Wisdom of Crowds
“No one of us is as smart as all of us” or The Wisdom of Crowds.
A LEVERAGEDWISDOM Member recently summed up his meeting day experience by declaring, that it seemed “No one of us is as smart as all of us.” He had presented to the assembled CEOs a troubling issue about a long time key employee. He had come to believe his CFO’s level of competency no longer matched the demands of the organization.
Through a facilitated process led by Group’s Chair, questions were asked about how this was impacting the business, what effect it was having on him personally and what the consequences would be if the situation were to continue. It was painful exercise; but, helped him better understand the consequences of not taking responsibility for a situation that had gone on for too long. The Members of his Group were then able to make suggestions, help him prioritize next steps and ultimately ask for a commitment to action.
James Surowiecki, writes about this process of collective wisdom in “The Wisdom of Crowds: Why the Many are Smarter than the Few and How Collective Wisdom Shapes Business, Economics, Societies and Nations”. Surowiecki shows how under the right circumstances, groups –a handful of people– more often than not will outperform even the brightest individuals on the team.
Surowiecki demonstrates that when a group is organized around four specific principles the collective wisdom (or LEVERAGEDWISDOM) of the group will almost always lead to better judgment and more accurate decisions. These principles are:
- Diversity of opinion. Each member of the group has some private information, even if it’s nothing more than their own interpretation of the known facts. (No one in a LEVERAGEDWISDOM Group is in the same business, so they offer a unique diversity of viewpoints.)
- Independence. Team members’ opinions are not determined or affected by the opinions of those around them. (No Member does business with another Member thereby eliminating personal or business agendas. And, the facilitation process encourages independent thought.)
- Decentralization. Members of the group are able to specialize and draw on local knowledge. (Member’s businesses differ in revenue, size and location. Member’s personal backgrounds, education and age are diverse.)
- Aggregation. Some kind of mechanism exists for turning private judgments into collective decision. (The process is facilitated by a trained professional Chair thereby insuring candor, transparency and best thinking.)
When a group satisfies these four criteria, suggests Surowiecki, the group is smarter than the smartest people in them…making a strong case for the power of the many outweighing the power of the one.
When working at its best, this is what LEVERAGEDWISDOM is all about.