> Individual humans are smart. Groups of humans are dumb.
Actually, you have that exactly wrong[1].
"Behavioural economists and sociologists have gone beyond the anecdotic and systematically studied the issues, and have come up with surprising answers.
Capturing the ‘collective’ wisdom best solves cognitive problems. Four conditions apply. There must be: (a) true diversity of opinions; (b) independence of opinion (so there is no correlation between them); (c) decentralisation of experience; (d) suitable mechanisms of aggregation."
"Crowds" != "Groups". In a crowd, the individuals behave independently; each person makes their own judgment as to the best course of action and pursues it. In a group, the individuals are constrained to come to a collective decision and implement it.
That difference is crucial. Markets function based on the wisdom of crowds; they work because if one person has the right information but everybody else is dumb, the one iconoclast stands to make a lot of money and force out all the dumb people. Statistics function according to the wisdom of crowds; it works because errors contribute little to the mean, while most people, arriving independently at their conclusion, tend to be closer.
Groups all have to agree on the same conclusion. When this condition occurs, the only conclusion that they can agree on is one that can be communicated to all members of the group, which is necessarily limited by the ability of the weakest group member to understand it.
Both markets and groups are much better at quantifying power differentials than in assessing information objectively and making useful predictions about the future.
This is why groups tend to be dumb. So much energy goes on hierarchical posturing and social signalling that there's relatively little left over for practical intelligence.
Orgs that can break through this can do astounding things. But the successes tend to be more rooted in the values of science and engineering as processes than in market processes.
Historically, every so often you get an org that works as intelligence amplifier and is more than the sum of individual talents.
But this configuration seems to be unstable, and so far as I know no org has ever made it stick as a permanent feature of a business culture.
Of course I was oversimplifying :) In any case, that study removes many of the reasons that groups of humans make bad decisions - which is unfortunately impossible to do in most real-world contexts.
If you want to be more precise, we often make assumptions of people belonging to a group that is not our own. The safest assumption to make is that all other groups are dumb. Ironically, this likely reinforces the problem: Why is this other group assuming our application doesn't have feature XYZ? Of course it does, because we're good at what we do. But obviously they must not be very bright to make such an assumption...
Actually, you have that exactly wrong[1].
"Behavioural economists and sociologists have gone beyond the anecdotic and systematically studied the issues, and have come up with surprising answers.
Capturing the ‘collective’ wisdom best solves cognitive problems. Four conditions apply. There must be: (a) true diversity of opinions; (b) independence of opinion (so there is no correlation between them); (c) decentralisation of experience; (d) suitable mechanisms of aggregation."
[1] http://www.diplomacy.edu/resources/books/reviews/wisdom-crow...