James Surowiecki, Wisdom of Crowds
PROFIT : The Wisdom of Crowds is not simply about getting any group of bodies together. Whilst it needs to be the right crowd, they don’t have to be a smart one provided they demonstrate the four key qualities for making wise decisions.
The simple mathematical reason that collective wisdom works is that each individual has a slightly different interpretation of what is going on.
When you combine all of these thoughts, ideas and nuances into a single frame you get a more rounded and more complete picture of what is going on.
A single individual cannot compete with this consistently over time.
Collusion, alignment and peer group pressure are enemies of wise crowds. We need independent thinkers who create their own opinions and do not simply absorb the views of those around them.
It’s okay if those people around us influence some of our opinions and it doesn’t work if we’re all following the same viewpoints.
We need independence of thought to spark fresh ideas.
The power of wise crowds lies in sharing the knowledge that is not commonly known. We need specialists with local knowledge who are decentralized and separate from the larger crowd.
In the world of information and knowledge we are all specialists because there is simply too much information for one person to take in. Plus, we tend to follow our own areas of interest.
By their very nature specialists know a lot about a little and sometimes this local knowledge makes the difference.
For example, your frontline employees hear what the customers are really saying whereas management will be faced with second hand hearsay.
A crowd of people are going to have a crowd of opinions.
To gain value from the collective we need to create a structure or mechanism to combine and aggregate these private judgements into a useful decision.
This could be as simple as giving individuals a vote as in a democratic election.