Large groups of people are collectively smarter than the most skilled professional in the domain when it comes to decision-making, predicting, and innovating.
This is the central thesis of James Surowiecki’s 2005 book “The Wisdom of crowds”.
When asked to estimate the number of jelly beans in a jar, the average number guessed by a group of people will always be more accurate than the estimate of the smartest person in the room. This is because each opinion has a certain percentage of bias attached to it which is eliminated in group thinking.
The concept traces back to a passage from Aristotle's Politics in which he explains how groups can sometimes make better decisions than individuals or smaller groups.
In his book “The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies”, Social scientist Scott E. Page introduced the diversity prediction theorem explained as “the squared error of the collective prediction equals the average squared error minus the predictive diversity". Therefore, the more diverse groups are, the smaller the possibility of error.
Examples of projects that tap into the collective intelligence are search engines, online encyclopaedias, and social media platforms.
What makes a crowd wise?
According to Surowiecki, wise crowds share a couple of key characteristics: diversity, independence, decentralisation and a suitable method for aggregating opinions.
Aggregation. The crowd should be able to aggregate the individual opinions collected via polls, surveys, or voting systems into one collective decision. A study conducted by The Federal Institute of Technology (ETH) in Zurich shows that social influence is detrimental to groups because it leads to homogenization and as a consequence, it decreases the answer accuracy.
Diversity. Wise groups are formed of diverse people who approach problem-solving in different ways. Cognitive diversity is important because it gives access to more information. New entries or those who stand out and are different in any way will always make a habit out of questioning commonly accepted knowledge.
Independence. Although a lot of the online communities are about acceptance and achieving consensus, people express themselves, when they feel their opinion matters. Crowds are wisest when people act as independent as possible.
A network is more than the sum of its parts. Tapping into collective knowledge can bring significant value to companies and communities. However, in order to make smart decisions, it's crucial that groups are networks of diverse and individual voices.