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On the Wisdom of Crowds

In 1906, scientist and statistician Francis Galton (a cousin of Charles Darwin) discovered something remarkable in a remarkably non-scientific setting: a British Fat Stock and Poultry Exhibition. Through a career spent studying human behaviour, Galton had become firmly entrenched in the belief that the only way to ensure social productivity and stability was to cement power in the hands of a few elite people. However, it was ultimately his experience at the poultry exhibition that highlighted that such elitism was incredibly unwise, and taught him a profound lesson about the intelligence of crowds.

Ox Tale

In The Wisdom of Crowds, James Surowiecki shares Galton’s experience and its implications for business and society at large as he explores how under the right conditions, groups of non-experts — from racetrack betters to the staff of large multinational corporations — “are remarkably intelligent, and are often smarter than the smartest people in them.”

Galton came across a weight-judging competition. A fat ox had been selected and members of a gathering crowd were lining up to place wagers on the (slaughtered and dressed) weight of the ox… Eight hundred people tried their luck. They were a diverse lot. Many of them were butchers and farmers, but there were also quite a few who had no insider knowledge of cattle…

Galton was interested in figuring out what the ‘average voter’ was capable of because he wanted to prove that the average voter was capable of very little. So he turned the competition into an impromptu experiment…When the contest was over and the prizes had been awarded, Galton borrowed the tickets from the organizers and ran a series of statistical tests on them, including the mean of the group’s guesses…

Galton undoubtedly thought that the average guess of the group would be way off the mark. After all, mix a few very smart people with some mediocre people and a lot of dumb people, and it seems like you’d end up with a dumb answer. But Galton was wrong — the crowd guessed 1,197 pounds; after it had been slaughtered and dressed the ox weighed 1,198 pounds. In other words, the crowd’s judgment was essentially perfect.

Galton was the first to exhibit that crowds can have tremendous collective intelligence that vastly supersedes the brain power of individuals. Since then, further research has both confirmed the wisdom of crowds as well as elucidated which environments are most conducive to collective ideation and problem solving.

Three Key Factors

Specifically, there are three main environmental factors that help to make groups more “wise,” the absence or imbalance of which is to the detriment the group’s efficacy. Namely:

  1. Diversity: A group needs a range of opinions to arrive at a sound overall consensus.
  2. Independence: group members must be empowered to add their voices individually; collective wisdom arises from members thinking, evaluating, and contributing independently.
  3. Decentralization: this is a means to the former two factors. Central direction hinders them both, and ultimately lessens the wisdom of the crowd.

Finding the Right Balance

For crowd wisdom to flourish, members need the right balance. They need rules, but not too many. They need the ability to communicate amongst themselves, but not to the point that it impedes their independence of thought and leads to imitation or a herd mentality. Finally, depending on the nature of the ideas and problems being addressed, groups must be the right size. Engage too few and you won’t be able to reach the critical mass necessary for the collective to become wise. Engage too many and the crowd can become too big for all of the relevant information to reach everyone involved.

When the conditions are just right, crowds can demonstrate tremendous insight and problem-solving capabilities unmatched by any individual expert.

Harness the power of employee ideas.