by Jim Heskett
Are large groups of reasonably informed and motivated people able to make better decisions than a small group of experts? James Surowiecki, in his recent book, The Wisdom of Crowds, reports on a diverse body of work that suggests that they are. If the researchers whose work he chronicles are right, it could have profound implications for the role of leadership in organizations. And it should provide some comfort to all who, like Americans this month, vote to elect their leaders.
In addition to being reasonably informed and motivated, the "crowds" in Surowiecki's title, to be most effective, have to have three characteristics: diversity of points of view, independence from each other's opinions, and decentralization (with access to and the ability to draw on "local knowledge"). And they have to have some kind of mechanism for aggregating "private judgments into a collective decision." In a variety of situations researchers have found that the median view of members of a crowd is more accurate than all but a handful of individuals, and that no individual is able consistently to make decisions superior to those of the crowd. Large groups of people have been found to be better than a few experts at everything from estimating the true magnitude of things (as in guessing the number of jelly beans in a jar) to diagnosing causes of problems (as in determining that the O-ring seals were the primary cause of the Challenger disaster) to predicting outcomes (through, for example, market-mediated trading systems, so-called "decision markets," for predicting the outcomes of things such as presidential elections and even potential success in war).
Taken as a body, it may be possible that the findings of these studies could help us understand why some organizations are more successful than others, why organization size can matter, why decentralization and diversity works, and why lines of communication that enable members at all levels of an organization to make their views heard are so important. If this is the case, why is so little attention paid to this kind of research by corporate leaders? And what does it say about the true nature of effective leadership?
If the essence of leadership is, as my colleague John Kotter maintains, the ability to achieve "extremely useful" change, just what does this research say about how such change is best achieved? Does it suggest one more reason why we should put aside the concept of the imperial leader whose wisdom is questioned only at one's risk? What does it say about the need for leadership behaviors that foster learning, communication, and involvement from the bottom to the top of an organization? Is it the best argument yet for the idea of diversity, broadly defined, in organizations? Or is it a utopian dream forged in the laboratory by organization theorists in support of the mantra of decentralized management and its effectiveness—one which flies in the face of the often-expressed need to have everyone in the organization "on the same page?" What do you think? 
To read more:
James Surowiecki, The Wisdom of Crowds: Why the Many Are Smarter than the Few and How Collective Wisdom Shapes Business, Economics, Societies, and Nations (New York: Doubleday, 2004)
John P. Kotter, A Force for Change: How Leadership Differs from Management (New York: The Free Press, 1990)