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The Wisdom of Crowds
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A warm-up exercise
Everyone write down what they think my age
is individually.
Now get the average of the answers.
How close are you to correct?
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Traditional Problem Solving
Use our Instinct/Guess
Use our own ExperienceAsk an Expert
Research books by Experts
Ask a Friend/Colleague Follow the Leader
Follow the Trend
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Francis Galton
Francis Galton (16 February 1822 17
January 1911), cousin of Charles Darwin,was an English Victorian polymath,
anthropologist, eugenicist, tropical explorer,
geographer, inventor, meteorologist, proto-
geneticist, psychometrician, and statistician.
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Francis Galton
In 1906 Galton visited a livestock fair and
stumbled upon an contest.An ox was on display, and the villagers were
invited to guess the animal's weight after it
was slaughtered and dressed.
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Francis Galton
Galton disliked the idea of democracy and
wanted to use the competition to show theproblems of allowing large groups of people
to vote on a topic.
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Francis Galton
787 people guessed the weight of the ox,
some were experts, farmers and butchers,others knew little about livestock. Some
guessed very high, others very low, many
guessed fairly sensibly.
Galton collected the guesses after the
competition was over
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Francis Galton
The average guess was 1,197 pounds
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Francis Galton
The average guess was 1,197 pounds
The correct weight was 1,198 pounds
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Francis Galton
The average guess was 1,197 pounds
The correct weight was 1,198 pounds
AMAZING
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Wisdom of Crowds
What Dalton discovered was that in actuality
crowds of people can make surprisingly good
decisions IN THE AGGREATE, even if they
have imperfect information.
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Other examples
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Who wants to be a millionaire?
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Who wants to be a millionaire?
Compare the lifelines;
Phone a friend
Ask the Audience
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Who wants to be a millionaire?
The correct answer is given;
Phone a friend
Ask the Audience
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Who wants to be a millionaire?
The correct answer is given;
Phone a friend
Ask the Audience
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Who wants to be a millionaire?
The correct answer is given;
Phone a friend
Ask the Audience
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Other examples
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The Spaceshuttle Challenger
On January 28, 1986, when the Space
Shuttle Challenger broke apart 73 secondsinto its flight, leading to the deaths of its
seven crew members. The spacecraft
disintegrated over the Atlantic Ocean, off the
coast of central Florida
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The Spaceshuttle Challenger
The stock market did not pause to mourn. Within
minutes, investors started dumping the stocks of the
four major contractors who had participated in theChallenger launch: Rockwell International, which built the shuttle and its main
engines;
Lockheed, which managed ground support; Martin Marietta, which manufactured the ship's external fuel
tank; and
Morton Thiokol, which built the solid-fuel booster rocket.
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The Spaceshuttle Challenger
Twenty-one minutes after the explosion,
Lockheed's stock was down 5 percent, MartinMarietta's was down 3 percent, and Rockwell
was down 6 percent.
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The Spaceshuttle Challenger
Morton Thiokol's stock was hit hardest of all. As the
finance professors Michael T. Maloney and J. Harold
Mulherin report in their fascinating study of themarket's reaction to the Challengerdisaster, so many
investors were trying to sell Thiokol stock and so few
people were interested in buying it that a trading halt
was called almost immediately. When the stockstarted trading again, almost an hour after the
explosion, it was down 6 percent.
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The Spaceshuttle Challenger
By the end of the day, its decline had almost
doubled, so that at market close, Thiokol'sstock was down nearly 12 percent. By
contrast, the stocks of the three other firms
started to creep back up, and by the end of
the day their value had fallen only around 3percent.
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The Spaceshuttle Challenger
What this means is that the stock market
had, almost immediately, labelled MortonThiokol as the company that was responsible
for the Challengerdisaster.
Months later it was discovered that it was in
fact Morton Thiokol who caused the problemwith the production of faulty O-rings.
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The Spaceshuttle Challenger
How did the stock investors know ?
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The Spaceshuttle Challenger
How did the stock investors know ?
There is no satisfactory explanation, other
than the wisdom of crowds.
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Other examples
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Google PageRank Algorithm
How does Google work ?
How does it classify pages so that typically
the page you are looking for is the in first ten
links it returns?
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Google PageRank Algorithm
It uses the PageRank algorithm, the specifics
of which are a closely guarded secret, but the
main idea is easy to grasp: the more sites that link to a certain URL with a
certain phrase, the higher the rating.
This works because each link is vote for theconnection between the phrase and the site.
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Google PageRank Algorithm
It uses the PageRank algorithm, the specifics
of which are a closely guarded secret, but the
main idea is easy to grasp: the more sites that link to a certain URL with a
certain phrase, the higher the rating.
This works because each link is vote for theconnection between the phrase and the site.
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Exercise
A friend of yours said they will be in Dublin
on Saturday and want to meet you, but you
didnt hear where they said, if you had you
guess where would you go ?
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Exercise
A friend of yours said they will be in Dublin
on Saturday and want to meet you, but you
didnt hear where they said, if you had you
guess where would you go ?
Most people would tend to say the Spire orClearys clock.
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Exercise
You also missed the time at which you are
supposed to meet them at, if the meeting is
for a Saturday, what time will you head into
town for?
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Exercise
You also missed the time at which you are
supposed to meet them at, if the meeting is
for a Saturday, what time will you head into
town for?
Most people say Noon or 1 oclock.
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Exercise
Thus in general the majority of pairs of two
people who dont know when are meeting or
where they are meeting could hook up
without prearrangement.
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So what doesthis tell us?
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Wisdom of Crowds
It shows us that groups of people make
excellent decisions and can select the correct
alternative out of a number of options without
any specific expertise.
How could this be?
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It is importantto remember
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Experts are not know-it-alls
Individual experts really arent as smart as
we think.
Herbert Simon and W.G. Chase (1973)
explored the nature of expertise in the
domain of chess.
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Experts are not know-it-alls
They showed a chess-board in the middle of
a game to an expert chess player and an
amateur.
They asked both to recreate the locations of
all of the pieces on another boards,
consistency the experts were easily able toreproduce the boards, whereas the amateur
rarely could.
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Experts are not know-it-alls
So does this mean experts are smarter ???
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Experts are not know-it-alls
No, because when they put the pieces on the
board randomly, the expert and amateur both
did equally as well.
This shows the very, very limited scope of
expertise.
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Experts are not know-it-alls
We normally assume people who are
intelligent at one pursuit are good at all, but
in actuality this is not at all the case.
Chase said the intelligence and expertise is,
in fact, spectacularly narrow
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A key point is
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Diversity
Scott Page has shown that groups
who display a range of perspectivesoutperform groups of like-minded
experts.
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Diversity
Diversity yields superior outcomes, and Page
demonstrates this in a range of ways.
Page suggests that difference beats out
homogeneity, whether you're talking about
citizens in a democracy or scientists in the
laboratory.Diversity gives you a larger range of opinions
to select from.
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Diversity
If we dont have diversity in our
groups we end up withGROUPTHINK.
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GroupThink
Groupthink occurs when a group makes
faulty decisions because group pressures
lead to a deterioration of mental efficiency,
reality testing, and moral judgment (Irving
Janis, 1972, p. 9).
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GroupThink
The key factor that causes Groupthink is when thecrowd is homogeneous.
If all members think and act the same this can lead togroupthink, as can be seen in highly regulatedorganisations like the army.
To harness the power of the wisdom of crowds youreally need diversity, the nay-sayers, the moaners andcomplainers, and the crazy optimists, the fools, thehappy-go-luckies you need the whole mix.
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Consequences of GroupThink
Pearl Harbour
The Bay of Pigs Failed Rescue Attempt of Hostages at US
Embassy in Iran
US Invasion of Iraq
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Symptoms of GroupThink
Illusion of invulnerability
Collective rationalization
Belief in inherent morality
Stereotyped views of out-groups
Direct pressure on dissenters
Self-censorship Illusion of unanimity
Self-appointed mindguards
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Illusion of Invulnerability
Creates excessive optimism thatencourages taking extreme risks.
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Collective Rationalization
Members discount warnings and do notreconsider their assumptions.
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Belief in Inherent Morality
Members believe in the rightness oftheir cause and therefore ignore theethical or moral consequences of theirdecisions.
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Stereotyped Views of Out-groups
Negative views of enemy makeeffective responses to conflict seemunnecessary
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Direct Pressure on Dissenters
Members are under pressure not toexpress arguments against any of thegroups views.
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Self-censorship
Doubts and deviations from theperceived group consensus are notexpressed
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Illusion of Unanimity
The majority view and judgments areassumed to be unanimous.
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Self-appointed mindguards
Members protect the group and theleader from information that isproblematic or contradictory to thegroups cohesiveness, view, and/ordecisions
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Signs of GroupThink
Incomplete survey of alternatives
Failure to examine risks of preferred choices. Poor information search.
Selective bias in processing information at
hand.
Failure to work out contingency plans.
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What can we do ?
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What can we do ?
The manager/leader should assign the role of
critical evaluator to each member of the
crowd
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What can we do ?
The manager/leader should avoid stating
preferences and expectations at the outset
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What can we do ?
Each member of the group should routinely
discuss the groups' deliberations with a
trusted associate and report back to the
group on the associate's reactions
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What can we do ?
One or more experts should be invited to
each meeting on a staggered basis and
encouraged to challenge views of the
members
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What can we do ?
At least one member should be given the role
of devil's advocate (to question assumptions
and plans)
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What can we do ?
The manager/leader should make sure that a
sizeable block of time is set aside to survey
warning signals.
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Diversity (recap)
It not only contributes by adding different
perspectives to the group but also by making
it easier for individuals to say what they really
think.
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Good Crowd For Wisdom
Diversity of Participants
Independence of Opinion
De-Centralised Organisation
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A Bad Crowd
Problem Domain
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A Good Crowd
Problem Domain
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Crowds Wisdom?
A Village Population in the Middle AgesA Jury
Football Supporters
Gamblers
A Community of Practice
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The Wisdom of Crowds & KM
Helps convince KM Sceptics People are
your greatest Resource
Starting point for Community of Practice
Effective & Creative thinking techniques
increase the Crowds ability without the
additional resources
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EXERCISE - SMART HEART
and the Wars for Independent Thought
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EXERCISE - SMART HEART ???
Identify People Process Technology?
Identify COP implementation weaknesses?
Is Nonakas Spiral in play - demonstrate?
Identify Creative Thinking Techniques?
Success Factors wisdom of army?
Barriers to English adopting same?
Apply PMI to Bruces approach?
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