alkemical
02-01-2007, 11:34 PM
Innovation in the Age of Mass Collaboration (http://yahoo.businessweek.com/innovate/content/feb2007/id20070201_774736.htm)
Innovation in the Age of Mass Collaboration
The co-authors of the recent bestseller Wikinomics explain how businesses across the board can spur innovation by going Wiki
A few years back, Toronto-based gold mining company Goldcorp (GG) was in trouble. Besieged by strikes, lingering debts, and an exceedingly high cost of production, the company had terminated mining operations. Conditions in the marketplace were hardly favorable. The gold market was contracting, and most analysts assumed that the company's fifty-year old mine in Red Lake, Ontario, was dying. Without evidence of substantial new gold deposits, Goldcorp was likely to fold.
Chief Executive Officer Rob McEwen needed a miracle. Frustrated that his in-house geologists couldn't reliably estimate the value and location of the gold on his property, McEwen did something unheard of in his industry: He published his geological data on the Web for all to see and challenged the world to do the prospecting. The "Goldcorp Challenge" made a total of $575,000 in prize money available to participants who submitted the best methods and estimates.
Every scrap of information (some 400 megabytes worth) about the 55,000 acre property was revealed on Goldcorp's Web site. News of the contest spread quickly around the Internet and more than 1,000 virtual prospectors from 50 countries got busy crunching the data.
New Lessons for Old Sectors
Goldcorp was hardly the first company to go open-source. Ever since a loose network of dedicated software programmers built Linux—one of the most widely used operating systems in the world—a growing number of companies have adopted their own open-source strategies. We've all heard about how Amazon opened up its e-commerce infrastructure to build an active developer community of some 150,000 third-party programmers. Companies such as Google (GOOG), eBay (EBAY), and Red Hat (RHAT) have also built businesses on a foundation of mass collaboration.
But Goldcorp isn't a dot-com kind of company. Mining is one of the world's oldest industries, and it's governed by some pretty conventional thinking. Take Industry Rule No. 1: Don't share your proprietary data. The fact that McEwen went open-source was a stunning gamble. And even McEwen was surprised by how handsomely the gamble paid off.
Within weeks, submissions from around the world were flooding into Goldcorp headquarters. There were entries from graduate students, management consultants, mathematicians, military officers, and a virtual army of geologists. "We had applied math, advanced physics, intelligent systems, computer graphics, and organic solutions to inorganic problems. There were capabilities I had never seen before in the industry," says McEwen. "When I saw the computer graphics, I almost fell out of my chair."
Advancing the Technology
The contestants identified 110 targets on the Red Lake property, more than 80% of which yielded substantial quantities of gold. In fact, since the challenge was initiated, an astounding 8 million ounces of gold have been found—worth well over $3 billion. Not a bad return on a half million dollar investment.
Today, Goldcorp is reaping the fruits of its radical approach to exploration. McEwen's willingness to open-source the prospecting process not only yielded copious quantities of gold, it introduced Goldcorp to state-of-the-art technologies and exploration methodologies, including new drilling techniques, and data collection procedures, and more advanced approaches to geological modeling. This catapulted his under-performing $100 million company into a $9 billion juggernaut while transforming a backwards mining site in Northern Ontario into one of the most innovative and profitable properties in the industry.
Needless to say, McEwen is one happy camper. As are his shareholders. One hundred dollars invested in the company in 1993 is worth more than $3,000 today.
Page 2 (http://yahoo.businessweek.com/innovate/content/feb2007/id20070201_774736_page_2.htm)
Innovation in the Age of Mass Collaboration
The co-authors of the recent bestseller Wikinomics explain how businesses across the board can spur innovation by going Wiki
A few years back, Toronto-based gold mining company Goldcorp (GG) was in trouble. Besieged by strikes, lingering debts, and an exceedingly high cost of production, the company had terminated mining operations. Conditions in the marketplace were hardly favorable. The gold market was contracting, and most analysts assumed that the company's fifty-year old mine in Red Lake, Ontario, was dying. Without evidence of substantial new gold deposits, Goldcorp was likely to fold.
Chief Executive Officer Rob McEwen needed a miracle. Frustrated that his in-house geologists couldn't reliably estimate the value and location of the gold on his property, McEwen did something unheard of in his industry: He published his geological data on the Web for all to see and challenged the world to do the prospecting. The "Goldcorp Challenge" made a total of $575,000 in prize money available to participants who submitted the best methods and estimates.
Every scrap of information (some 400 megabytes worth) about the 55,000 acre property was revealed on Goldcorp's Web site. News of the contest spread quickly around the Internet and more than 1,000 virtual prospectors from 50 countries got busy crunching the data.
New Lessons for Old Sectors
Goldcorp was hardly the first company to go open-source. Ever since a loose network of dedicated software programmers built Linux—one of the most widely used operating systems in the world—a growing number of companies have adopted their own open-source strategies. We've all heard about how Amazon opened up its e-commerce infrastructure to build an active developer community of some 150,000 third-party programmers. Companies such as Google (GOOG), eBay (EBAY), and Red Hat (RHAT) have also built businesses on a foundation of mass collaboration.
But Goldcorp isn't a dot-com kind of company. Mining is one of the world's oldest industries, and it's governed by some pretty conventional thinking. Take Industry Rule No. 1: Don't share your proprietary data. The fact that McEwen went open-source was a stunning gamble. And even McEwen was surprised by how handsomely the gamble paid off.
Within weeks, submissions from around the world were flooding into Goldcorp headquarters. There were entries from graduate students, management consultants, mathematicians, military officers, and a virtual army of geologists. "We had applied math, advanced physics, intelligent systems, computer graphics, and organic solutions to inorganic problems. There were capabilities I had never seen before in the industry," says McEwen. "When I saw the computer graphics, I almost fell out of my chair."
Advancing the Technology
The contestants identified 110 targets on the Red Lake property, more than 80% of which yielded substantial quantities of gold. In fact, since the challenge was initiated, an astounding 8 million ounces of gold have been found—worth well over $3 billion. Not a bad return on a half million dollar investment.
Today, Goldcorp is reaping the fruits of its radical approach to exploration. McEwen's willingness to open-source the prospecting process not only yielded copious quantities of gold, it introduced Goldcorp to state-of-the-art technologies and exploration methodologies, including new drilling techniques, and data collection procedures, and more advanced approaches to geological modeling. This catapulted his under-performing $100 million company into a $9 billion juggernaut while transforming a backwards mining site in Northern Ontario into one of the most innovative and profitable properties in the industry.
Needless to say, McEwen is one happy camper. As are his shareholders. One hundred dollars invested in the company in 1993 is worth more than $3,000 today.
Page 2 (http://yahoo.businessweek.com/innovate/content/feb2007/id20070201_774736_page_2.htm)