The central premise of James Surowiecki’s The Wisdom of Crowds is that “decisions taken by a large group, even if the individuals within the group aren’t smart, are always better than decisions made by small numbers of ‘experts’”.
Dave Pollard starts his review:

James Surowiecki writes the financial column in The New Yorker, so even before his book The Wisdom of Crowds came out I knew he did good research, and wrote well. But the book exceeded my high expectations: It is the best-written book I’ve read in years — clear, clever, accessible, and jammed full of brilliant, original thinking and compelling, supporting stories and reference.

He then goes on to summarise the key points in a very accessible, readable way, looking at “the taxonomy of three types of problems that individuals and groups try to solve”, the qualities that a group must have in order to be able to return a reliable ‘collective answer’, and the implications of Surowiecki’s conclusions.

The implication of this is that business executives, expert consultants, investment analysts, egomaniacal doctors and heads of state are not competent to make important decisions related to cognitive, coordination or cooperation problems, and should always defer to the collective wisdom of large diverse groups when such problems arise.

Daniel Davies writes on Crooked Timber about some of the problems he sees in Surowiecki’s work starting with his observation that “there is quite a lot of material in [The Wisdom of Crowds] which, while entertaining, is pretty tangential to the real underlying point”. He then goes on to say

So when you strip away these ephemera, is there anything left? Well yes. … the important thing to note is that [The Wisdom of Crowds] does, at its core, describe a genuine phenomenon. In some circumstances, groups can outperform individuals at some kinds of decision problem. For interesting values of N, N heads are better than one.

The discussion in the comments section to the post then goes on to examine real life examples and counter-examples, particularly that of Google’s PageRank which can be seen as a form of group decision making through virtue of the fact that the more people link to a page, the higher a PageRank it has and therefore the higher in the search results it shows up.
Carla Verwijs additionally points to an interesting Working Knowledge article by Robert B. Cialdini which draws from work by Patrick Laughlin et al at the University of Illinois and covers similar ground as Surowiecki:

Group consultation has long been lauded as the best process for problem solving in organizations because it results in a wider range of solutions than most individuals can design on their own … the approaches and outcomes of cooperating groups are not just better than those of the average group member, but are better than even the group�s best problem solver functioning alone
… Far too often, a leader�who, by virtue of greater experience or wisdom or skill, is deemed the ablest problem solver in a group�fails to ask for input from team members. Equally dangerous, members of a team often relinquish problem-solving responsibilities to the leader and fail to provide her with important information for moving forward on a decision.

What is missing from The Wisdom of Crowds discussion, but which is touched on briefly in Cialdini’s article, is how this can be used in a business setting.
If we accept that groups have the power to make good decisions, the next step is to consider firstly how to create the right sort of group, and secondly how to encourage participation in the decision making process.
We already have the tools that are required to aggregate opinion – blogs and RSS do this on a daily basis in a variety of settings, from corporate to public sector to personal life. The next step is to go from simply aggregating available feeds, (which may not form a representative cross-section of opinion), to creating a socially balanced and dynamic group within which individuals feel empowered to make their voices heard, even when dissenting from what appears to be an emerging consensus of opinion.
We’ve all been in situations where we either disagreed with an apparent consensus, or had data that conflicted with it, but felt unable to speak up. For a crowd to work effectively, dissenting voices must be heard because it is through dissent and discussion that we challenge individual and group assumptions, and thus progress towards a valuable conclusion.
In order to create a group where individuals feel free to dissent, we need to build trust not just that dissension will not be punished but also that such voices will be taken as seriously as those who agree with the majority. Without that trust, the crowd collapses into groupthink which benefits no one
These problems are social problems and the solution requires a rethink of how organisations communicate and a restructuring of the tools used to do so. Simple social software tools are effective in providing individuals with a voice, aggregating those voices, and creating positive feedback loops in the decision making process.
Not only are they effective, they are flexible too. The habit of large corporations to create steering committees or workgroups in order to address problems frequently results in nothing more than a greater number of tedious meetings to snooze through. Once a decision has been made or a project completed, the committee or group disbands and the cycle starts up again on a new project.
This top-down imposed grouping of ‘experts’ who are expected to come up with solutions often misses out on the real knowledge which is distributed throughout the company. A more social solution, where people can pitch into any discussion which interests them, instead of having projects assigned to them, can take advantage of everyone’s wisdom, not just the information held by individuals who happen to be visible enough to the management to be picked for the steering group.
So, the wisdom exists, undoubtedly. The tools to share and exploit that wisdom exist. What is missing from many corporations is the decision to use those tools. Hopefully, Surowiecki’s book will persuade some crowds to act wisely and make that decision.