James Surowiecki, a journalist, had coined the term – The Wisdom of Crowds – in 2004 (The title of his book). In this book, he argued that none of us is as smart as all of us. Or, in other words, expertise is overrated. Not that the experts are not needed in this world, but the collective wisdom of people leads to better decisions. It seems counter-intuitive, but it has been proven to be true.
- Google was the thirteenth search engine when it had launched in1998 and yet, it became a resounding success because of the quality of its results. The search algorithm takes into account hundreds of factors but the most important factor is the number and reputations of Web sites linking to a particular Web page. It is, in essence, a vote for a page by other knowledgeable people – a collective wisdom in play.
- Wikipedia, an openly editable encyclopaedia, allows anyone to make changes to its articles. Instead of relying on the knowledge of a few experts, Wikipedia harnesses the small chunks of information people have on a topic and combines those chunks to create millions of articles. Surprisingly, the articles outnumber the professionally produced Encyclopaedia Britannica and the number of errors are comparable too.
- Reviews on Web sites like Amazon (products), Rotten Tomato (movies) and Yelp (restaurants) rely on the feedback of many people to produce an aggregate rating.
This concept begs a question, though. Can we put a group of people in a room, give them a task, and they would come up with the best decision? Unfortunately, the answer is not that simple. This concept, to work best, has some preconditions that must be satisfied.
Diversity: The people in the group must have diverse opinions, educational and work backgrounds, experience, knowledge, and skills, which would lead to creative ideas and a large quantity of ideas. A group comprising experts on the same topic tend to think similarly.
Independence: The people must think independently from each other. In a group setting, groupthink takes over and the conversation usually follows the most vocal or the highest ranked person.
Decentralization: There is no top-down directive so nobody is in charge and the problem of mere compliance is avoided. Everyone contributes freely and voluntarily.
Incentive: There must be some incentive for the people to contribute to the overall effort. Intrinsic reasons (because I want to) work much better than extrinsic reasons (I have to because I’ve been asked to or paid).
Aggregation: There must be a mechanism to aggregate the contributions of the group. An online environment (Google, Wikipedia) works great even if the group size is millions. In an offline environment (an office setting), a designated leader can do the collection and compiling.