James Surowiecki, Wisdom of Crowds
PROFIT : If Collective Decision Making is better than doing it alone, how can we tap into this source of power? Clearly this depends upon the size of the group you are starting with and relying upon. Here, we look at four group sizes and how you can tap into their wisdom.
Individuals : Solicit Feedback
An expert is an expert because they know lots of things. We respect them and we respect their opinions.
The blind spot for an expert is over-confidence. This is a catch 22 for an individual expert… if they’re not confident in their ideas, then you’re not likely to listen to them. And, if they are too confident in their own ideas they can potentially make incorrect decisions.
To overcome your blind spot as an individual expert you need to solicit feedback from those around you.
Small Group : Build Diversity
Groupthink & Herding kills innovation. This occurs when you have teams that are too homogenous. In small teams or committees (less than 10 people), this can be devastating to their decision-making effectiveness.
The solution is simple… build diversity. In particular, Cognitive Diversity – a range of thinking skills and learning preferences.
For example, an engineering firm may add an accountant, someone from the marketing department and ideally someone without formal education and training – perhaps the cleaner.
This is crucial for boards!
Large Group : Combine Opinions
When you can’t fit all the decision makers in a single room on a regular basis the challenge is not diversity, it is making sense of all the opinions.
In other words forming a single judgement from a mass of opinions and information.
To successfully design a system to aggregate opinions four significant elements are required:
- A local and a global focus
- A means to incorporate information and judgements
- An incentive for participating and
- A way of deciding.
Community : Decision Market
Simply put, sheer weight of numbers creates a better opportunity for collective wisdom.
The big question is: ‘How do we tap into a crowd that potentially is a thousand people deep?’
To do this we need to set up a situation where the crowd does it for us and one way to do that is a ‘decision market’.
A decision market is a place where a large group of people form to make what is effectively a group decision.
Consider the stockmarket or a footy tipping competition as ways that a group of people (a market) decide what a share is worth or who the favoured team is.