On the 1st January 2000, I started my 13 year tenure as the EVP Human Resources. The company had 441 people most of whom were based in Cambridge and they designed the chips for mobile phones. Unusually, the company had revenues of less than $100m but was already in the FTSE 100 with a market capitalisation of £10B. The workforce was highly qualified, there was a strong corporate culture and we knew we would grow the company substantially over the next few years. The issue was having a coherent model on which to develop the organisation. The original founders admired the book Built to Last and our early business strategy discussions used the ideas from that book. The subsequent books by the same authors were also influential. The main weakness was the ideas were based on a few successful very large organisations who were old world businesses largely engaged in manufacturing. Most of the literature on focussing on culture was fairly generic and unconvincing in terms of linking strategic development with organisation growth and scaling. Indeed, there tends to be an ongoing debate about either retaining the culture as you grow or evolving it as per Built to Last. In each case, the link between business and organisation was weak.
In late 2000 we participated in an Oxford Templeton study of what motivates engineers and scientists based on a detailed survey of employees of leading innovative businesses one of which was ARM. The study built on the work of Sumantra Ghoshal and Janine Nahapiet who in 1998 had published a paper called Social Capital, Intellectual Capital and Organistion Advantage in the Academy of Management Review. This work essentially connected Human Capital to Social Capital to the creation of Intellectual Capital as well as connecting the organisation’s development to the core competencies of the business. High Social Capital provided the conditions under which knowledge is shared and through recombination, innovation occurs thus creating more intellectual capital. The definition of Social Capital used was that it is a mix of networks, trust and a shared narrative. These basic ideas transformed our approach to organisation development and underpinned every aspect of our people approaches from recruitment to development to internal communications. Many years later, I met Jon Ingham and he interviewed me and also wrote about what we did in his blog:
After Jon published his recent book on social organisations we met up to discuss the formation of this community. Our shared view was as per his book - the aim of organisation development is to build Social Capital and it is the most useful set of ideas for understanding the growth and development of organisations. Culture is part of shared narrative but really a passive thing that is of little use in understanding the real processes of organisations.
During my tenure at ARM, we won almost every award possible for how the company was run including European Company Of The Year in 2007. By 2013 we were ranked in the top 4 innovative companies in the world. In this blog I hope to explain how we did this using the social capital model.
Thanks for sharing this Bill - ARM was such a great case study for the development of social capital, and our meeting / listening to you at the CIPD in 2011, were key to getting me and keeping me focused on this agenda (even if it did take another 7 years and another meeting with you to get this community established!)
You were also the first person I talked with to be alert to the problem of social media becoming antisocial media, which we’ve certainly seen a lot of.
I definitely want to involve you in some conversations on culture here over the next couple of months, as I think the relationship between social capital and culture, including the way you saw this at ARM, will be an interesting discussion opportunity for people.
Also in case members are interested, here are the links to the Sumantra Ghoshal and Janine Nahapiet article which I agree was key to this agenda, and the Templeton College study too:
I don't want to share this publicly but if anyone wants a copy of the Ghoshal / Nahapiet article, or Janine Nahapiet's 2003 phd thesis, Towards a Theory of the Dynamic Firm: Knowledge, Learning and Social Relationships, which was really interesting too, do let me know.