The main challenges lie knowing when to use the wisdom of crowds and and how to improve the process of decision-making so the crowd sourced decision-making can be more effective.
To improve the process of decision-making, there are some recommendations, each applies to a wide range of decisions:
Take it seriously, groups tend to be more effective than individuals when they consist of a diverse set of individuals who bring different perspectives to a decision. But groups are actually less effective than individuals when they are diverse when different people bring the same biases to to a decision. It’s the single most critical factor for helping groups make good decisions.
You can have a large group filled with people who bring different perspectives but if that group communicates before people think independently about the decision, then the advantage of their diversity may be lost. This may seem very counterintuitive, so I’ll repeat it: communication isn’t always a good thing.
In the extreme case were group members prioritize social cohesion over independent thought communication can actually lead to close-mindedness where people think much more alike than they really should and they become overconfident in the accuracy of their beliefs. This phenomenon has been labeled groupthink and it’s most evident when a small group of similar people works together on a high-pressure decision.
One technique for increasing independent thought is selective communication. If there’s a complex decision to be made by say a group of 20 people it’s a good approach to have them trade on their initial thoughts about that decision before any intra-group communication takes place. This works for brainstorming too.
Good brainstorming often requires individuals working independently to generate many ideas and then a group working collectively to evaluate those ideas. It’s often effective to go back and forth between individual brainstorming and collective evaluation, alternating these two approaches over and over.
Making better judgments
Finally, I want to end with the way you can use the wisdom of crowds to make better judgments and better decisions, let’s consider another trivia question, what’s the distance in a straight line as the airliner flies between Rome and London? Think for a moment and then state your estimate out loud. Okay! Now assume that your first guess was wrong.
Think for a moment about why it might’ve been wrong. What didn’t you consider when making your estimate. Now based on what you’re thinking about now make a new alternative estimate. What did you just do? You just simulate a crowd of two in your own guessing.
When people do this, when they make two guesses after thinking about different information or if you’re just waiting a while the average of their guesses turns out to be a better estimate than one guess in isolation. Someone who answered the wrong the London question by saying 1500 miles might be likely to reduce their estimate the next time thinking about European geography a different way.
Perhaps they now say only 700 miles the average year 1100 miles is much more likely to approximate the true value of about 900 miles. This is a really easy trick for improving your judgments and even them’s some complex decisions. Don’t get fixated on the first guess. Force yourself to think again consider what else is important and make a new estimate. It even works well for consumer decisions.
If you ask yourself how much something is worth say a used car which you might make an offer. Don’t stop after first estimate, try again and see how your estimate changes even if you can’t collect data from a diverse and independent crowd, even if you can’t rely on a trusted friend you can still improve your own judgments just by asking yourself to think again.