Forecasting the impact of market events – whether estimating new product share, predicting payer coverage, or quantifying a competitive threat – is critical to your brand’s success. With reduced budgets, tighter timelines, and smaller sample sizes, how can you produce the most accurate forecasts with as much precision as possible? RG+A’s Wisdom of Crowds approach speaks directly to this need.
Wisdom of Crowds reflects an observation that combining the estimates from people with limited knowledge will often provide a more accurate prediction than any one individual or even a panel of experts. The “wisdom of crowds” effect rests on three critical elements: participants must have diverse opinions, they must make their estimate independent of the opinions of others, and each participant must bring at least some knowledge that applies to the estimate. With a wide range of independent opinions each based on differing levels and amounts of relevant knowledge, the estimates will typically bracket the correct result (some over- and some under-estimated). Averaging these estimate together cancels out the over and under estimates, a result very close to the correct one.
The bottom line with Wisdom of Crowds is dramatically improved accuracy – even with small sample sizes. For example, averaging the independent estimates of 20 respondents will produce a result 80 percent more accurate than the typical respondent.