Busting the Myth of Trusted Sources

In the course of their careers most knowledge professionals gravitate towards a small number of sources of information that they trust. They claim, sometimes believe, that these sources provide comprehensive knowledge for them to make their decisions. We question this faith in today’s world of long-tail content.

As we have written earlier, information overload is a problem. Professionals have to compromise on either depth, breadth or costs of the work they do, leading to sub-optimal and expensive decisions. In our continued interactions with customers, we have found that relying on a small number of sources is a common defense mechanism against this problem. For example, some investment managers talk to, or read, only one or two industry analysts, and ignore the rest.

To be fair, we think engaging with these trusted sources is much better than trying to manage the information overload without any help. The individuals — industry analysts, journalists, data scientists — have made more errors in their particular domain than others, and hopefully have learnt from them. Their own sets of trusted sources have been curated more carefully, and their synthesis provides a biased, but thought-out opinion. All this is valuable.

But this is also very dangerous.

A generation ago a few enterprise, journalistic or government repositories contained most of macroeconomic or financial information that mattered. Then Internet came along and to a large extent tore down the barriers to disseminating thoughts. This is when the so called trusted sources gained prominence, and quickly proved their value. In fact access to quality trusted sources became a differentiating factor. This is how larger funds defeated the efficient frontier of research.

Now, however, the figurative center of mass of information is shifting again, this time to the world of Twitter and freelance blogs. It does not cost anything to share or receive information. User generated content is beginning to drive stock markets. Enterprises are beginning to realize that significantly more knowledge is latent in their workforce than has been captured in their knowledge management systems. In this world, trusted sources are losing their value. Individually, very few know what there is to know, even though collectively information generation and sharing has never been more powerful.

Lets put this in numbers. As per Internet Live Stats, after first website was launched in 1991, 3 million websites came up in the next eight years. Today there are 1 billion websites, with about 25% being actively used. Eric Pangburn posted in 2013 that there were are 240 million blogs, with Tumblr alone accounting for 40 billion blog posts. Twitter processes 500 million tweets a day.

In the new world, trusted sources are increasingly being reduced to mere regurgitation of freely available, long-tail information. Not only that: they are also incomplete.

Millions of times every day, our algos have to decide between two different sources that present the same fact. So we know that if we prioritize few high visibility sources, there still are many relevant facts that are not covered at all. Vice versa is not true. If we decide to prioritize long-tail sources, very few facts from the so called trusted sources survive. In short, trusted sources only provide an incomplete picture, and have little to add. They are also the slowest to learn.

Smart money managers are well aware of this. In a recent conversation with manager for multi-billion dollar fund, we offered to take all non-personal email from his inbox and give only two digests a day. He was visibly nervous. While he feels harassed by the unsolicited emails he gets, he still painstakingly goes through them to make sure he has not missed out anything. With Coseer he does not have to, but without any such cognitive tool smart money managers have learnt that the so called trusted sources are only a starting point.

In conclusion, trusted sources have outlived their utility, and smart professionals know this. They are strategizing new ways to manage the problem. Opinions from other individuals will always be valuable, but professionals have to learn to manage opinions from a large crowd as well. We are passionate about democratizing cognitive tools to help the situation. If you are also excited, please follow us at Facebook, LinkedIn, Twitter, or Google Plus.