Tuesday, 3 March 2009

Back yourself against the crowd

You can use a group to reach a better decision than you can alone. Professionals use for example the Delphi method. And if you don’t have pool of experts, then you may find a way to use “The Wisdom of Crowds” to inform your decisions.

The Delphi method is a systematic way to produce an estimate or forecast. A facilitator guides a panel of experts through a process that gradually narrows range of their individual answers until they converge towards the optimal answer. Many such consensus forecasts have proven to be more accurate than forecasts made by individuals.

In “The Wisdom of Crowds”, the author Surowiecki suggests you use four key criteria to separate wise crowds from irrational ones:

· Diversity of opinion: Each person should have private information even if it's just their own interpretation of commonly known facts.
· Independence: People's opinions aren't determined by the opinions of those around them.
· Decentralization: People are able to specialize and draw on local knowledge.
· Aggregation: Some mechanism exists for turning private judgments into a collective decision.

But again, the careerist will ask: How many managers are promoted as a reward for painstaking work to establish a consensus?

Systematic decision methods appeal to analysers. The gamblers who tend to reach the topmost management positions prefer to go with their instinct. Why embark on a procedure that will either reach a decision you would rather be seen as making yourself? or contradict what you want to do?


  1. Indeed - and most recent studies support the validity of the gamblers' behaviour. A study by Professor Nalini Ambady of Tufts University, Massachusetts into "thin slicing" - in effect our ability to make accurate and long lasting judgements following a few seconds input - concludes that "thinking about the judgements you make could make you less accurate. We've found that when we ask people to deliberate before thay make a decision they tend not to be as good as if they do it non-consciously".

  2. OK, but the contrast above is not between instant and deliberate judgements (of the kind an individual can be asked to make in a controlled experiment); it is between gambles (instant or deliberated) and calculations based on analysis of information from several sources.