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| Management Tools |
| Tough Management Decision? Consider the safety of the crowd |
In 1968, a U.S. Navy sub disappeared in the North Atlantic. Information was limited, so the Navy sought help from a bevy of specialists to determine where the sub might have gone down. Mathematicians, scrap metal salvage experts, and submarine engineers were all consulted. None of them could pinpoint the sub’s location. But the Navy had the good sense to consider all of the points of view, and when all of the suggestions were combined into a single “collective guess,” the sub was located successfully—just 220 yards away from the spot pre-determined by combining all of the experts’ guesses.
Managers or business owners who are accustomed to making all of a firm’s important decisions themselves might consider taking notice of the phenomenon of “collective wisdom” explored in a new publication, The Wisdom of Crowds, by James Surowiecki.
The premise is that the collective wisdom of a large group of people often yields more precise and correct solutions than any single “expert” could create. In popular terms, collective wisdom works much like the game show Who Wants to be a Millionaire. When you don’t have the answer, “polling the audience,” will usually yield more accurate results than “phoning a friend,” even if the friend is bright and intelligent—or even an expert on the subject in question.
According to the author, crowds aren’t always smart. There are four key elements that need to be in place in order for a “crowd” to make a good decision:
- Diversity: Different people bring different information to the table.
- Decentralized: There shouldn’t be any “big cheese” with the power to make all of the executive decisions (or dictate the crowd’s answer).
- Summarization method: There needs to be a way to gather all of the data into one place before any conclusions are drawn.
- Independence: The people in the crowd need to be able to pay attention to their own information and not be biased by what others around them think.
“I think the most important lesson is not to rely on the wisdom of one or two experts or leaders when making difficult decisions. That doesn't mean that expertise is irrelevant, or that we don't need smart people. It just means that together all of us know more than any one of us does,” writes Surowiecki.
If he’s right, then The Wisdom of Crowds just might help you find a better solution the next time you need to hire a manager, develop a marketing idea, or choose a vendor.
The Wisdom of Crowds by James Surowiecki is published by Random House: http://www.randomhouse.com/features/wisdomofcrowds/index.html
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