The Entrepreneurial Learning Initiative
Issue 11 | November 2021


“Complexity Leadership Theory: Shifting from Human Capital to Social Capital”

When we examine current Human Resource practices, we see a keen focus on competency-based, human capital initiatives. While human capital is worth developing, new research suggests we may want to emphasize another set of skills. Social capital, it seems, can have as much to do with innovation and growth in an organization as the skills of individuals. As this paper defines it, social capital is “the competitive advantage that is created based on the way an individual is connected to others.”

In particular, the authors of this piece emphasize group cohesion and brokerage as particularly relevant to HR development practices. By focusing on “facilitating the movement of ideas across a system through bridging and brokering,” they believe we can create more adaptive and innovative organizations. This movement of ideas can breed innovation in existing systems by positing a new theory, complexity leadership theory (CLT). This theory suggests that the everyday interactions of cohesive groups foster adaptability. Then the actions of these groups begin to link up to produce “powerful emergent phenomena.”

The issue is, “in many organizations, these linkages are hard to make because organizational bureaucracy and silos can create obstacles to interconnectivity,” say the authors. However, when an organization has well-established bureaucratic and entrepreneurial systems, they often do not link these vital groups together.

The paper discusses how the most effective organizations bridge this gap through something they call adaptive space. That is a space for interaction and (positive) tension between the organization’s operational and entrepreneurial systems to occur. By allowing these clusters of workers to interact, problem-solve, and connect, more impactful innovation occurs.

How are we fostering innovation in our organizations? How are we leveraging organic innovation and unleashing hidden potential in our teams?

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“Workplace Peers and Entrepreneurship”

In Complexity Leadership Theory, we assume that an organization has a bureaucratic and an entrepreneurial system. But what if there isn’t a formalized system for entrepreneurship? How can leaders develop entrepreneurial skills in their teams?

As suggested by a Harvard Business School working paper, one solution is to look to the previous work experience of your employees. The paper’s authors have found that who your co-workers are and what they have done previously in their careers significantly impact your likelihood of becoming an entrepreneur. Our peer group, particularly at work, strongly influences our chances of developing entrepreneurial tendencies. Recently, many organizations have been interested in developing an entrepreneurial culture. To do so, we need to pay attention to how we enable the exchange of information and skills between co-workers. Those who have any exposure to entrepreneurship may very well promote the same habits in their peer groups.

Read on



“A Project of One’s Own”

As we close out our discussion of building entrepreneurial culture, let’s consider one more option for fostering innovation: the side project. In his recent essay, Paul Graham thinks through the beauty of a self-directed project. That is, a project “that you’re doing voluntarily, rather than merely because someone told you to, and…that you’re doing it by yourself.”

Graham shares the wealth of positive emotions that come with doing something you want to do independently. The act of working on our own self-directed projects generates innovation; it empowers us to think of work differently and to take ownership of our work. We go from simply following orders to leaning into a project and finding creative solutions. The link between owning our projects and finding new solutions is evident and essential.

So, as we consider creating entrepreneurial behavior in our teams, let’s think about personal projects. These don’t have to be for the organization. In fact, when starting, that may be detrimental. Let your teams find their own problems to solve and get creative with their solutions. Let them collaborate when necessary and venture out on their own when they want. Importantly, trust that side projects will not take away from the work they do for your team. They may not only empower your employees but might also create an entrepreneurial system.

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