The Wisdom of Crowds... "Is There a Bubble and Will It Burst?" That's the provocative question posed in Cushman & Wakefield's full-page advertisement in last Wednesday's Wall Street Journal (Sep 15, 2004). Readers are asked to fill out an online survey. (After filling out the survey, you can read comments left by previous respondents.)

So why would C&W ask the public to make real estate predictions? Here's my theory. Somebody at C&W read James Surowiecki's fascinating new book, The Wisdom of Crowds. It turns out that large groups of people can make smart decisions -- even smarter decisions than smaller groups of experts.

As Surowiecki writes, "A small group of people, no matter how intelligent, simply will not be smarter than [a] larger group." He doesn't argue that expertise is not valuable. But even groups of experts can make poor decisions. (Consider the sequence of events leading up to the Challenger and Columbia space shuttle disasters.)

What makes a smart crowd? Surowiecki argues that smart groups must be independent, diverse and decentralized. "Diversity and independence are important because the best collective decisions are the product of disagreement and contest, not consensus or compromise."

"Paradoxically, the best way for a group to be smart is for each person to think and act as independently as possible." That's hard to do when companies stress the value of "team players." So how does your company make market predictions? Do you incorporate the opinions of outsiders?

--Peter Pike