Wisdom of Crowds vs. Egos of Bosses

In his ground-breaking book The Wisdom of Crowds, author James Surowiecki cites some pretty compelling evidence that crowds are usually wiser than individuals.  Even the smartest individuals amongst us.  He gives many examples of when crowds have out-performed experts when it comes to solving problems, fostering innovation, coming to wise decisions and predicting future outcomes.   This begs the question:  If crowds are so damn smart, why is it that we often ignore them?

I believe there are two answers to this question, one obvious and one not-so-obvious.

The obvious answer is that crowds get a bad rap.  When we think of “crowds” we often think of them at the worst… lynch mobs, rioters, mass looters, etc.   But we forget that even though all lawless groups of hoodlums are crowds, not all crowds are lawless groups of hoodlums.  For example, a stock market is also a crowd.  So is a Board of Directors.

Mr. Surowiecki identifies 4 characteristics that separate wise crowds from their rowdy cousins:  (1) diversity of opinion; (2) independence of members from one another; (3) decentralization; and (4) a good method for aggregating opinions.  If you look at any example of a rowdy crowd, it violates at least one of these characteristics.  If all 4 characteristics are in place though, a crowd will act quite wise.

Let’s assume that you’ve bought  The Wisdom of Crowds book and the theory it proposes.  You understand why crowds get a bad rap and see how amazingly capable they are under the right conditions.  Now would you trust a crowd to help you with an important business decision?  Would you leverage a crowd’s creativity to design your next product or advertising concept?  Would you allow a crowd to pick which logo you’ll use on your new website?

Unfortunately, the answer to these questions is often “no.”   I know this because I’ve been studying the wisdom of crowds for many years, along with the cottage industries it’s helped create (crowd sourcing, prediction markets, etc.)  The problem isn’t that wise crowds can’t be trusted, there’s overwhelming evidence that they can be, the problem is that many managers don’t want to.

Trusting the opinion of crowd is a great exercise in humility.  It’s tough to say to oneself, “I graduated in the top 5% of my high school class.  I made a 1440 on my SAT.  I went to a top university and can kick butt at Jeopardy.  Yet… a diverse, independent, decentralized group of non-experts can do my job better than I can.”

What a massive blow to the ego.  An ego that has been carefully cultivated and pampered over decades of life.  An ego that a young mother would only feed words of encouragement and enthusiastic praise.  Damn the evidence.  The ego must be protected!

It’s self-evident that corporate bosses have egos, superb ones in the fact, and that the higher you venture up the corporate ladder the larger the ego you will discover there.   No wonder bosses don’t like the wisdom of crowds.  It puts in harm’s way the very psychological component that motivated them to achieve the position of authority they enjoy.

However, there’s light at the end of the tunnel.

Suppliers of “wisdom of crowds” solutions often observe that while middle managers tend to resist their products, top executives tend to embrace them.  Why?  Because from their vantage point, efficacity outweighs ego.   Maybe it’s because their ego needs have already been met or maybe because they have more to gain from favorable business outcomes.   Perhaps they’re just more open-minded.  In any event, if you’re trying to sell the wisdom of crowds it’s best to start at the top.

For business decision-makers who are willing to check their ego at the door, the wisdom of crowds is a powerful phenomenon to tap.  For those who aren’t, it will always remain just a curiosity.

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