Relationship capital, accounted for
A working draft of a metric boards keep asking for and analysts keep pretending exists.
Three years ago, in an offsite in Berkshire, a senior partner asked the room how to read the relationship capital on the balance sheet. It was the right question, asked badly. The relationship capital is not on the balance sheet. The accountants did not put it there because there is no accepted method for recognising it.
This essay is a working draft of one such method. It is not a finance proposal. It is a governance proposal. The point is to give the chair a document she can act on — a one-page reading of the relationship capital that flows through the organisation, where it is concentrated, and where it is at risk.
A QUARTERLY LETTER
Four pieces a year. No automation.
A note from the practice four times a year — usually 1,500 words on what is happening in boardrooms that the press is not writing about yet.