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 / Fourth Quarter 2002 / Issue 29(originally published by Booz & Company)


Karen Stephenson’s Quantum Theory of Trust

Companies can analyze, engineer, and elevate their own human networks, says the pioneering social scientist.

Photography by Dudley Reed
Think back to a conversation you had months ago with someone you know well enough to trust, but with whom you haven’t spoken since. Chances are you’ll remember only vague outlines of the exchange. Call the person and raise the same subject again, though, and more likely than not, the two of you will find yourselves picking up where you left off, remembering the details of significance and expanding into new areas.

To Karen Stephenson, a maverick yet influential social network theorist, the association between trust and learning is an instrument of vast, if frequently untapped, organizational power. The act of reconnecting and talking with a trusted colleague generally triggers a resurgence of mutual memory, opening the gates to fresh learning and invention. This phenomenon, Professor Stephenson contends, is just one example of the direct cognitive connection between the amount of trust in an organization and its members’ ability to develop and deploy tacit knowledge together. Because networks of trust release so much cognitive capability, they can (and often do) have far more influence over the fortunes and failures of companies from day to day and year to year than the official hierarchy.

“People have at their very fingertips, at the tips of their brains, tremendous amounts of tacit knowledge, which are not captured in our computer systems or on paper,” says Professor Stephenson. “Trust is the utility through which this knowledge flows.”

Much has been written about the value of trust. Such social scientists as Francis Fukuyama, Mark Granovetter, and Robert Putnam have made strong cases that high-trust societies have an enormous competitive advantage over legalistic societies, in which suspicion of people is a cultural value, because the transaction costs go down. In high-trust organizations, transaction costs are similarly lower. For example, if people in two different departments or regions (say, marketing and sales, or Asia and Europe) feel enough trust to speak candidly together about their impressions of the market, the quality of work processes, and ways to improve the work, then they have many more opportunities to innovate and think together. The cost of new projects goes down accordingly. Whether high trust applies to a country or a company, the outcome is the same: More value is created when expensive, unwieldy oversight is reduced.

Professor Stephenson’s concept, which she calls the “quantum theory of trust,” explains not just how to recognize the collective cognitive capability of organizations, but how to cultivate and increase it. At age 50, Professor Stephenson is the most visible member (particularly in business circles) of a small but growing academic field called social network analysis. Originally derived from the complex math used to explain subatomic physics, it is being used to understand and manage the ineffable forces of human interaction within an organization’s walls — particularly those forces that can’t be captured in formal structures, such as pay scales and reporting relationships, but that implicitly govern the fate of every enterprise.

“The organization chart basically shows you the formal rules. But the ropes of the organization, how it actually works, is the human network,” says futurist Thornton May, one of Professor Stephenson’s former colleagues at the John E. Anderson Graduate School of Management at the University of California at Los Angeles, where she taught for most of the 1990s. “Karen, more than anyone else, knows how to make it visible.”

A trim woman, slight in stature, with large eyes set wide apart and graying hair cut straight and short, Karen Stephenson lectures at a rapid-fire pace, with twangy, slightly tongue-in-cheek forthrightness. She has not written a book to promote her work (preferring to patent her algorithms instead), and you won’t find her name on lists of top management gurus. Her academic reputation is one of contrariness; she walked away from a tenured position at UCLA because she didn’t like the direction in which the business school was moving.

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  1. Joel Garreau, “Disconnect the Dots,” Washington Post, September 16, 2001
  2. Malcolm Gladwell, “Designs for Working,” The New Yorker, December 11, 2000; Click here.
  3. Albert-László Barabási, Linked: The New Science of Networks (Perseus Publishing, 2002)
  4. Howard Rheingold, Smart Mobs: The Next Social Revolution (Perseus Publishing, 2002)
  5. Journal of Social Structure: Click here.
  6. NetForm International:
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