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


Karen Stephenson’s Quantum Theory of Trust

In her doctoral dissertation on the technology company Bolt, Beranek and Newman (BBN), Professor Stephenson (with Harvard statistical scientist Marvin Zelen) devised a formula for ranking the significance of individuals as knowledge conduits. Information scientists at BBN, which was founded by MIT professors as an acoustic-design company, had invented (among other things) the packet-switching technology underlying the Internet and had chosen the @ symbol for use in e-mail addresses. Interestingly, researchers at the Harvard Business School had been trying, unsuccessfully, to get permission to conduct a case study on this highly innovative company for 25 years. Ms. Stephenson, however, was the first prospective researcher from the school of anthropology. It turned out that BBN cofounder Richard Bolt, who was still active in the firm, had been close friends with Margaret Mead. In Ms. Stephenson’s interview with him, he said, “Well, if anyone can understand us, an anthropologist should.” She began to use the formula from her dissertation to calculate how networks changed over time, working initially at Harvard, then as a UCLA faculty member, and currently from her offices in New York.

Trust and Transactions
For all of Professor Stephenson’s observations about the value of trust, there’s a cloak-and-dagger quality to her demeanor, particularly when she is figuring out whether to take on an assignment. She seems to alternate between open enthusiasm and suspicion; it’s as if her own theories have sensitized her to the flip side of trust: betrayal. But once she is fully committed, she digs deep into the heart of the organization, conducting analyses over the course of a year or two. Because she must interview or survey so many people to do an analysis, she claims to have the largest data bank of business network survey results in the world.

Often, Professor Stephenson enters a company through the human resources department to research what is seen as a personnel problem. She came to Merrill Lynch to help explore why some human resources managers were more effective than others. But inevitably, she touches on strategic issues, because the organization’s ability to implement any new strategy depends primarily on the way knowledge courses through its networks. If the CEO is a hub, that makes a difference; if a gatekeeper dominates a particular strategic product or region, that makes another kind of difference. And if the relationships between top executives and others are devoid of trust, or if key sources of information in the informal networks are not formally recognized or rewarded, that can paralyze an organization. 

“All along, I’ve been implicitly studying trust,” says Professor Stephenson. “But I only came to a full realization of it in the last couple of years.”

Professor Stephenson’s quantum theory of trust holds great potential as a diagnostic method for the unquantifiable aspects of business. Imagine that at any given moment, you could analyze the health of an organization’s networks. For instance, a company might have a healthy work network (with a great deal of open information flow about processes and very little workaholism), a medium-grade social network (with little real contact but also little pressure), and a low-quality network for what Professor Stephenson calls “continuous improvement” — the ability to innovate new processes easily. Any organization can be stunted in one of these areas and bountiful in another.

Professor Stephenson suggests that most organizations do not remain static. Their network health profiles continually change. An organization’s path from one network health profile to another not only is predictable, she says, it can be influenced. There are archetypal patterns that repeat, over and over, and, depending on the prevalent pattern, make it possible for one company to thrive where another fails. A startup technology company might begin with a low work/high social/medium improvement profile, as people first get to know each other. Then, as venture capital and deadlines kick in, the profile would move to high social/high work/medium improvement. And then there might be a betrayal by one of the senior executives. At this moment, the fate of the company’s networks hangs in the balance. Does its improvement capability, for instance, go up or down? Does its social capability flatten to the point where people leave the company? Or can the strength of the networks, fortified by the trust people feel for one another, override the crisis?

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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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