James Surowiecki, staff writer for The New Yorker and author of The Wisdom of the Crowds, will speak at the New New Internet's Web 2.0 for Business Conference this November extolling the virtues of large group collective intelligence and its impact on Web 2.0 applications.
In the first pages of his best selling book, Surowiecki uses the game show Who Wants to be a Millionaire as an example of his theory in action. Followers of the show will remember the lifeline that allowed a struggling contestant to poll the audience for help with a question. Surowiecki's wisdom of the crowds theory applies this spirit of collective intelligence to a variety of business cases and social trends.
As we've posted before, all Web 2.0 tools are built upon the theory that a group of individuals can help shape our understanding of the world in ways one particular expert cannot. Inherent in almost any Web 2.0 tool is the faith in this theory. From open source software and wikis to prediction markets and Google's algorithms. All these applications benefit – either explicitly or implicitly – from the input of the masses.
In his book, Surowiecki explains that often times “expert judgments are very poorly calibrated ““which means that there's little correlation between an expert's confidence in his judgment and the accuracy of it. That's why it's worthwhile to cast a wider net, and why relying on a crowd of decision makers improves“¦your chances of reaching a good decision.“ This explains why corporate web pages are giving way to more dynamic and collaborative ways to interaction with organizations. A corporate blog, or an employee-created wiki taps into this wisdom in ways a stagnant webpage cannot.
Executives who prefer to take the reins themselves are likely to relish in the several and significant caveats dropped throughout the book. For example, Surowiecki's crowds theory really only works if individuals are relatively uninterested in the knowledge or actions of others. If this is not the case, a herd mentality is born with often catastrophic consequences, as seen in the Columbia Disaster.
Problems also pop up when the crowd becomes biased in the same direction and more concerned with the opinions of others rather than their own, as seen in stock market bubbles, “instead of worrying about how much a company is really worth, investors start worrying about how much other people will think the company is worth,“ Surowiecki warns.