-ties, and a broader set of changes in societal normsand values that have tended to undermine its socialand psychological viability.19

The third place used to serve as a key source of boththe creation of meaning through social identity andpersonal pleasure. One was known there, and onecould be who one was — away from the evaluativeand instrumental aspects of work, and from theduties and obligations of family. Progressive elimin-ation of the third place and the associated enlarge-ment of the work sphere have significantly enhancedthe need for work to be both more meaningful andmore pleasurable. And for that to be the case, the gapbetween work and identity has to be reduced, whichthe growing variety of occupational opportunitiesnow makes possible.

Another related aspect of the on-going transform-ation of society that most observers have taken to bea cause for concern is the increasing sphere of win-ner-takes-all games. Whether an athlete, a manageror an academic, individuals are increasingly subjectto an economic regime in which the very best cornermost of the pay-off.

These forces combine to create a very different con-text for career success — there are many more gamesnow, thereby providing more variety to match thevariety of human preferences and pleasures, andeach game offers large rewards for excellence andrapidly diminishing rewards thereafter. While mostpronounced in the developed Western economies,this new context is rapidly spreading around theworld, as a handmaiden of the evolving global mar-ket economy.

Not only will one’s personal human capital becomemore and more important in this new context, thecourage to align who one is with what one does willbecome both more pleasurable and more profitable.Aligning work with personal values, creating thevocatus — doing what one likes — has always beena precious human aspiration. It is increasinglybecoming also the most effective strategy for per-sonal success. At the end of the day, this is perhapsthe most wonderful and satisfying aspect of compet-ing on human capital — while painful because of theneed for continuous improvement of one’s ownknowledge, relationships and sense of self-efficacy,


it aligns economic incentives with the very humanpropensity for creating meaningful lives by pursuingone’s own convictions and passions.

Notes

1. We have followed closely Held’s thoughts on democratiz-ation. See Held (1986).

2. See Giddens (1990, 1992).3. Peter Cappelli draws the analogy with serial monogamy

in his paper (Cappelli, 1999).4. See Lal (1999).5. There has been much evidence to suggest that organis-

ations have not created flexible internal labor markets orinvested in the training of short-term skills. See forexample, Pfeffer (1998). Detailed cases from seven largeorganisations also highlight the gap between rhetoric andreality. Lynda Gratton et al. (1999).

6. In 1997, three books were published all carrying the titleintellectual capital; the programme for the 1999 AnnualMeetings of the Academy of Management was dominatedby sessions and papers on this topic. Clearly, for bothmanagers and academics, this issue of knowledge man-agement is now very much in the forefront of attention.Of the vast amount of literature on this topic, we havefound the books by Quinn (1992) and Nonaka and Takeu-chi (1995) to be the most insightful from a practical pointof view, and the articles by Spender (1996) and Grant(1996) as useful contributions and idea reviews, from anacademic perspective.

7. The term ‘social capital’ initially appeared in the contextof community studies, highlighting the central importanceof the networks of strong, cross-cutting personal relation-ships for the survival and functioning of city neighbour-hoods. Since this early usage, this concept has beenapplied to elucidate a wide range of social phenomena,particularly its influence not only on the development ofhuman capital (see Coleman, 1988) but on economic per-formance of companies (see Baker, 1990), geographicregions (Putnam, 1995) and nations (Fukuyama, 1995).

8. For a rich description of the social capital networks in Sili-con Valley, see Cohen and Fields (undated).

9. What we have termed here ‘emotional capital’ borrowsfrom disparate literature streams. At the individual levelthe notion of emotional intelligence has been described byGoleman (1995) and earlier by Salovery and Mayer (1980)and loosely defined as the ability to monitor one’s ownand others’ feelings and emotions. It is described as essen-tially individual and partly innate. By emotional capitalwe have broadened the concept to include integrity, tounderstand the emotions of others, and to acknowledgeand be sincere about one’s own emotions (Hochschild,1983). We also describe an action element, the capacity tomove into action through will and hope (Brockner, 1992).For recent and relatively comprehensive reviews of therole of emotions in organizational functioning and per-formance, see Fineman (1993) and Quy Nguyen Huy(1999).

10. For a detailed discussion on how social capital influencesthe development of intellectual capital, see Nahapiet andGhoshal (1998).

11. See Donald Sull (1999), for a rich and illustrated dis-cussion of how commitment to relationships can preventor delay action.

12. See Ghoshal and Bartlett (1997).13. Jung’s concept of individuation is described by Edward

Edinger (1984). For deeper insights see Jung (1953–1979).14. Jung first described the personality types in Psychological

Types, volume 6 (1953–1979). The Myers Briggs TypeInventory is discussed in Briggs Myers and Myers (1980).

15. People in business-related activities tend to be thinkersrather than feelers — see Briggs Myers andMyers (1980).


As the authors also show, women are significantly morelikely to be feeling-orientated than men.

16. See Hollis (1996).17. See Burt (undated).18. For an elaboration of this argument, see Granovetter

(1973).19. Richard Pascale made this point in his unpublished

paper (1995).

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Managing Personal Human Capital