Digital Transformation – Part II: Collective Intelligence Is the Game Changer

The science fiction writer William Gibson once astutely observed, “The future has already arrived; it’s just not evenly distributed.” As described in last month’s blog, our future is a digitally transformed world that will usher in an entirely new human epoch where the dominant top-down hierarchical structures of the first 10,000 years of human civilization will rapidly give way to the far more powerful peer-to-peer network architecture that is now possible, practical, and increasingly more pervasive thanks to the proliferation of digital technology.

However, despite the increasing evidence of the ascendance of hyper-connectivity, our rapid transformation to a fully networked world remains hidden in plain sight. Although we use our connected iPhones to do Google searches as we step into an Uber car on our way to close a deal we made on eBay, we are in many ways oblivious as to just how radically the world is changing around us.

Our tools may be networked and digital, but the world we carry around inside our heads is still very hierarchical and linear. It’s an unsustainable situation, and we know how this ends: The future always wins, and it’s just a matter of time before the future will become very evenly distributed. 

The Power of Many

The prime distinction between hierarchies and networks is that hierarchies are designed to leverage the “power of one,” while networks naturally enable the “power of many.” That is why networks are so much more powerful. Perhaps you may be thinking, if networks are so superior, why is it that hierarchies have shaped our social architecture for all this time?

The simple answer is, until the digital technology revolution, we had no way to effectively bring people together into cohesive real-time networks. In the absence of this capability, the best we could do to coordinate the activities of large numbers of people was to build sophisticated hierarchical structures. The fundamental assumption underlying what was once the greatest human organizational innovation is that, by leveraging the individual intelligence of the elite leaders at the top, the whole organization is smarter than it otherwise would be if people were left to their own judgments. And for many centuries, this supposition was true.

However, the current technology revolution has spawned a new and very different innovation in organizational structure that has completely nullified this centuries-old assumption. In the hyper-connected network, the smartest organizations are not the ones with the smartest individuals, but rather those with the capacity to rapidly aggregate and leverage their collective intelligence.

What makes networks so superior is that they are distributed structures that are far more resilient because, unlike centralized structures, distributed structures don’t have single points of failure, which are the Achilles’ heel of command-and-control organizations. If you can disable a leader in a hierarchy, you can often disable the whole organization.

This is not so with networks. Instead of leveraging the individual smarts of an elite few, networks leverage the collective intelligence of everyone in the distributed system, thus eliminating single points of failure in complex organizations. This eradication is the great game changer and, arguably, the single most important attribute of digital transformation.

The Wisdom of Crowds

In his seminal book, The Wisdom of Crowds, James Surowiecki provides numerous examples of where, under the right conditions, distributed groups are highly intelligent and consistently outperform even the smartest individuals among them.

He describes how the sports bookmakers at the Mirage assure the reliable profitability of the betting operations at the Las Vegas hotel by relying on the collective judgments of the gamblers to set the betting lines, how Linus Torvalds defied logic by introducing the phenomenon that has come to be known as crowdsourcing to build the highly successful Linux operating system, how the World Health Organization rapidly deployed a global networked communications structure to rapidly solve the SARS threat before it could spread to pandemic proportions, and how Google, a late entry into a crowded field of upstarts, established quick dominance of the search engine market when a pair of Stanford graduate students discovered a way to use the collective intelligence of the users to rank the pages.

Despite these compelling examples, tapping into the wisdom of the crowd is more the exception than the rule. Perhaps that’s because accessing collective intelligence is not as easy as it may appear. There are many leaders who feel that they are tapping into this resource by gathering different perspectives into a room and managing a spirited discussion among the multiple points of view before making an executive decision. While they may be well-intentioned, this is not how collective intelligence works.


Surowiecki specifies four conditions that are necessary to access the wisdom of the crowd: 

·     Diversity of opinion: Having different perspectives—even eccentric notions—broadens the available information, provides the capacity for evolving ideas, makes it easier for individuals to be candid, and protects against the negative dynamics of shortsighted groupthink. 

·     Independent thinking: Each individual is free to express his or her own opinions without editing and without any pressure to conform to the beliefs of others in the group. Surowiecki makes the point that “paradoxically, the best way for a group to be smart is for each person in it to think and act as independently as possible.” 

·     Local knowledge: To truly access collective intelligence, the group must be able to draw upon specialized and localized knowledge because the closer a person is to the problem or the customer, the more likely he or she is to have a meaningful contribution. 

·     Aggregation mechanisms: A distributed system can only produce genuinely intelligent results if there are processes or algorithms for integrating the content of everyone’s observations and opinions.

The Importance of Aggregation Mechanisms

Without all four conditions, accessing collective intelligence is not possible. That is why the leader who gathers different perspectives into a lively discussion is not tapping into the collective wisdom of the group.

Although he or she may have access to multiple perspectives and have input from people with extensive local knowledge, chances are organizational politics is interfering with true independent thinking and when the leader is processing the consolidation of the information, there is clearly no aggregation mechanism. Google, on the other hand, has all four attributes.

The billions of users assure diversity of opinion as well as sufficient local knowledge, people are free to exercise individual choice of the pages to view, and sophisticated algorithms serve as highly effective aggregation mechanisms.

Of the four conditions, perhaps the most important is the use of aggregation mechanisms. This is why so much of social media is dysfunctional. Popular sites such as Facebook and Twitter have the first three attributes, but are clearly devoid of aggregation mechanisms.

And so, while we have diversity of opinion, independent thinking, and a great deal of local knowledge, without a way to aggregate the different contributions, we have a cacophony of chaos that divides us into myopic tribes and reinforces a highly polarized climate in which compromise and, even more so, consensus becomes impossible. This is the dark side of our hyper-connected world.

The Great Challenge

The great challenge for social media sites going forward is to become platforms that contribute to the best—and not the worst—that humans have to offer. To do so they need to find ways to develop sophisticated aggregation mechanisms that are capable of accessing and leveraging the collective intelligence of their users to transform tribal positions into innovative solutions that promote the common good. Creating this collective intelligence capability, while admittedly not easy, is the greatest contribution that social media sites could provide humanity for building a better future.

If we are to create this better future, we will need to change the world we carry inside our heads—a world that has been ingrained since the first day we stepped into a schoolroom. There we learned that human intelligence was an attribute of individuals and that knowledge is advanced through a competition of ideas. There is nothing in our educational histories that has prepared us for a world of networked intelligence that has suddenly actualized what used to be a platitudinous sentiment: Nobody is smarter than everybody. 

We hold onto old mindsets about human intelligence because, as Surowiecki points out, “One of the striking things about the wisdom of crowds is that even though its effects are all around us, it’s easy to miss, and, even when it’s seen, it can be hard to accept.” Simply put, the phenomenon of collective intelligence has been hidden in plain sight because it defies all our beliefs about how intelligence works.

But whether we believe it or not won’t matter for much longer because we are on the threshold of one of the most consequential events that will reshape the human experience and accelerate the evolution of both human and artificial collective intelligence: the connection of all humans and things via the Internet of Things (IoT). More on this in next month’s blog.



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