How Dumb Mobs Beat Smart CEOs

Predictions

from the wisdom-of-crowds dept

Both the wisdom and stupidity of crowds is a fascinating subject. I once took an entire course that focused on the problems of “groupthink,” which is more commonly referred to as the “echo chamber” these days. However, at the same time, disparate groups of people, all making decisions (say, in a market) can lead to some very intelligent solutions. Salon is now reviewing a book called The Wisdom of Crowds, which is obviously a play on the old favorite, Extraordinary Popular Delusions & the Madness of Crowds. However, I think that the title to Salon’s article gets it wrong. They call it: Smart Mobs Beat Dumb CEOs, when what the book is really talking about is that Dumb Mobs Beat Smart CEOs. That’s the real point to drive home. The power of well organized markets that present information (where the errors cancel out and the real info remains) is a testament to the power of “dumb” crowds. They’re not being intelligent – but it’s the collective actions that reveal the pieces of intelligence. That network of supposedly “dumb” devices at the ends, is likely to beat out the centralized “smart” CEO in the middle. In fact, the book supposedly discusses companies that are experimenting with such distributed decision making processes, where the decisions of many can better forecast where the company is going than the top-down view of the CEO. Of course, if this book catches on, expect a number of companies to try to implement such bottom-up decision making in a way that misses the point and does more damage than harm (followed by the inevitable anecdotal evidence of why such things will never work) such as making everyone “vote” on certain pointless decisions that will just waste time.