The ‘Wisdom of Crowds’ theory, as popularised by James Surowiecki’s 2004 book of the same name, is an important—if misunderstood—theory that has influenced a lot of recent online ventures that rely on social networks and collaboration to work intelligently.
For those who want to take advantage of the wisdom of crowds for their own ventures, Derek Powazek (who has worked at least one such site; Technorati) offers a primer on the wisdom of crowds theory and how to successfully implement it online.
The web, with its low barrier to entry and permeable social boundaries, is the ultimate medium through which to explore the finer points of the wisdom of crowds. You’re surrounded by online examples: Google’s search results. BitTorrent. The “Most E-mailed” stories on your favorite news site. Each is powered by wisdom gleaned from crowds online.
You need a few things to enable online crowds to be wise.
For other related information (i.e. how attempts at harnessing collective intelligence succeed and fail) the Wikipedia entry for Surowiecki’s book is a great place to start.