Two weeks ago I wrote an article about an underappreciated asset on your balance sheet - your income. Earning an income is one of the key drivers of your ability to create wealth. And you earn an income by creating value for other people. You create value by bringing the knowledge, skills and experience within you to meet the needs of other people.
People are happy to exchange their resources to solve their problems.
Together, your skills and experiences make up your Human Capital. They represent your ability to create a better future through your actions. This can mean starting a company. Or running one. It can mean changing the oil in your car. Or knowing how to drive one.
It is through your actions that you are able to serve other people and create value. ‘Human Capital’ describes potential energy. The capacity to create value that resides between your ears.
Unlike your ‘economic capital’ – the stocks, bonds, real estate and other investments – you exercise a tremendous amount of control over your human capital. You choose what skills to develop, what goals to pursue, what jobs you apply to. Just as there are best practices for managing portfolio investments there are also best practices for managing your human capital.
How we use human capital
There are two ways we can apply Human Capital – directly and indirectly. Direct application is solving our own problems. It is mowing our own lawn, building our own house, doing your own taxes. There is work that needs to be done, and you’re willing to learn how to do it.
There is more potential to create wealth by applying your human capital indirectly-using your it to serve others. By focusing your development you can create more value. You can solve problems faster. You can solve bigger problems. You can solve the same problem for more people. Each is an avenue to wealth.
Something critical happens between your Human Capital and wealth. You must earn the trust of other people. Yes, other people have problems, and you may have the ability to solve them. But nothing happens until and unless they trust you. This isn’t easy.
People face many choices on how to solve their problems. Which solution is better? Or cheaper? Should they spend more time researching? Or just do it themselves?
Develop your Human Capital to answer these questions. Earn trust by demonstrating that you’ve solved these problems before - for many people, and in many contexts. This is the function of your résumé. This is the place you showcase your ability to solve problems.
Résumés are a shortcut for people with problems. They help prospective employers filter out candidates. Imagine the hiring managers making the first pass through applicants over the trash can. The first test of your Human Capital is this - do you have the skills the minimum skills to do the job? This is just as true for hiring a babysitter as it is for finding a surgeon.
Once the wheat has been separated from the chaff, only ‘qualified applicants’ remain. The easier the job, the bigger the pool of competition. When opportunities are limited, this becomes a problem of selection. Who get’s chosen, and who is left behind? All else being equal, those that are selected are those who stand out. After all, managers will only choose who they remember.
You now have the context in which you need to see your Human Capital. You also need a framework for investing in yourself.
Free up bandwidth. To generate remarkable skills and experiences you must first create space, in your mind and on your calendar. You need space for two reasons. To explore the possible options you have to choose from (instead of what is immediately in front of you). And to spend time investing in that pursuit, once selected. Freeing up bandwidth is hard, but necessary.
Explore. Don’t waste the time you’ve liberated, use it to practice opening your mind to alternative realities. Ask yourself, “How can I better create value in the world around me?” You need ideas. Lots of them. The world is saturated with ideas, so be intentional about which you allow to grab your attention. Those that fit will be specific to you. Look for opportunities tangential to your current role. Ones that point where you want to go. Seek out ventures your peers aren’t pursuing, one which help you stand out. Even more important, pay attention to what interests you. Any project you take on will make demands on your time and attention. Find things that compel you. Take notes. Let your notes build up over time.
Say ‘yes.’ Schedule time to review the list of potential projects you’ve accumulated. Committing the time is important, because thoughtful consideration is easy not to do. It’s far easier to continue down the path you’re on (which is where all your peers are, too). You’ll be tempted to do the same things as everyone else, only better. Beware the rat race. Success there comes at a steep cost. You’ll invest time and energy only to be marginally better than your competition, and often find that the outcome was determined by chance (or nepotism). Instead find the open spaces, where you can stand out and be remembered. Where the payoffs are manyfold greater for the time invested. These opportunities are there for you to find. But you need to open your mind to many possibilities. This is the purpose of exploration.
Set boundaries. Once you’ve made your decision, make it concrete. Think of it as a project. A project has a due date and outcomes attached. The shape you give your project will be based on you. It should be designed to replace the weakest part of your résumé, and so make it stronger. Projects are limited in nature, they have an end. This is to protect your time. Time is your most valuable currency, and you need a defense against goose-chases and dead ends. You have many other ideas to try, anyway. A project mentality gives you permission to wrap things up and move on. Not every venture will be a success.
Hustle. Little explanation is needed here. You’ve given up commitments and freed bandwidth so that you can focus your attention adding to your Human Capital. Defining the scope of your project should outline exactly when and how it’s completed. Having a finish line frees you from continuing down a path longer than you should. And it’s easier to focus our energy when the end is in sight.
Iterate. Once your project is complete, go back to exploration. What did you learn from the experience? What did you learn about yourself? Does this change the nature of opportunities you’re open to exploring? You’ll find that Human Capital compounds. Once you’ve solved a problem you are entrusted to solve more and bigger problems. This changes the nature and the number of opportunities that cross your path. Each new project builds upon the last. In this way your accomplishments enter and exit your résumé, to showcase the value you have learned to create in the world around you.
Tell your story. Learn to share what you’ve learned. Remember that other people are looking for solutions to their problems. But they are also busy, and always looking for shortcuts. Practice talking about the problems you solve. You may only have seconds to share with someone how you can serve them, on an elevator or at a cocktail party.
Don’t keep yourself a secret.
The world needs what you have to offer.