Crowdsourcing – Wisdom or Madness?

According to Nietzsche “Madness is rare in individuals, but in groups, parties, and nations it is the rule.”  James Surowiecki’s book “The Wisdom of Crowds” has popularized the opposite concept. Free market capitalism (Adams Smith’s “invisible hand”) and democracy are often used as examples of the wisdom of crowds (or the madness of crowds depending upon one’s viewpoint). How can we determine if a particular crowd might be wise or mad? Diversity of opinion and perspective coupled with members of the crowd having no exposure to the group opinion before forming their own are the keys to a wise crowd. Eliminate either of these and there is risk of the crowd going mad.

With this information how can you use groups to make better business decisions?