{On April 5, 2013, we will celebrate the 15th Anniversary of the First Friday Book Synopsis, and begin our 16th year. During March, I will post a blog post per day remembering key insights from some of the books I have presented over the 15 years of the First Friday Book Synopsis. We have met every first Friday of every month since April, 1998 (except for a couple of weather –related cancellations). These posts will focus only on books I have presented. My colleague, Karl Krayer, also presented his synopses of business books at each of these gatherings. I am going in chronological order, from April, 1998, forward. The fastest way to check on these posts will be at Randy’s blog entries — though there will be some additional blog posts interspersed among these 30.}
Post #14 of 30
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Synopsis presented July, 2004
The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations
by James Surowiecki (Doubleday Books, 2004)
As I write this, the business world is in the midst of a heated conversation about Marissa Mayer’s mandate that all the folks at Yahoo have to “come in to work” to work. The argument for it goes something like this: people need many interactions, with each other, face-to-face, across departments (no more silos!), to general the best ideas. The idea is that people together are more innovative, and generate more ideas, than a person alone.
I think the jury is in on this. And the verdict is this: “we are smarter than me.” Now, you might be able to find some lone rare genius. But, the average person is not that lone rare genius. The average person needs some help from others to come up with the best ideas, and thus be a little “smarter.”
I’ve read, and presented, a number of books that reinforce this idea. From The Collaborative Habit by Twyla Tharp (a great read!), to Where Good Ideas Come From by Steven Johnson (one quote from this book: “This is not the wisdom of the crowd, but the wisdom of someone in the crowd. It’s not that the network itself is smart; it’s that the individuals get smarter because they’re connected to the network.”).
But The Wisdom of Crowds is the book that “started” it for me. The Wisdom of Crowds struck me as absolutely “right,” and brilliant. I have since become a fan of Suroweicki’s writings on The New Yorker site. (Here’s a quote from his latest article, Face Time, about the Yahoo issue: “On the simplest level, telecommuting makes it harder for people to have the kinds of informal interaction that are crucial to the way knowledge moves through an organization.” And, “The role that hallway chat plays in driving new ideas has become a cliché of business writing, but that doesn’t make it less true.”).
Now – to the book itself. From The Wisdom of Crowds:
Under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them. Groups do not need to be dominated by exceptionally intelligent people in order to be smart. Even if most of the people within a group are not especially well-informed or rational, it can still reach a collectively wise decision. This is a good thing, since human beings are not perfectly designed decision makers.
With most things, the average is mediocrity. With decision making, it’s often excellence. You could say it’s as if we’ve been programmed to be collectively smart.
Corporate strategy is all about collecting information from many different sources, evaluating the probabilities of potential outcomes, and making decisions in the face of an uncertain future. These are tasks for which decision markets are tailor-made. Yet companies have remained, for the most part, indifferent to this source of potentially excellent information, and have been surprisingly unwilling to improve their decision making by tapping into the collective wisdom of their employees.
The real key, it turns out, is not so much perfecting a particular method, but satisfying the conditions – diversity, independence, and decentralization – that a group needs to be smart…
It is hard to find the “one thing” (Scott Peck would remind us that there is no “one thing” to find in much of anything). But I think the idea of genuine diversity within a group is critical. If everyone in a group has the same background, the same kind of experiences, the same of much of anything, the “collective wisdom” will be too narrow. You need some different histories, some different training, some different backgrounds, some different likes and wants and traditions and rituals, to lead to genuine breakthrough thinking. It is almost like putting Thomas Kuhn’s observation that “outsiders can lead to paradigm shifts” to work on purpose, quite intentionally. That may be the very essence of the wisdom of crowds. Again, from the book:
Diversity is, on its own, valuable, so that the simple fact of making a group diverse makes it better at problem solving… On the group level, intelligence alone is not enough, because intelligence alone cannot guarantee you different perspectives on a problem.
If you think about intelligence as a kind of toolbox of skills, the list of skills that are the “best” is relatively small, so that people who have them tend to be alike. This is normally a good thing, but it means that as a whole the group knows less than it otherwise might. Adding a few people who know less, but have different skills, actually improves the group’s performance.
Bringing new members into the organization, even if they’re less experienced and less capable, actually makes the group smarter simply because what little the new members do know is not redundant with what everyone else knows. “The effect does not come from the superior knowledge of the average new recruit. Recruits are, on average, less knowledgeable than the individuals they replace. The gains come from their diversity.”
The fundamental truth about expertise is that it is spectacularly narrow.
and
The smartest groups are made up of people with diverse perspectives who are able to stay independent of each other. Independence doesn’t imply rationality or impartiality, though. You can be biased and irrational, but as long as you’re independent, you won’t make the group any dumber.
Here is the way I highlighted this on my handout for my synopsis:
#1 — The wisdom of crowds…
• working individually, the aggregate is smarter than even the “best” individuals• the four conditions that characterize wise crowds:
1) diversity of opinion: a steady flow of new information
2) independence: no single opinion leader; people’s errors “balance each other out”
3) decentralization
4) aggregation: the “whole” is smarter than a “smart one/smart expert”#2 — The difference difference makes…
• the essential nature of cognitive diversity
• diversity is the counterpoint to “groupthink” (e.g., the Bay of Pigs – the decision was made without enough diversity…)
• diversity brings in more viewpoints
• diversity heightens the likelihood of courageous “speaking out”
Here’s a personal note. I work “from home.” Though I go to plenty of “group” events, and build interactions into my schedule as much as possible, I simply never “run into anyone” on the way to the “water cooler.” I have worked in places where that did happen. I miss it. I have to work harder to gain the wisdom of others because I do not work where there is a “crowd.” (Maybe my reading helps. And I try to read pretty widely). I think this book helps us understand this one pretty big drawback for the work-by-yourself crowd.
(And, one footnote – yes, there are times when all those “collisions and interruptions” can be unproductive. So, you need to be able to “work in alone time” for stretches of time. But, not at the cost of giving up the wisdom of the interactions, the wisdom that comes from the collisions… the wisdom of crowds…)
First Friday Book Synopsis 