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The Wisdom of Crowds implies the amalgamation of information/ideas/guesses in groups, that are regarded as better, compared to that could have been put forward by any particular member belonging to that group. The theory came into existence with Francis Galton’s discovery that a crowd of a particular country together did a much better guess of the weight of an ox, when their guesses were averaged, in comparison to the guess of all the members taken individually The advantages of wisdom of crowd is attributed to be due to following factors: Cognition: Individual thinking and opining are much faster compared to the contemplation of experts or expert committees, which offer many a times biased decision, out of each other’s influence or under external influence. Diversity of opinion Independent opinions: Not influenced by other’s opinion Decentralisation: drawing opinion on local knowledge Aggregation: Assembling all individual decisions and leading to a collective decision Trust: Every person has a trust on collective group and respects it's decision. The reasons for failure of wisdom of crowd and strategies to combat: 1. Homogeneity/Lack of diversity: There has to be enough diversity to generate much of variance in thought process and private information 2. Centralization: The opinion must be derived from local knowledge, rather than a centralized controlling factor. 3. Division/Lack of dissemination of information: There needs to be free flow of information from one subdivision to another, lack of which can lead to failures, such as in 9/11 attack, lack of information from one to another subdivision led to failure of intelligence in prevention of such attacks. On the contrary, free flow of research information on SARS virus and its isolation, without any central control led to better curb on viral infection. 4. Imitation: The focus should be to make right decisions based on the current choices, rather than looking for any similar kind of decisions in the past and imitating it. 5. Emotionality: Emotional factors , such as togetherness can lead to peer pressure and members get influenced by each other and create collective hysteria. So the members should be divergent, without significant peer pressure. Application of Wisdom of Crowd in real world: Prediction markets: one of the most common application is that of prediction market, which creates speculative or betting markets, based on common questions, such as “who do you think, will win the polls’’. The current market values are indicators of probability of the event. The best example is Betfair, which is world’s biggest prediction exchange, with a very high trade volume, based on collective prediction. Many web based quasi-prediction market companies make use of this phenomenon to offer predictions based on things like sporting events, stock market etc. Prediction marketing principle is also being used in project management software to enable the team members to predict it’s real time deadline and probable budget. Delphi methods: The Delphi method is a kind of planned and interactive decision, based on a panel of independent experts. The selected experts , answers questionnaires in few rounds. After each round, a moderator provides summary of all the expert opinions. The participants are encouraged to modify their answers, in light of other answers. The range of answers decrease in the process and lead to convergence towards correct and better answer compared to individual answers. Human Swarming: It is enabled using software such as UNU collective intelligence platforms, in which groups of networked users can collectively respond to questions, generate ideas and make collective predictions. Studies have shown that human swarms perform better than individuals across a number of real-world predictions. Stock Markets: Wisdom of crowd aspect of stock markets enables decision makers (e.g. firms’ managers, capital providers, regulators, or central bankers) to use stock markets and their own information for a large scale predictive market.

With reference to Weight of Ox, Galton discovered that average guess was awfully close to the actual weight. Sporadically, it makes sense to go with guess from crowd intelligence, specifically when there is no scale, or when the measurement is expensive or when it is time-consuming for accurate measurement. Few considerations and points to be factored before we rely on this method would include the below pointers: Diversity of opinion Independence of opinion Trusting the group to be fair in terms of giving the opinion Should be cautious of Groupthink Consideration on activity time Distribution of expert panel is important to avoid dominance and skewness Diffusion of responsibility We still use similar versions of Wisdom of Crowds in organizations. Ref 1: When we do Story Point Estimation in Agile development During development, it is critical and vital to plan budget, time and resource required to complete the module in every sprint. Entire project is broken into different levels and function point analysis and story points is assigned to each user stories. Story point estimation gives rough estimation (more like a guess) for the product backlog items with relative sizing. This is a comparative analysis. Key estimators include developers, testers, scrum master, product owner and other related stake holders. Some of the common estimating methods are T – shirt Sizing Using Fibonacci Series Animal Sizing Typical measures used in T – shirt sizing comprise XS, S, M, L, XL, XXL; In Fibonacci sequence measures includes numerical 1,2,3,5,8,13,21,34,55, etc.; In Animal Sizing team uses Ant, bee, cat, dog, lion, horse, elephant, etc. It’s fun to use animals instead of numbers Based on the efforts required, points are assigned for the stories during planning. Quick and effective way of using crowd intelligence while doing story point estimation. Ref 2: Delphi interview technique This method relies on expert panels decision, considering opinion from experts more like that of getting crowd intelligence in wisdom of crowd Ref 3: Group Decision Support System (GDSS) Many organizations use this method for idea generation, to select optimal solution, for voting and so on. By using this technique, it easy to arrive at solution for complex problems Other effective methods and applications includes below, Brain storming Nominal group technique Devil’s advocacy Fish bowling Didactic interaction Closing quotes to go with Wisdom of Crowd.