February 10, 2009

How to use the collective wisdom of staff

There is a great book called “The Wisdom of Crowds” by James Surowiecki. It basically says if you ask enough people a question you will end up with the correct answer. If you ask just one or two people you’ll most likely get a wrong answer, but if you ask 20 people it will most likely be right. Ask 100 people and it’s even more likely to be right.

An example James uses in his book is when the Challenger blew up. It could have been the fault of a handful of companies and would take a while to figure out which one. After the accident many shares in the companies involved were sold. It turned out that the company that had the highest number of shares sold was the one who caused the problem! The wisdom of the shareholder crowd was right – they didn’t even need to wait to hear the official cause, the crowd knew.

4 things that make crowds wise
1. Diversity of opinion (private info, interpretation of known facts)
2. Independence (peoples opinions aren’t determined by those around them)
3. Decentralization (people are able to specialize and draw on local knowledge)
4. Aggregation (private judgments into collective decisions)

There was a test done to see if people care about ‘the wisdom of crowds’. They made one person stand on the corner of a busy street looking curiously up at the sky. Loads of people passed and nobody else looked up. They then got 10 people to stand there looking up and some passersby did look up. However when they made 50 people stand on the corner looking up everyone passing stopped to look up. The conclusion was the more people doing it the stronger the ‘social proof’ that something was happening - lots of people doing it means there must be a reason.

There were lots of other cool examples of the wisdom of crowds in the book such as to decide if you’ll need an umbrella check if everyone passing your house is carrying one, if not it probably wont rain – apparently this rarely fails. The same goes for moving your car off the street for cleaning in London – if others haven’t moved theirs it’s probably been cancelled this week.

So are businesses engaging the wisdom of crowds? Are they asking their staff loads of questions about things like new product innovations, marketing ideas, solutions to problems or customer relations? The answer is NO. Businesses still seem to be indifferent to the wisdom of crowds – they aren’t actively, constantly and frantically asking their employees anything! The staff surveying I did in the past convinced me of the power in the voice of the employee. But the wisdom of crowds goes even deeper than that. I highly recommend reading the book and figuring out exactly how to make it a way of life at your company – you will stand out a mile.


andrew said...

The 'crowd" must be disparate for the possibility of smarter group decisions to emerge according to that book. You might enjoy the book, Here Comes Everybody.
What a fun blog you have!
- kare, moving from me to we

Allison O'Neill said...

Thanks Andrew, I've reserved a copy of the book you suggested - thanks, it looks great :)