 In his book The Wisdom of Crowds,
James Surowiecki laments the fact that, despite compelling evidence
that executives and experts are poor at making decisions, and that the
collective wisdom of large numbers of people is very much better at it,
few businesses rigorously canvass their employees and customers for
anything more than inconsequential assessments after the decisions have
already been made. At a meeting last week with a group of business
executives who are Surowiecki enthusiasts, we kicked around how the
Wisdom of Crowds might be used in business, in particular for making
key business decisions.
In a previous post, I described
NASA's standard decision-making process, which is generically the
process that all of us use to make decisions of significant importance.
This process is as follows:
- Assess the situation
- Gather facts and assess unknowns
- Identify alternatives
- Establish decision criteria
- Weigh alternatives
- Select 'best' alternative
- Validate decision
So when we are buying a house, for example, we consider why we are
making such a decision, collect data about the current market, identify
some houses we like, identify the criteria (probably subconsciously)
that affect our choice, use those criteria to weigh the alternatives,
make a choice, and then probably second-guess ourselves: "Now, are you
sure you like this one better than that one?"
In a business, the process is similar. If we need to decide on an
action plan to deal with a revenue shortfall, for example, we'll look
at the revenue data versus budget, collect demographic and economic
information and competitive intelligence that may account for the
shortfall, come up with a series of alternative actions that could be
taken, identify the criteria (again, probably subconsciously) that
affect the choice, use those criteria to weigh the alternatives, make a
choice, and then probably validate it by running it by other executives
or advisors we trust: "Here's our draft Sales Catch-Up Plan, take a
look at it and tell me what you think."
Surowiecki would argue, I think, that there are opportunities at
several points in this process to gather the collective wisdom of large
numbers of people (notably employees and current and prospective
customers), and that doing so would almost inevitably produce a much
better decision or solution. In our discussion last week, we identified
four places in the NASA process where the Wisdom of Crowds might be
tapped. In so doing, we split the first step in the process (Assess the situation) into two parts:
- Articulate the components of the issue (for example, our
revenue shortfall may be localized in certain product lines or
geographic areas, and different solutions may be needed in each
different area)
- Identify the root causes behind each component, to ensure
the decision affects the cause, not just the symptom, of the issue at
hand (for example, the revenue shortfall in area X may be due to a
declining local economy, a new competitor, big turnover in sales
personnel, or setting an unrealistic budget in the first place)
We also concluded that the second step, Gathering facts and assessing unknowns,
occurs throughout the process and not just at one particular stage. The
revised decision-making process is shown in the figure above, and the
four places in the process where collective intelligence of the
organization and/or its customers might be used are shown in the green
boxes. Continuing the sales shortfall example, we might use this
collective intelligence to:
- Ensure we had accurately identified all the important product line, regional and other components of the shortfall
- Rank the components by their impact on the shortfall
- Ensure we had identified the real underlying causes of each component of the shortfall
- Qualify and rank the alternative solutions we had identified to address each underlying cause
- Critique the proposed implementation of the selected solution alternatives
Here's another example, from my personal experience: We wanted to know
why the use of our corporate intranet was declining. We began by
identifying the evidence that led us to believe this was a problem
(e.g. some of the newest tools had fewer users than some of the older,
less robust tools). The first stage of an extensive user survey
surprised us: We discovered that the data we were getting on usage was
misleading, and while there was definitely a problem, we had
misdiagnosed the components of the problem. We learned, for example,
that one of the reasons for declining use was that users weren't able
to find what they were looking for, and speculated on the root causes
of this problem component: The search tool was too complicated, or
there was just too much stuff to wade through, or perhaps the users
weren't adequately trained, or perhaps they weren't aware it existed,
or possibly they couldn't find what they were seeking because it wasn't
there at all. What they told us, in the next part of the survey, was
that looking for information on the intranet, beyond very simple
lookups like firm policies or government regulations, was simply not as
efficient a way to get pertinent information as walking down the hall
or picking up the phone and getting that information first-hand from a
colleague, with more context than the intranet could provide. They told
us to ask their assistants about the usability of the search tool,
since the assistants were the people who actually used it, for
relatively simple lookups when they were instructed to do so (this
assertion was in fact consistent with the usage data we had collected).
We decided as a result to redefine the problem from "People aren't
using the intranet" to "People aren't effectively aided by our
technology and information to do their jobs efficiently." We then
changed gears completely and refocused on what we could do to help the
informal peer communities identify and connect with each other more
easily, and share their 'filing cabinets'. We proposed several ways we
could do this, including introducing weblogs and creating expertise
finders. When we surveyed the users again, they picked the simplest,
least powerful alternative, and, when we showed them a proposal to
implement that, they suggested ways to make it even simpler. Had we not
repeatedly surveyed our users to garner the Wisdom of Crowds, we would
have gone on doing refinements to the intranet search engine, training
programs, awareness activities, and content rationalization, none of
which would have had any effect on use, or on the value people were
(not) getting from these costly resources.
There are two ways of gathering collective wisdom of a large number of
employees or customers: (a) Asking mostly closed-ended questions in
written or e-mail surveys, or (b) Interviewing these people one-on-one,
to probe and qualify their answers. If the list of possible
alternatives is small and known with near-certainty, surveys are
sufficient, and cheaper. But if you're not sure you have identified all
the important issue components, root causes, or alternative solutions,
a closed-ended survey will give you misinformation, and probably
convince your employees and customers (when they note that you've
missed the most important components, causes or solutions) that you're
out of touch with what's really happening in the organization. In these
situations, a more expensive personal interview approach is needed.
Surowiecki warns that interviewers need to be carefully trained not to
put their personal spin on the answers they receive during this more
open-ended intelligence gathering. They might want to use Dave
Snowden's 'cultural anthropologist' approach to ensure the results of these interviews are objective, accurate and complete.
What's interesting to me about this process is that the decision-making in the chart above is all made by the 'crowd'.
The 'Solution Team' are really just facilitators -- they gather
information, do research and analysis, and brainstorm solutions and
implement the decisions. But none of these activities requires
executive or management skills, or 'expertise'. Anyone in the company
with decent creative, communication and analytical skills can do these
things. Theoretically, a company with this process in place for key
decisions could operate without management or outside 'experts' at all.
And, theoretically, if Surowiecki is right, the calibre of the
resultant decisions would be greatly improved. Think how much money
could be saved on executive and expert salaries! And how much more
collegial the organization would be without decision-making hierarchy.
It's nice to dream about, anyway.
This approach can even be used to enhance personal decision-making. In
the example of deciding which house to buy, the house-hunters would be
wise to talk with (a) a lot of peers looking for the same qualities in
a home and neighbourhood that they are, (b) many of the residents in
each new neighbourhood they're considering, and (c) people they trust
to assess whether the problem they're trying to solve will really be
solved by buying a new house at all. We are all prone to jump to
conclusions about the real problems, their true root causes, and the
best solutions. The Wisdom of Crowds (even small crowds) can help us
'know better'.
Some other points that came up in our discussion last week that are
worth pondering before trying to tap into the Wisdom of Crowds:
- We all want reassurance that what we believe is right, and
we all relish simplicity. That tends to make us hear what we want to
hear, over-emphasizing opinions that reinforce our own views, and
discounting (or even not hearing) conflicting or complex views. If we
fail to recognize these biases in ourselves, we won't be open to
others' collective wisdom.
- Executives, who are rewarded for making quick decisions
(sometimes even if they're wrong) tend to operate on a 'hypothesis'
basis: When the need for a decision arises, they will draw on their
experience and formulate a hypothesis. At this point they become deaf
to any alternatives. If you want to suggest an alternative, first you
need to convince the executive that his
hypothesis is wrong. Only then will he (or she, though in my experience
women executives are more open-minded) entertain an alternative
hypothesis. Even then, it's advantageous to set up the executive so he
thinks your hypothesis is his idea.
- This all has some far-reaching implications for Knowledge
Management (as I think my intranet example above indicates). If
business is in fact a complex, adaptive system, then it is impossible
to know all of the relevant information before making a decision. In
such systems the best possible answer tends to emerge,
given sufficient time and collaboration, as when a flock of geese
migrate, through collective wisdom, in perfect formation to exactly the
location of their nesting area thousands of miles away. Why don't
optimal answers emerge more often in business? Is this because business
is not so much complex as just complicated, and unduly so? Or is it
just that civilized humans, who see selfish behaviour exhibited
everywhere (and often rewarded), have lost the intuitive skills of
collaboration? Can any static 'knowledgebase' be designed to
facilitate, rather than impede, emergent solutions? What would such a
knowledgebase look like?
- In today's business world, where, as Drucker says, everyone
knows more about their own specialized job than anyone else, including
their boss, we are constantly making decisions, making them alone,
and looking (often fruitlessly) for useful information that can make
the decision-making process less precarious. Obviously we can't employ
the full process illustrated above every time we make a simple
decision, but it's worth thinking about whether finding means to help
workers make decisions faster and more intelligently shouldn't be
Management Job One, and if so what those means might be.
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