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Friday, July 29, 2011

Wisdom of Crowds: Post #3--Diversity

Diversity: Engage a group of Marines, housewives, engineers, and dog catchers to address a public policy and you’ll get a much more robust decision than with a bunch of politicians sitting around a table. Why? Diversity of experience (cognitive diversity) and knowledge when aggregated tend to come up with better decisions. In fact, diversity begins to act like a “market” which makes far better decisions than individuals or homogenous groups. This cognitive diversity means that by adding people to the decision-making team who know less than experts but who bring different skills and perspective actually improves the group’s overall performance. Diversity ensures that alternative perspectives are brought to bear on the issue that might otherwise get lost. And the smaller or more formal an organization, the more important the power of diversity is to the process because it lacks the power and magnitude of a large market. All this is to say that a wise, diverse group will outperform a CEO anytime.

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