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


Karen Stephenson’s Quantum Theory of Trust

Professor Stephenson came to management theory after studying the fine arts, anthropology, and chemistry; she talks about organizations as if they were still lifes, researches them as if they were tribes, and plots their decisions as if they were chemical reactions. She is simultaneously a management academic (teaching at Harvard’s School of Design and Imperial College’s School of Management at the University of London), a computer software entrepreneur (her company, NetForm International, holds the patents on a set of software algorithms for analyzing human networks), and a consultant on the nature of networks in large organizations, particularly as vehicles for change.

She helped J.P. Morgan & Company merge with the Chase Manhattan Corporation, Steelcase Inc. design a new furniture consultation service, IBM reengineer itself, and Hewlett-Packard Company foster innovation. Since the events of September 11, 2001, she has also become a military researcher. Under the auspices of a new government contracting firm, she is helping the U.S. Defense Advanced Research Projects Agency’s Information Awareness Office (the counterterrorism branch of the same government research agency that created the original design of the Internet) draw inferences about the weak links in Al Qaeda’s network.

In all these assignments, her research documents what savvy managers have always known intuitively: The form and substance of talk in an organization is as palpably influential on performance as a magnetic field is on a cluster of iron filings. Companies, she says, can exert far greater control over their competitiveness and their future than most researchers have ever thought possible, by putting the right people in the right places and fostering new opportunities for them to talk with each other.

Anatomy of a Network 
To understand Professor Stephenson’s work, start with the conventional image of an organization: the hierarchy, as represented by any formal organization chart. Then imagine laying over it diagrams of various other kinds showing human networks that are influential within the organization. One overlay might depict day-to-day assignment contacts, which Professor Stephenson calls the “work network.” Another diagram might show the social network — people who spend time together outside work. A third might show whom people turn to for career guidance (the career advice network).

Like the transparencies in a medical textbook, organizational network diagrams all reveal different circulatory systems, but instead of showing the flow of blood,  they depict the circulation of information. The data charted in these diagrams could be gathered in various ways (direct observation, tracking e-mails, reading minutes of meetings), but, in practice, network researchers tend to rely on surveys. Karen Stephenson requires at least 80 percent of the people in organizations she analyzes to fill out confidential questionnaires that ask them to name those they work with personally, those they turn to for career advice, those they look to for new ideas or creative collaboration, and those with whom they socialize.

The results can help explain even the most puzzling successes and failures. Consider one case Professor Stephenson researched: the flawed CEO succession in a new R&D subsidiary of a major telecommunications company, which harmed the company’s profitability. The story, based on surveys Professor Stephenson conducted, is revealed in Exhibits 1 through 3.

These diagrams show the connections for four key people: the CEO, then nearing retirement, and three of his direct reports, Joe, Diane, and Stan. Those three, like most senior executives, were richly connected to others at the company, but the qualities of their connections were different. Diane, for example, was critical to the day-to-day work of the enterprise. Exhibit 1, the diagram of the work network, shows it: Among the 15 other people included in this chart, seven worked with Diane every day. She was exceptionally plugged in because of her superior knowledge of the company’s key technologies.

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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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