The official WikipediadefinitionCrowds matter! Imagine misleading a handful of people as opposed to a crowd. Easier right. When the crowd decides what’s good for them, there’s more power in their decision. Wisdom of crowds is a conglomeration of varied experiences and knowledge backgrounds of all sorts of people. Therefore, wisdom of crowds is never equal to an individual.

A market judgment of crowds is more reliable than gratifying advertisements. Let us look at a few examples:

Firefox: Most people use Firefox for their browser. The masses have used it, benefited from it, liked it and hence spread the word. Hence, an open source company without many resources could stand to the might of a much larger company with huge resources at its disposal.

Recommendation engines: Amazon has pioneered this concept. Again, it essentially boils down to – since multiple people who read this book also bought this other book and since you are buying the first book, chances are high that you will find this other book interesting as well. Now web 2.0 companies are taking this concept further where they are building new customer buying experience on recommendations from the crowd. Check out Baynote, which is called “Amazon recommendation service on steroids”.

Review sites are gaining popularity. People want to plan their next vacation hot spot, book their next table in a hotel, buy clothes & accessories to even gadgets, based on popular review sites & the opinion of the crowds. Quickly think & tell me the names of three video sites, and I bet YouTube is one of them you named. See, the crowds like it and so it’s that popular.

Idea generation & validation: Again operates on the same concept that a crowd essentially can take a basic idea to next level and good ideas will always benefit from crowd action. Checkout Spigit, spigit simulation takes ideas through three lifecycle stages before they graduate and move on to become successful in the real world. The three stages are called Incubation, Validation, and Emergence.

So, Wisdom of Crowds can be summed up as bundle of private judgments turning into a collective decision and hence crowd’s power is greater than sum of mass. Now the question could be- can wisdom of crowds be process-ized? Hmm, interesting, maybe another blog topic.