In Good Company

About the Author

Don Cohen and Laurence Prusak bring their extensive experience and insight to the exploration of social capital in their book, In Good Company: How Social Capital Makes Organizations Work. Don Cohen is a writer, consultant, and editor of Knowledge Directions, a journal that delves into knowledge management and organizational learning. Laurence Prusak is the Executive Director of the IBM Institute for Knowledge Management and co-author of Working Knowledge. Their combined expertise provides a deep understanding of how social capital functions and its critical role in organizational success.

Main Idea

The central theme of In Good Company is the concept of social capital, defined as "the stock of active connections among people: the trust, mutual understanding and shared values and behaviors that bind the members of human networks and communities and make cooperative action possible." The authors argue that social capital is essential for organizations to function effectively, going beyond traditional metrics of intellectual capital, processes, and technology. By building and nurturing social capital, organizations can foster trust, reduce transaction costs, improve employee retention, and enhance overall coherence and performance.

Table of Contents

1. Why Social Capital is Important to Your Company
2. Trust: The Starting Point of Social Capital
3. Networks: Where Social Capital is Strongest
4. Give Employees Space and Time to Connect
5. Social Talk and Storytelling: The Voice of Social Capital
6. The Challenge of Volatility
7. The Challenge of Virtuality

Why Social Capital is Important to Your Company

Social capital makes an organization more than just a collection of individuals. It bridges the space between people, creating an environment where knowledge sharing happens naturally because relationships are built on trust and shared goals. As Cohen and Prusak state, "Social capital makes an organization more than a collection of individuals intent on achieving their own private purposes." This interdependence is crucial in today's knowledge-intensive, service-based industries where individual genius is rare, and collaborative efforts are necessary for success.

Organizations that invest in social capital can benefit in multiple ways, including:

• Creating an environment conducive to knowledge sharing.
• Lowering transaction costs due to increased trust and cooperation.
• Reducing turnover rates, thus saving on hiring and training expenses.
• Fostering greater organizational stability and coherence.

The Age of Interdependence

We live in an era where no single individual can know everything about even their own job. The need for interdependence has never been greater, and belonging to networks that enhance our limited knowledge is essential. This is particularly evident in service-based industries, where treating people like cogs in a machine is ineffective. Instead, work today requires responsiveness, inventiveness, and cooperation, traits that thrive in environments rich in social capital.