When capital is cheap, what’s your strategic advantage?

Interesting article in HBR, looking at sources of scarcity and competitive advantage in a time where we’re just coming out of a decade of 0% interest rates.

The core conclusion: focussing on capital as the limiting factor overlooks the more profound effects of human capital.

When capital is both plentiful and cheap, many of the unspoken assumptions about what drives business success must be challenged and a new playbook developed. […]

As long as companies continue to focus too much attention on managing financial capital, they will devote far too little to ensuring that the organization’s truly scarce resources—time, talent, and energy—are put to their best use. In fact, most companies lose nearly a quarter of their productive power because they have structures, processes, and practices that waste time and undermine performance.

In other words, human capital has become the fundamental source of competitive advantage, and companies that manage it as carefully and rigorously as financial capital perform far better than the rest.

Compare with McChrystal’s Team of Teams, making a similar argument. The constraint is management of people, not necessarily management of capital.