In The Wisdom of Crowds, James Surowiecki, provides the argument that “under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them. Groups do not need to be dominated by exceptionally intelligent people in order to be smart. Even if most of the people within a group are not especially well-informed or rational, it can still reach a collectively wise decision. This is a good thing, since human beings are not perfectly designed decision makers. Instead, we are what the economist Herbert Simon called ‘boundedly rational.’ We generally have less information than we’d like. We have limited foresight into the future. Most of us lack the ability – and the desire – to make sophisticated cost-benefit calculations. Instead of insisting on finding the best possible decision, we will often accept one that seems good enough. And we often let emotion affect our judgment. Yet despite all these limitations, when our imperfect judgments are aggregated in the right way, our collective intelligence is often excellent. . . . This intelligence, or what I’ll call ‘the wisdom of crowds,’ is at work in the world in many different guises.”
Given the wisdom of crowds (the group of your business colleagues and advisors), the compelling question is what process can be envisioned for the group to make the best decisions possible? With this group it is necessary to stress that the factors of diversity, independence, and decentralization are valued. A reporter can carefully poll this group to encourage diverse, independent, and unique thoughts on the decision to be made, and document these thoughts in writing. Before any meeting occurs a summary of the thinking should be circulated to all. This summary need not attribute the thinking or make a conclusion about the thoughts expressed. The group should be encouraged to discuss the summary with the others and begin to formulate their own positions in accordance with their values and the information derived from the others. From this summary and the discussions, a draft plan document can be created. After this document has been reviewed, the areas of disagreement among the group will be understood.
It is, of course, up to the person responsible for the plan to exercise the authority of making the final decisions, but through a careful polling process these decisions will have the benefit of the wisdom of crowds.
