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The Wisdom of Crowds (平装)
by James Surowiecki
| Category:
Collaboration, Business thinking, Globalization, Management |
| Market price: ¥ 158.00
MSL price:
¥ 138.00
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| Stock:
In Stock |
MSL rating:
 Good for Gifts |
| MSL Pointer Review:
Combined solid ideas and research, the author of this great business book advocates diversity, independent thought, and collective wisdom to achieve maximum success. |
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AllReviews |
  1 2 Total 2 pages 16 items |
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Stuart (MSL quote), USA
<2006-12-30 00:00>
James Surowiecki writes a brilliant and often provocative business column in The New Yorker, and he applies a challenging attitude in everything he writes: turning a 700 word case study very often into a powerful big idea.
Here he argues that far from being a mindless herd of idiots, the collective wisdom of a group of people can very often (not always) outshine the work of experts who know the subject. The author calls on a series of rather good case studies to argue the point - for example the way the public punished Thiokol in the sharemarket long before the cause of the Challenger explosion had even been established. (And without any influence from insider trading.) How does the collective gut instinct get this kind of thing so right? And how does the Hollywood Stock Exchange HSX pick tomorrow's hit movies so accurately - before these films ever get released? I'm sure a few movie moguls would kill to have such an accurate track record as the "mindless public."
Surowiecki sets out a number of conditions that facilitate the wisdom of crowds, and explains why sometimes the public doesn't get things so right.
I'm far from the only market researcher who has reviewed this book, and from a professional point of view the volume counterbalances a lot of argument we hear about how the public, or public polls get things "so wrong, so often." In essence the book offers a vote of confidence in the common-sense of the public.
However let's not ignore that there are counter-arguments to Surowiecki's case, and I wasn't satisfied that the author had explored these ideas. For example I've read scientific journals that suggest that group-decisions are usually smarter than individual decisions purely because a group has a greater chance of containing at least one expert within its ranks - but this idea isn't raised or argued here.
Towards the end of the book I had a palpable sense that the author had run out of energy: the main points, and Surowiecki's characteristic vitality are evident more in the first half.
I give the volume four stars though. The Wisdom of Crowds forms an important part of the jigsaw of understanding how today's networked, internetted society really functions. I enjoyed this book immensely. Power to the people! |
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Mark Murphy (MSL quote), USA
<2006-12-30 00:00>
Members of large organizations who want to see good ideas take root should have a look at this one, as should their bosses. I don't think one should expect a cookbook for innovation improvement but the anecdotes will remind most readers of situations they have experienced in which solid proposals with popular backing have languished while the chief's schemes floundered.
I didn't think that the stories about failures of the crowd diminished the premise that aggregated intelligence (different from consensus) often exceeds the capabilities of gifted individuals. That a few mutual fund managers can out-perform the market does not take much away from the reality that most do not.
HP, Google and other companies are experimenting with in-house predictive markets. It will be interesting to see if these practices become institutional - part of everyone's job.
Anyone who remembers the big flap about Admiral Poindexter's Terrorism Prediction Index was probably as disgusted as I was. Your opinion may be altered once you understand what the effort was really trying to do. The story is here.
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A. Curie (MSL quote), Germany
<2006-12-30 00:00>
James Surowiecki's The Wisdom of Crowds is a readable and understandable book that attempts to bring an esoteric concept and present it to the layman. Surowiecki's thesis is simple: a group of people that is diverse, independent, and decentralized usually reaches a better solution to a problem than even the best experts.
Surowiecki is a columnist with the New Yorker, and the book reads like a collection of columns, with short, digestible sections discussing smaller ideas that all lead to his thesis. He uses case studies, sociological experiments, stock market activity, and other research to build his case. Although he offers many qualifications, he does a very good job showing that the marketplace of ideas usually produces the best answer.
The Wisdom of Crowds sets out what it means to do and helps explain how the world actually works - why the experts are often wrong and why the majority is usually right. While it may be beneficial to managers and leaders looking to incorporate these ideas into their leadership styles, it is a great read for almost anyone wanting to understand a little more about human behavior and how the world works. |
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Bruce Gregory (MSL quote), USA
<2006-12-30 00:00>
This is not a review so much as a caveat. The book is informative and well written. The caveat concerns the title. Surowiecki does not document the wisdom of crowds, he documents the wisdom of large numbers of independent agents. When agents are not independent - when they know what other agents are doing - they demonstrate very little wisdom. This is the reason that Surowiecki does not give many examples from Wall Street. Speculators (I'm sorry, investors) are well aware of what other speculators are doing. This knowledge is more likely to lead to herd behavior than to wisdom. If you keep this distinction in mind you are much less likely to be misled. Surowiecki makes the distinction quite clear, but he does not emphasize it. Buyer beware! |
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Kenneth Posner (MSL quote), USA
<2006-12-30 00:00>
Surowiecki's book focuses on the strengths and weaknesses of collective decision-making. The text covers a large number of issues rather superficially, and it will not satisfy those looking to dive into and master the underlying economic theories. But it makes an important point and can be read quickly.
His thesis is that groups of people can aggregate information to produce surprisingly accurate decisions. The book starts by recounting a famous experiment, in which a 19th century Scottish scientist studied the results of a typical contest where county fair-goers guessed the weight of an ox. He found that, while many guesses were wide of the mark, the mean of the guesses was spot on - and closer to the ox's actual weight than any individual guess. Apparently this phenomenon holds true for other such contests (how many jellybeans in a jar or how much a pumpkin weighs) - and this ought to make one stop and think about the power of aggregating information from groups of ordinary people.
Surowiecki relates the power of group thinking to other situations, ranging from the efficacy of market prices to the eerie accuracy of the Iowa Electronic Markets (which forecast election results among other things).
He contrasts these examples with the dangers of "group think," the consensual and wrongheaded approach to decision-making that plagues governments and corporations, the frequently poor quality of "expert" forecasts, and the volatility of security prices (he explains the theory of "information cascades" in a clear and easy-to-follow manner).
The moral of the story: "Diversity and independence are important because the best collective decisions are the product of disagreement and contest, not consensus or compromise." It strikes me that this bit of wisdom could be usefully applied in government, business, investing, and many other walks of life; hence the value of the book, even if you skim it quickly. |
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Andrew Szabo (MSL quote), USA
<2006-12-30 00:00>
Intellectuals have often denigrated the abilities of people acting as a crowd. Gustave Le Bon's The Crowd (1895) portrayed the folly and stupidity of people acting en masse. Charles McKay titled his classic work, "Extraordinary Popular Delusions and the Madness of Crowds" (1841). Nietzsche wrote, "Madness is the exception in individuals, but in groups...it is the rule." But then along comes James Surowiecki, in his "The Wisdom of Crowds" (2004), asserting that under the right conditions, crowds typically make better and more informed decisions than even expert individuals.
The era of new technology has highlighted the power of collective wisdom under the right conditions. Consider Google, the most effective and popular general search engine, which amounts to a popularity contest by hyperlinks. Many cooks enhance the soup.
What are these "right conditions" for sound group decision? According to Surowiecki, you need: 1. diversity of opinion, 2. independence in reaching decision, 3. centralization (local knowledge) and 4. aggregation (a mechanism for sharing information and judgment effectively).
Surowiecki, a staff writer for the New Yorker, cites many experiments and historical cases in support of his hypothesis. Consider how the audience consistently outperformed hand-picked experts on "Who Wants to be a Millionaire?"
Surowiecki's thinking may help us to sort out an old rivalry among investment practitioners and writers. To put it simply, some assert that the crowd is always or generally wrong; these are called "contrarians." Others believe that the "trend is your friend." The implication of Surowiecki's work is that markets can do a sensational job of valuing securities. However, where those "watching the tape" exceed those valuing cash flows, look out! For then you have the conditions for poor group decision, excessive price momentum, and then extreme setback.
Surowiecki's discussion of stock market bubbles and the idea of "dependent" action relies partly on Robert Schiller's work in behavioral finance, particularly the notion of "feedback loops." However, it is notoriously difficult to predict when a bubble will burst, rather than expand more. I don't see how either author provides a theoretical or practical basis for timing the decision to sell short.
Surowiecki's slim book carries broad-ranging implications for informed action in politics, science, business and even sports. And although the work is not based on independent empirical research, it charts a path for further research. I recommend it highly. |
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