May 15, 2006
James Surowiecki, ‘The Wisdom of Crowds’
This podcast is for anyone who cares about the way important decisions are made in business and politics. The book’s central thesis is that in certain circumstances, groups of people can be smarter than the smartest individuals within the group. And while it sounds counter-intuitive, James explains why it really does make sense and unveils the implications
STARRING
- James Surowiecki, Author, The Wisdom of Crowds
- Michael Warren, michael.c.warren *at* btinternet *dot* com (Host)
PODCAST
When reviewing the book The Wisdom of Crowds, The Financial Times wrote: “As readers of Surowiecki’s writings in The New Yorker will know, he has a rare gift for combining rigorous thought with entertaining example. [The Wisdom of Crowds] is packed with amusing ideas that leave the reader feeling better-educated.”
And this gift comes across in spades during this exclusive and engaging conversation in which James takes us through ‘Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations’
The book’s central thesis is that in certain circumstances, groups of people can be smarter than the smartest individuals within the group. And it’s counter-intuitive because we have all been brought up to see experts as the source not only of information but also of wisdom and good judgement.
This right-brain thinking has profound implications for the ways businesses and politics, among other things, are executed.
So, is it time for a complete rethink?
James is in conversation with our guest host Michael Warren (michael.c.warren *at* btinternet *dot* com), a familiar name in the research industry with over 30 years service, including four years at the helm of the Market Research Society.
The conversation’s a bit longer than usual but much the richer for it, I hope you enjoy.
And remember, tell us what you think about this and our other podcasts because that’s the only way we’ll know whether or not it’s been useful (contact details at the end of these notes).
Please let us know what you think of this podcast.
TIMELINE [37m23s]
00m00s General thesis and the Jelly Bean experiment.
05m52s Prediction markets (including Hollywood Stock Exchange).
07m35s The three pre-requisites.
11m02s Evidence that diversity works.
13m33s Diversity is not default behaviour.
15m36s Lessons from the NASA shuttle disasters.
20m36s Collective wisdom and democracy/politics.
23m58s Is wisdom time related?
26m07s Wisdom and the voting system.
29m48s Is market research the perfect source of collective wisdom?
32m30s Implications for politics and organisations.
36m10s James’s related projects.
LINKS
Publisher
WikiPedia article
QUOTES
On the Hollywood Stock Exchange: “In any given year, that market traditionally picks seven of the eight categories [of the Oscars] correctly.”
On group predictions: “You don’t have to identify in advance who knows what…as long as you satify the conditions to make a group smart…you’re usually going to end up with a collective judgement that is exceptionally good.”
On the importance of diversity in decisions: “Diversity expands the range of information that a group has available to it…much of the time groups don’t necessarily know in advance what tools or perspectives are really going to be valuable in solving a problem.”
On the limitations of experts: “Experts are NOT very good at identifying their own biases or blind spots.”
On groupthink: “One of the paradoxes of the book is that groups are smartest when everyone in them is acting as much like an individual as possible…but in organisations there is a real tendency to try and stress consensus…which makes groups less intelligent.”
On the NASA Challenger disaster: “…the real problem is that there was a lot of disagreement further down the organisation about what the real problem was … and most of that information got put aside [by senior management].”
On party politics: “In a party system it’s all about looking at what others are doing and taking your cues from others [which is contrary to good decisions].”
On the best way to elicit opinions: “Collective judgements work better when decisions are not framed in simple Yes/No terms.”
On market research: “[researcher] BrainJuicer tried to adopt a different model based literally on ‘The Wisdom of Crowds’…they found no meaningful differences [in response] between the two approaches [small, heavily filtered qualitative group vs. and a large, unfiltered but diverse group].”
On the implications for business: “The idea of ‘The Wisdom of Crowds’ does give more credance to the concept of having management teams instead of entrusting power to a dominant CEO.”
Music Brother Love from the PMN
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I am very fortunate to listen to the podcost which have taught me the lesson on doing market research. Coming with a background in NGO sector, I realise James’s ideas are very innovative and in fact we are trying to apply and test in the villages we work.
I lead the Voice of Participants team at Byrraju Foundation, located in Hyderabad and I am sure the learnings from the audio are sure to help me.
I really appreciate the efforts put by this website, researchtalk.co.uk.
with my regards
Bhaskar
Bhaskar,
Thanks for your kind comments. Do post your progress and/or findings as what you are doing sounds intriguing.