Summary: An very accessible discussion about why crowds of random people can often draw better and more accurate conclusions than a small group of experts.
Intended Audience: Interesting to all, especially those who make decisions with the help of their teams
Why You Should Read It: James Surowiecki discusses many situations where groups of experts are unable to reach better conclusions than the general population. In many cases, the results are much worse (remember the groupthink behind the 2008 financial crisis?). Crowds can perform much better if the following four conditions are met:
- crowd members have a wide range of opinions
- crowd members act independently of each other
- the crowd is decentralized, to reinforce independence and allow ideas to emerge
- there is a good way to consider all opinions and make a choice
- Many financial markets work well because of the wisdom of crowds but can easily fail when one of the four axioms is not in place. Often, the government does not undertake a duty to support one of the first two.
- A powerful example of this wisdom of crowds was seen in “Who Wants To Be A Millionaire”. Asking the audience for help yielded the correct answer in excess of 90% of the time.
- When considering decisions with a team you are leading, it is often best to keep your opinion to yourself and try to create conditions where the wisdom of the team can emerge.
Recommended?: A good general interest book