Smart mobs beat dumb CEOs

James Surowiecki's new book, "The Wisdom of Crowds," argues that diverse groups predict the future better than solo prima donnas.

By Farhad Manjoo

Jun 2, 2004 | On April 17, 1961, more than a thousand Cuban-exile paramilitary fighters landed at the Bay of Pigs, off the southern coast of Cuba, in an audacious effort to convince the local population to join a march toward Havana and overthrow Fidel Castro. Instead of finding pliant locals, though, the exiles, who'd been trained and armed by the American Central Intelligence Agency, were quickly and ignominiously defeated by Castro's forces.

CIA investigators would later determine that the agency's invasion plans had been seriously misguided -- the CIA had underestimated Castro's popularity and the strength of his military, it had failed to lay down any real plans for the post-invasion period, and it mistakenly assumed that the U.S. could plausibly deny any involvement in the mission, even though the press had been reporting on the exiles' training for months prior to the invasion.

Why did the Kennedy administration launch this flawed mission? Because it "planned and carried out its strategy without ever really talking to anyone who was skeptical of the prospects of success," writes James Surowiecki in "The Wisdom of Crowds," his intriguing new book that examines the ways in which groups of people can become either smarter or dumber than their brightest members. Surowiecki, who writes the financial column for the New Yorker, holds up Kennedy's foreign policy team as an example of one of the perils of group deliberation. Specifically, the Kennedy White House was the victim of what psychologist Irving Janis, who studied the decision-making process that led to the Bay of Pigs invasion, called "groupthink" -- a phenomenon that causes small, homogeneous groups to unconsciously squelch dissent and ignore positions that run contrary to the group's point of view, leading to often bizarre decisions.

Groupthink seems to run rampant in the halls of government these days, and Surowiecki does a service to the nation in untangling the causes of this menace. But he points out that groups can be felled by much more than groupthink. In Surowiecki's view, people form precarious collections; if we're not organized just right, our groups can make terrible decisions. The intelligence of a team, or of a much larger crowd, can be diminished if its members are not intellectually diverse, if its members do not make decisions independently of each other, and if the team is either too centralized or too decentralized. The network of open-source programmers who maintain Linux is an example of a group that gets things right; the team of NASA engineers that managed the space shuttle Columbia's last mission is one that got things disastrously wrong.

Surowiecki's is a big-idea book, reminiscent of his New Yorker colleague Malcolm Gladwell's "The Tipping Point." Although he spends much of the book pointing out all that can go wrong in a group or a crowd, Surowiecki's big idea is that a well-designed group can be exceptionally intelligent, smarter even than its brightest member. Ask a crowd to guess the number of jelly beans in a jar and the average of their guesses will be almost exactly right. In the same way, people organized in markets, in betting pools, in corporations or even in governments can sometimes magically arrive at the correct solution to a tough problem.

In book form, Surowiecki's writing sometimes meanders, and it lacks much of the elegance, and some of the delight, of his short pieces for the New Yorker. He also has a tendency to glut his arguments with apparently tangential examples, some of which raise more questions than they answer. Still, Surowiecki puts forward a compelling idea. In our world, we tend to think of intelligence as the province of individual "experts," but Surowiecki convincingly argues that under the right circumstances, groups might be far better equipped to manage human affairs. In other words, this book should send corporate CEOs -- the highest-paid experts in the land -- running scared.

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