The Profit of Diversity and The Wisdom of Crowds

I firmly believe that the reason you should be diverse is it makes you smarter. Diversity makes a business more profitable. There is a bottom line positive impact in business that can be achieved by surrounding yourself with people who do NOT agree with you. Yes look for shared values in hiring people, but also be sure to look for diversity of opinion and thought and backgrounds. Diversity is the most profitable thing to do.

On this topic, there is a great post on O’Reilly about the Wisdom of Crowds. Three points emphasized below, although you really should read the entire post, are (note – emphasis added on all three excerpts by me).

One of James Surowiecki’s key observations in his book of that name was that a diverse collection of independently-acting individuals produce the wisdom of crowds effect. To the extent that those individuals reinforce each other’s opinions rather than preserving independent decision making, they tend to undermine that group intelligence.

and

The problem: everyone was in more or less the same stocks, with the same offsets, so this strategy, a winner when only a few people were using it, became exposed to much more systemic risk merely because the technique had become so widespread.

and

In thinking about the future of collective intelligence, we need to make sure that we not only think about systems that lead to convergence of opinion, but also ones that ensure divergence, and fresh inputs. The surest way I know to get this is not to pay attention to the breaking news in your own pond, but to find the next community over, and to create new cross connections. Once the connections are well established, move on.

One of the things we talk about internally is that in a competitive
world we should not need quotas. The main reason for diversity, in
business and in thought, is that it is more profitable. Diverse
companies, if executed correctly, should be more profitable companies
as they are more intelligent. As a group. Diversity is wise.

On a side note, it is the diversity of ideas and input that makes me attend eTech every year. Hope to see y’all in March 08!