The Wisdom of Crowds:

Why the Many are Smarter Than

the Few and How Collective

Wisdom Shapes Business,

Economies, Societies, and Nations

By James Surowiecki

Doubleday, 296 pages, $39.95

New Yorker staff writer James Surowiecki begins The Wisdom of Crowds with the almost 100-year-old tale of British scientist Francis Galton walking through an agricultural exhibition in southwest England. Galton is intrigued by a guess-the-weight-of-the-ox competition. To make things more interesting for contestants (but presumably not for the ox), the goal was to guess the weight after it had been "slaughtered and dressed." Despite his contempt for the IQ of the average man -- and, indeed, for the judgment of the average voter -- Galton was amazed that the average guess of the 787 contestants was within one pound of the final weight of 1,198 pounds.

Conventional wisdom would suggest that crowds behave foolishly, but Surowiecki is able to show that, for certain types of problems, the group is wiser than the individual. These include cognition problems such as Galton's, where there is a definitive solution, and co-ordination problems such as rules of the road for safe driving, or safe flying, if you are a starling. The wisdom of crowds works for co-operation problems where the name of the game is to get self-interested individuals to work together paying their taxes, recycling their garbage and behaving honourably in their business dealings.

For the crowd to be wise, certain conditions are necessary: diversity of input, independence from coercion, decentralization of decision-making and the right way of aggregating the diverse opinions of the crowd, such as the market-based methods discussed below.

The book comes complete with 22 pages of densely packed footnotes (although no index) and numerous references to websites where the curious can extend the fun. The first half of The Wisdom of Crowds discusses the types of problems that make for wise crowds, and the second is given over to case studies in traffic, science, committees, companies, markets of various sorts and, yes, democracy. Many of these studies are intriguing, including the 1968 loss of and search for the missing U.S. submarine Scorpion, elegantly described in the book Blind Man's Bluff, by Sherry Sontag and David Drew.

The trick in the Scorpion case was the clever method of aggregating the guesses of the searchers with Bayes's Theorem, which uses new information about an event to modify an earlier prediction. Bayes's Theorem, a simple mathematical formula for calculating conditional probabilities, is often used in computer mapping and Geographic Information Systems software, when users are trying, for example, to predict the location on a map of archeological artifacts.

Other examples of wise groups include: Investors quickly and correctly assigning blame for the 1986 Challenger space shuttle disaster to Thiokol, the manufacturers of the solid-fuel booster rockets; the success of the studio audience in the TV show Who Wants to Be a Millionaire, on which the audience, when consulted, was right 91 per cent of the time versus a 65-per-cent success rate when the contestant consulted a "smart friend"; and Google's use of other websites to "vote" with their links for the best search result. Surowiecki also cites simulated markets, such as the Iowa Electronic Market (IEM), the Hollywood Stock Exchange and the Policy Analysis Market, organizations that sought to predict election results, Oscar night victories and potential trouble spots in the Middle East, respectively. The IEM was usually far more successful than the more traditional Gallup Poll.

Want to try it out? If you're a politico, go to newsfutures.com and you'll see George Bush is trading at 48 per cent for a November re-election; he was over 60 per cent at one point. If you're a sports fan, you can go to tradesports.com and bid on upcoming sports events. When the recent Euro Cup final was 10 minutes old and the score 0-0, Greece's stock went up dramatically.

Surowiecki's examples abound, but there is no mention of the use of meta-analysis, a method for aggregating the results of disparate research. Nor is there any discussion of public-participation methodologies in planning. He does refer to congestion pricing, along with Mayor Ken Livingstone's highly successful scheme to limit traffic in London, where vehicles are charged £5 a day to enter the city, but apparently doesn't realize that this approach could be used to solve such problems as electricity deregulation. (If consumers knew precisely how much more it cost to use electricity at peak times, they would spread their demand and reduce the need for new power plants.)

However, there is much that anyone working for any sort of organization can learn from this book. Thus forced consensus, concentration of power, top-down leadership, autocratic organization, even team players, are all anathema to the healthy organization. Indeed, leadership of any sort may simply be unnecessary. Flocks of birds can co-ordinate their activities just fine without a leader, and if a bird doesn't need to be told what to do, why should someone with a PhD?

Nigel Waters is founding director of the masters in geographic information systems program at the University of Calgary, and a contributing editor to GeoWorld; he recently wrote a chapter for the book Driving Lessons: Exploring Systems That Make Traffic Safer.