I first heard the term “the wisdom of the crowd” years ago when I was learning about Game Theory which is the science behind crafting strategies that work bearing in mind other agents’ (people, corporates, or countries) actions. I remember it was so enticing, it still is.
It’s a theory about delegating making decisions to crowds. At its core, it holds that the aggregate of a crowd’s predictions yields an approximation which beats experts’ predictions.
How does it work?
The story begins with Francis Galton, a statistician, who visited a livestock fair in 1906. In a contest to guess the weight of a slaughtered ox, 800 people participated. Their estimates were recorded.
Galton took a close look at the statistical data and found no one guessed the exact weight of the ox correctly. The closest guess was 9 pounds off. When he averaged the estimates of all participants, he was shocked to learn that the crowd as a whole was 1 lb off.
Though occasionally someone’s estimate may be closer to the right number, consistently no one has beaten the crowd. In other words, the crowd outsmarts any individual. This finding is counterintuitive.
Where else does the wisdom of the crowd manifest?
The stock markets demonstrate this phenomenon. In economics, the efficient market hypothesis states that asset prices fully reflect all available information. Most economists don’t question the validity of the hypothesis, only the extent to which it’s valid. It confirms the collective wisdom of humankind.
So, for example, if Google’s stock price is worth $1200, then this is what it should be worth because if there were a way for people to make money either by buying the stock at that price or selling it and buying something else, they would have done it already.
The concept is even more evident on the internet. Would you ever buy something from Amazon without seeing its rating and scrutinizing its reviews? What about assessing the credibility of an answer on Quora?
What about ordering some food on Yelp or staying in someone’s house on Airbnb? On Reddit, an upvoted answer tops the downvoted ones. A highly retweeted tweet is also assumed to have more substance and credibility. Okay, maybe not a lot of substance but at least something we all can relate to.
In academia, a paper that is highly cited is deemed to have merit. Likewise, Google search works by counting the number and quality of links to a page to determine how important the website is. The underlying assumption is that more important websites are likely to receive more links from other sites — the wisdom of the crowd guides who appears on the first page.
Still, need more proof?
In 1968, one of the Navy’s submarines, the USS Scorpion, was lost. The Navy didn’t have intelligence on the location of the wreckage. John Craven, a naval officer, was asked to find where it was. He decided to give the wisdom of the crowd a go.
Craven asked diverse individuals to guess the submarine’s location. Their guesses were wagers in which everyone participated, from salvage men to submarine specialists and mathematicians. Their collective guess was 200 yards from the area where it was found.
How can you leverage the wisdom of the crowd at work and in life?
When putting together a crowd to make a decision, choose mavericks. These are the ones that don’t just absorb information but ruminate and contribute. They don’t fear to be different. They don’t conform. They don’t take cues for behavior from the actions of others instead they rely on their independent judgment.
Individuals in wise crowds are not susceptible to social influence. They limit communication about the decision. They don’t intimidate other people into agreeing with them. As James Surowiecki writes in The Wisdom of Crowds: “The best way for a group to be smart is for each person in it to think and act as independently as possible.”
Emphasize cognitive diversity
Your crowd has to have cognitive diversity, i.e., having different perspectives, information, and processing styles. According to Harvard Business Review, cognitive diversity is not predicted by factors such as gender, ethnicity, or age.
If someone in the group knows less, they’re still valuable if what they know is different. Intelligence is a collection of information and methods. Both could be biased based on social upbringing, native language, and peer pressure. Having more diverse thinkers evens out biased information and methodologies.
We have relied on pundits for so long; it’s about time we listen to the crowds and their collective wisdom. If we encourage collaboration, diversity, and originality, then we will be better off in problem-solving and decision-making.