I usually have a pile of books on my night table waiting for me to finally get around to reading them. But the ones that, by intention or accident, end up at the bottom of the pile can sit there for weeks or months before I finally get around to cracking them open.
In many cases I wish I hadn’t waited. And one of these cases is The Wisdom of Crowds, by James Surowiecki. I just started reading it and although I’m only a quarter of the way through, it’s already got me thinking about a lot of stuff.
With a fascinating array of current and historical cases from politics, business, economics and other fields, Surowiecki argues that large, diverse groups of people are better at predicting results and outcomes than traditional analysis, research, surveys or even the most knowledgeable panel of experts. It’s not even important that the group include a sizable portion of experts. In fact the evidence shows that the group makes a more accurate prediction when it includes many people with little or no knowledge of the topic.
A key factor leading to an accurate outcome is not to do what most market research does. Most market research asks people to say how they think they will behave individually when faced with a particular decision or choice, for example the choice to purchase a new product or not. In Surowiecki’s examples, the question isn’t what you would do, but what you think everyone would do. So the question might be, do you think this product will be a success, or become the biggest selling brand? Or what percentage of the movie going public do you think will go to see this film in the first week?
Obviously, if the wisdom of the crowd is more effective in making predictions like this, it raises questions about how companies have traditionally conducted market research. When launching a new product, a company will typically conduct a quantitative survey, putting a product concept, the actual product, or both, into the hands of a statistically valid number of consumers and asking them how likely they would be to purchase. Much money and time is spent determining and recruiting a specific target audience that would come into question for the product.
Based on the wisdom of crowds thinking, the survey sample would require only a large and diverse number of people, not a circumscribed target. And the research wouldn’t ask them to predict their own purchase behavior, but to judge as best they can the behavior of everyone. Conceivably, a marketer might not even need to go to the expense of asking consumers. If he had a large and diverse enough employee base, he might just ask the company’s employees to say how successful the new product would be, and still get a more accurate prediction than conventional consumer research.
If anyone knows of marketers that have applied Surowiecki’s thinking to their marketing, I’d love to hear about it.
But perhaps I’ll come upon some good cases as I make my way through the rest of this fascinating book. I’ll keep you posted if I do.