Once in a while, the world witnesses a tectonic shift in the ways humans are able to live and interact with one another. First, humans learned how to craft the wheel- allowing them to travel, trade, and exchange culturally with their neighbors. Then we fast-forward tens of thousands of years later to witness the invention of the printing press, a machine that allows knowledge to be disseminated widely and cheaply. In the 20th century, we see the most recent manifestation of this phenomenon. This is the genesis of the Internet.
The internet has served as the next step in the unstoppable wave of democratization of knowledge. With a computer and an internet access, a person has access to everything from cooking tutorials to financial models. No longer will a person have to pay thousands of dollars to have their portfolio managed, or be part of an elite group of investors, or even have to ‘know-the-right people’ personally. Instead, the internet allows for a phenomenon called Wisdom of the Crowds. The theory is that a group of people will be able to better decide outcomes than a few, even if those few are ‘industry experts’. Time for a fun example.
When people at a county fair were asked to guess the weight of an ox, the crowd accurately guessed the weight of an ox when their individual guesses were averaged, and, in fact, the average was closer to the ox’s true butchered weight than the estimates of most crowd members, and also closer than any of the separate estimates made by cattle experts. While there are those who would profit from the privatization of knowledge (i.e. insider trading), the swell of the internet in just 20 short years, and the exponentially growing information held within it leads me to only one conclusion….the future will not be powered by the elite few who have guarded knowledge tightly for most of human history, but instead the engine of human innovation will be fueled by the ‘people,’ empowered by online tools that allow them access to the forums of human innovation previously only accessible to a particular group of the population.
What are your thoughts? What are the future prospects of the democratization of knowledge? What does it mean for innovation?
Coming soon……The People Powered Future:What Crowdfunding means for the Finance Industry.