The Power of Averaged Intelligence

The Web is showing us that in a great many areas of human endeavor the best intelligence lies in the network as a whole, rather than any one element.

'The Origin of Wealth' by Eric D. Beinhocker is full of wisdom. In it, Beinhocker challenges a lot of the principles of traditional economics. Like, for example, that markets are predictable and that there is some sort of perfect equilibrium. (If markets are indeed predictable then most economists should be fired because of their awful predictions.)

Beinhocker believes that we live in a world of unpredictable complexity that is evolutionary in its behavior. However, while you can't predict the future, you can seek to be more fit and flexible, so as to adapt quickly to what the future throws at you.

There are hardly any companies that achieve excellence over the long-term, according to Beinhocker. In fact, most go extinct. This leads us to a “brutal truth” about companies. “Markets are highly dynamic, but the vast majority of companies are not.”

I recently had the privilege of working with a company called Vanguard. You've probably never heard of them. (They never advertise on TV.) They are an investment management company that has well over a trillion dollars under management. (That's a lot of money.)

My understanding of the Vanguard approach is that investing in individual stocks is like gambling. Instead, you invest in the market as a whole and invest for the long-term. That's because over the long-term the market tends to rise. Vanguard focuses on keeping costs as low as possible, meaning it has really low fees. You retire richer with Vanguard.

I used to be a big fan of the heroic individual. I used to have contempt for the crowd. But the Web changed all that. As I watched what succeeded and failed on the Web, it struck me that nearly every major website that succeeded had one thing in common.

Google, EBay, Amazon, You Tube, MySpace, Facebook, etc., all leverage the intelligence of the customer. These, and countless other successful websites, have ways to find the average of customer opinion and behavior. They allow us to discover in a systematic way what people like us think about a product, service, or idea.

The network is wise and the more we embrace and understand it, the wiser we become. We may not be able to predict the future but we can become fitter so that no matter the future throws at us, we can adapt.

So, how do we do that? One way is by using the Web to have more friends of friends. It has been proven that if you're looking for a new job, you are more likely to get that job through a friend of a friend than a friend.

Fitness in a network is about making connections, getting linked. The organizations that are fittest in a network are those that actively link out and let others link in.

About the Author

Gerry McGovern, a content management author and consultant, has spoken, written and consulted extensively on writing for the web and web content management issues since 1994.

The Power of Averaged Intelligence

The Web is showing us that in a great many areas of human endeavor the best intelligence lies in the network as a whole, rather than any one element.

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