Planning for Success: Managing the 4 Types of Capital You Have (and Need) How to manage the four types of capital we all have at our disposal.
By Daniel Scott Edited by Chelsea Brown
Opinions expressed by Entrepreneur contributors are their own.
Success requires a plan. In fact, it may require several plans. First, however, you must define what "success" means to you. What is it that your plan is trying to achieve? In my own life and business, I think there can be no greater goal than trying to achieve your life purpose (if you think there is a greater cause to pursue in your life, I would love to hear it). Given that there is no other life on this planet, or within this universe, with your exact biological makeup (i.e., your nature) and your exact life experience (i.e., your nurture), there is logically some original value that only you are capable of producing. Pursuing this unique value, I would argue, is your purpose in life.
Your life purpose serves your north star — the light you follow, the light that guides you and sets your direction. Once you identify your life purpose, then you must figure out how you can get there. This requires a combination of knowing and optimizing your resources (or capital) and the individuals who can best serve to optimize those resources and propel towards your goal (your team), developing a structure through which you manage your assets and through which your team operates, creating a process that ensures discipline and accountability with respect to executing your plan, as well as ongoing review and refinement of your plan. That's it.
Related: Define What Success Looks Like to You
Your plan for success requires five key elements: purpose (or goal), capital (or resources), team, structure and process.
Where most plans fall short is in understanding your capital. Too often, we confine our understanding of assets to traditional financial capital (i.e., money). While important, and great if you have them, financial resources are the scarcest and make up only a small portion of the assets you have at your disposal.
First and foremost, there is you: Who you are is your greatest asset. Every individual consists of mind (your knowledge and learned skills), body (how you are naturally gifted, your talents, etc.) and spirit (your core values, passions and beliefs).
Next, there is your creativity — the unique lens through which you see the world. Creativity is often defined as producing original ideas of value. This definition should sound familiar as it is closely linked to your life purpose. In fact, it is through your creativity that your life purpose is ultimately accomplished. These three pools of resources are referred to as your financial capital, human capital and creative capital.
Finally, there are your relationships, or social capital. Who you know can be your most valuable resource, and it has exponential value, because with each relationship, you tap into that individual's financial, human, creative and social capital. Understanding these four categories of capital is critical, because it allows you to create a complete strategy that optimizes the investment and growth of that capital towards achieving your goals, or purpose.
Related: Your Odds of Succeeding Improve When You Create a Success Plan
For example, let's say you are both naturally talented and passionate about music. This would mean your human capital is high with respect to music, because music is already part of your body and spirit. However, you can increase your human capital by pursuing an education in music and refining your talent into masterful skills, thereby fulfilling the mind component of "mind, body and spirit."
In addition to mastering your craft, you should focus on increasing your creative capital by becoming a prolific creator of original musical compositions and content. Finally, building a network and community of relationships in the music industry will increase your social capital. Now, ask yourself, which is more important in terms of increasing your likelihood of success in music? Being a naturally talented but unskilled and undisciplined musician with no original works and a lot of money to invest with? Or being a naturally talented, masterfully skilled musician with a large body of original work and key industry relationships but very little money?
Surely, the latter has a much better chance at success. In fact, if you are the former musician (with no skills, creative works or relationships), then the best use of your financial resources would be to invest your dollars towards building the human, creative and social capital the latter musician already has anyway.
