Book Review: “The Wisdom of Crowds” by “James Surowiecki”.

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Traditional belief, particularly in IT industry, suggests that if you place put together a group of outstanding persons/experts along with a mix of average persons and some below average persons and ask them to work on a problem then what you will most probably get is sub- optimal results.

This book turns the above notion upside down and suggests that certain types of problems and decision making are best solved by groups (the larger the better) of reasonably informed and engaged people. The group’s answer, he shows, is almost invariably better than any expert’s answer, even better than the best answer of the experts in the group.

The author also places great emphasis of what constitutes an ideal group:

Intellectual diversity: Different opinions and perspectives (unlike most management teams and boards, who tend to select others who think the same way they do.). The author suggests having a physicist in a group which is trying to solve a chemistry problem.

Independence: Freedom from the tendency to want to agree automatically with what one or more other group members says, and

Decentralization with Aggregation: Individual access to different, specialized knowledge, and a mechanism for effectively sharing that knowledge with the rest of the group.

The book begins with a taxonomy of three types of problems that individuals and groups try to solve:

Cognition problems: Problems with one definitive answer that we try to accurately assess after considering available and missing information (e.g. what’s a stock worth, who will win an election, or what caused a disaster).

Coordination problems: Where an optimal combined solution is needed for a problem that affects a whole group, and where this optimal solution is usually sought by having each individual act in personal self-interest (e.g. finding buyers and sellers for products, or determining the best route to work in traffic), and

Cooperation problems: Where an optimal combined solution is needed for a problem that affects a whole group, and where this optimal solution usually depends on individuals trusting each other and acting fairly and in what they perceive to be collective self-interest rather than just their own (e.g. how to deal with pollution, devise a tax system, or remunerate employees).

The author provides numerous examples and observations from our daily lives, corporate settings, social examples to make this book interesting. He also points out that answers/solutions coming out from group are not exactly “average” or “consensus” answers. The author terms the groups answers to be a “collective” answer with the superiority of the collective answer depending importantly on the group’s members having ‘Intellectual diversity’, ‘Independence’ and ‘Decentralization with Aggregation’

However what the author does not do is provide how his findings can be applied. I think that is left to the reader to figure out.

All in all it is an excellent intellectually stimulating book that conveys it’s message through simple observations and findings.


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