In 1968, the U.S. Navy began searching for the Scorpion, a submarine that had disappeared on its way back to base. The Navy had no idea how far the sub might have traveled from its last known location and so began searching a 20-mile radius of ocean water many thousands of feet deep.

A naval officer named John Craven took a unique approach to the problem. He assembled a team of diverse individuals that included not just submariners but also mathematicians and salvage men. He then concocted several scenarios about what kind of trouble the sub encountered, how fast it was moving, the angle at which it might have descended to the bottom, and so on. Instead of asking the group to consult with one another, he arranged for them to place bets independently on which scenario was most likely to have occurred.

Using a mathematical formula to come up with an average of the group's answers, Craven plotted a location that didn't match any of the individual estimates, but was a kind of collective guess. Five months later, when the Scorpion was found, it was within 220 yards of that spot.

The search for the Scorpion is one of the more complex examples in James Surowiecki's book The Wisdom of Crowds. His thesis, simply put, is that a group of diverse individuals acting independently on their own information almost always outsmart an individual and even an elite group of experts. Part of what makes this idea so fascinating is that it runs counter to everything our top-down business culture has taught us to believe.

Here's an example that's closer to home. Every time you use the search engine Google, you're putting the wisdom of crowds to use. Google's proprietary algorithm surveys Web links and treats every link as a kind of “vote.” It gives more weight to linking pages that are themselves important by virtue of the number of “votes” they get, then aggregates the results into a prioritized list that usually contains exactly what you were looking for.

The underlying mechanics are at work in almost any setting that meets the following four principles: diversity of opinion (everyone has their own bit of information); independence (no one knows what the others are thinking); decentralization (each person has specialized knowledge); and some means of aggregating the results.

The bigger the crowd, the more accurate its judgment, but small groups — like clients or employees — can also be wise. That's an idea revolutionary enough to inspire changes in the way we conduct business.

Sal Alfano
Editorial Director