June Pick Explores the Power of Diversity and Collective Wisdom

In The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies, and Nations (Doubleday), James Surowiecki talks about how we run businesses, fight terrorism, structure political systems, perform scientific research, walk through crowded streets, and drive on tightly packed highways. He even discusses the way flocks of birds maneuver. And, in doing so, Surowiecki illustrates how "groups" of all shapes and sizes end up being smarter than the individuals who comprise them, and how these groups can ultimately determine progress and achievement far better than mere individuals.

A June Book Sense Pick, The Wisdom of Crowds offers a far-reaching and thought-provoking thesis that Surowiecki supports with startling research and illuminating claims. As a staff writer for The New Yorker magazine, Surowiecki pens the "The Financial Page" column. "In some sense, the book was born out of my column, which I started about four years ago, and from research I did previously," he told BTW recently. "I was getting interested in how and why markets, whether they're financial- or product-related, work well when they do."

Early in the book, Surowiecki delves into research conducted by political scientist Scott Page, who believes in the power of "diversity." Surowiecki reports that diversity on its own is valuable and making a group diverse usually allows it to be better at solving problems. The author acknowledges that intelligence is indeed relevant, but that intelligence alone isn't ultimately enough because it won't ensure diverse views. He also states, in regards to Page's research, that "grouping very smart people together doesn't work that well because the very smart people tend to resemble each other in what they can do…. Adding in a few people who know less, but have diverse skills, actually improves the group's performance."

Complementing this section of the book are the findings of organizational theorist James March, who believes that "groups that are too much alike find it harder to keep learning, because each member is bringing less and less new information," Surowiecki writes.

"March's work on this stuff is pretty amazing," Surowiecki said. "But the point of the book is not that you don't want smart people, you definitely do, and you want the group to have as much information as possible. Having just said that, you don't necessarily know where the right information is going to be. March is saying that if you can add a diverse perspective, even if it's one that's not necessarily incredibly well informed, you might actually make the group as a whole smarter."

Of course, this notion comes into play in business. "You can see it in companies, with this incredible focus on the CEO, the one person basically," Surowiecki continued. "I'm sure these guys are fantastic, but obviously they don't know everything, and there's definitely a lot to gain by listening to other voices.

Surowiecki's discussions about the way groups perform in business, and in capitalism in general, are refreshingly optimistic. He points out, through various examples, that we not only demonstrate cooperation and trust in business with people we know, but with people we don't know.

"We buy things off eBay sight unseen," he writes. "We sign on to (well, some of us do) KaZaa and upload songs for others to download, even though this means letting them have access to our computer's hard drive." He goes on to reveal the business practices of the Quakers, which are based on "reliability" and "trustworthiness." Then Surowiecki writes about how capitalistic rhetoric has often emphasized the good aspects of "greed" and what "Chainsaw" Al Dunlop would refer to as "mean business." The author believes such negative views of capitalism bear "little resemblance to its reality…" In The Wisdom, he opines: "If you assumed every potential deal was a rip-off, or that the products you were buying were probably going to be lemons, then very little business would get done."

Surowiecki explained that "at the core of any successful economy, and …, even more at the core of any successful democracy, is the benefit of trusting and cooperating with each other." And then there are the problems that occur when cooperation and trust are absent; take, for example, the violence and anarchy in Iraq these days. "It's a very interesting example," Surowiecki said, "where clearly the idea of trust is just so difficult."

Trust and cooperation not only affect outcomes in business and politics, but extend to the everyday reality of, say, crowds in urban places. Here, what he refers to as "coordination" is also crucial.

"When you think about it, no one on the street knows what anybody else is going to do, right?" Surowiecki noted. "There's no telepathic communication. But people walking in huge crowds are somehow able to get where they want to go at a reasonably good speed without bumping into each other."

But coordination can sometimes be hard to come by. "A lot of times in traffic jams, it's about bad coordination," he said. A fascinating section about the way giant flocks of starlings fly through the African sky also touches upon coordination, not to mention "biologically programmed spontaneity" and success even when there's no one leader in charge.

Surowiecki writes "a flock is a wonderful example of a social organization that accomplishes its goals and solves problems in a bottoms-up fashion, without leaders, and without having to follow complex algorithms or complicated rules…. No plans are made. The flock just moves."

Surowiecki gathers a tremendous amount of fascinating findings into a tome that's relatively short -- 272 pages -- and does so in an eloquent and engaging style that's reminiscent of his New Yorker column. "I hope there's a lot in there," he said about the book. "My New Yorker column is only about 940 words, but I have to pack it as tightly as possible. I think there's some carryover to the way I wrote the book. Still, one of the things that was nice about writing the book was being able to offer a full accounting of certain arguments and really flesh things out. --Jeff Perlah