Collective intelligence is based on the theory that two heads are better than one. In other words, certain kinds of problems can more effectively be solved if a group of people collaborate and develop consensus about the issue. This consensus can be explicit, as in direct collaboration, or it can be implicit as part of a coordinated collective intelligence initiative.

James Surowiecki's book, the Wisdom of Crowds, describes how collective intelligence can be used to solve practical business problems. The following passage is taken from knowledge management expert, Dave Pollard:

For those who haven't read The Wisdom of Crowds, a 'qualified crowd' is one that is (i) intellectually diverse, (ii) independent and objective, (iii) each member has access to unique knowledge, (iv) each member is basically informed, and (v) each member is appreciative of (cares about) the problem or decision at hand. Surowiecki identifies five things that qualified crowds can -- if asked appropriately -- be very good at:

• ascertaining (all the) pertinent facts surrounding an issue
• predicting outcomes
• making a decision among a discrete set or finite range of alternatives
• determining an optimal process to follow (in simple or complicated situations, but not complex ones)
• assessing causality (in simple or complicated situations, but not complex ones)