Wisdom of the Crowd

Here’s how, with the right conditions, crowds of customers can provide amazing insight into customer discovery and R&D.

James Gamble
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July 7, 2022

How to use the crowd to your advantage

In 1906, while visiting a livestock fair, Francis Galton came across a startling observation. A crowd was guessing the weight of an ox and while no individual correctly determined the weight, the average of all guesses was accurate to less than a percent. With the volume of information today, the power of the crowd is incredible: By understanding these characteristics and conditions, startup companies looking for customer discovery and product revision can find themselves with a strong edge over competitors. 

The first condition of the crowd is their independence. Members of the crowd are not biased by other members, and are unable to sway the collective judgment. Inherent biases that form within a group's research and development of products and services can be mitigated. Because of this, independence is important to maintain. People are also social, so systematic biases must be thoroughly accounted for. 

Similarly, diversity of opinion and experience benefits the crowd in the volume and differentiation of ideas and perspectives. Highly specialized individuals with extensive knowledge in the same field can create redundancy in knowledge; with a diversity of both fields and expertise, novel perspectives come easily. Ensuring diversity within the crowd is also an important goal for research. By understanding the different opinions that varied crowds have can, customer discovery develops and your product can be catered to an expanded group. It’s also important to bear in mind that while larger crowds form diversity naturally, maintaining diversity in smaller groups is essential to utilizing its full potential. 

Decentralization is the system which allows individuals to gather knowledge from their own experience and knowledge. While it’s tempting to influence the crowd towards a certain idea, the crowd will provide ideas for your company far more varied when decentralized. Linux is a great example of this; with an open source database, any person can look for bugs and issues and try to solve it themselves.

The wisdom of the crowd is a force both powerful and difficult to control. Without proper aggregation, the information provided from the crowd is useless. The best solution possible from a decentralized crowd can get lost in the sea of solutions. An important aspect of aggregation is keeping the crowd independent, diverse, and decentralized while organizing the useful information from the rest. A popular model of this in both startups and large corporations is crowd competitions. Dunnhumby’s Shopper Challenge is a fantastic example of this: providing an incentive in prize money and clear quantitative evaluation, the company’s final solution had an improvement of over 100%. 

When looking at the crowd, it is important to understand the benefits they provide and to be cautious about the limits they have. Only after ensuring independence, diversity, and decentralization of the crowd can they be truly utilized. If done properly, you can experiment with numerous models, develop customer discovery and gain previously unavailable insight.

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