B’musings

I’ve been a bit slow with my reading lately, but managed to catch up on this book over Christmas.  There are lots of reviews of it on the Internet so I won’t go into detail here, but there’s some great stuff in this book for anyone who is interested in group dynamics. One of the key points that stood out for me was:

“The idea of the wisdom of the crowds is not that a group will always give you the right answer but that on average it will consistently come up with a better answer than any individual will provide.”

He discusses the importance of diversity in group decision making so that outcomes aren’t limited by subject experts; how strong leaders can negatively impact the decision making by encouraging the group to lean towards the leader’s perspective; and how too much information reduces the accuracy of the decision making process.

I remember the argument when Wikipedia started out that the contribution of everyday people to an online encyclopedia instead of leaving it up to the knowledgeable experts would result in the “dumbing down” of both Wikipedia and those who referred to it.  Surowiecki gives various examples of why this isn’t usually the case:

“A survey on the question of overconfidence by economist Terrance Odean found that physicians, nurses, lawyers, engineers, entrepreneurs, and investment bankers all believed that they knew more than they did.  Similarly, a recent study of foreign-exchange traders found that 70 percent of the time, the traders overestimated the accuracy of their exchange-rate predictions.  In other words, it wasn’t just that they were wrong; they also didn’t have any idea how wrong they were.  And that seems to be the rule among experts.  The only forecasters whose judgments are routinely well calibrated are expert bridge players and weathermen.  It rains on 30 percent of the days when weathermen have predicted a 30 percent change of rain.”

He presents some very good examples from business and industry and it was an enjoyable book to read.  I highly recommend it.