Want to tap into new business? The old way was to brainstorm, but that's so last year. Today we set up reward-based 'ideagoras' - effectively a 'mash-up' management strategy. And it works.
At the end of the 1990s, Rob McEwen was worried his company was heading for the rocks. His mining company Goldcorp had a vast stake at Red Lake in Northwestern Ontario, Canada but was extracting far less gold than neighbouring mines and cost too much money.
McEwen felt there was a lot more gold waiting to be discovered. But at a brainstorming session to work out how to find it, the company geologists seemed to be out of ideas. Could he find other geologists who might have better ideas?
'I thought: how do I expand the audience?' McEwen recalled as he talked about Goldcorp's low period at the X-Prize innovation conference last year. Soon after, McEwen went to a seminar at the Massachusetts Institute of Technology (MIT) where one of the presentations was on Linux and open-source software. He thought that if it was possible for people around the world to collaborate to build an operating system, he could tap the minds of thousands of geologists by going global.
'We asked the world where we're going to find the next six million ounces of gold,' McEwen says. McEwen then did what was unthinkable then in the gold-mining business: open up the data to the world.
'I hadn't grown up with the industry, so came in with a different perspective,' McEwen explains. Goldcorp announced on its website 'our Challenge will introduce you to a very high-grade gold deposit...the Challenge is designed to stimulate a global brainstorming within the industry...we invite you to examine this data, to pick out the important clues that might lead to the discovery of another high-grade orebody within the Red Lake mine property'.
Goldcorp mailed out CDs containing 400MB of data. 'Four hundred people from 50 countries came in with an incredible smorgasbord of ideas,' McEwen recalls. The winners were two competing geological consulting firms from Australia. 'Neither group had ever been to Canada. They were waiting to present to a client but the client was backed up and they were waiting in reception,' McEwen.
While waiting around, the geologists not only came up with ideas but put together a video presentation that McEwen used to show investors. For around $600,000 in prize money, Goldcorp found around $3bn in gold and now claims that its Red Lake location is one of the lowest-cost mines of its type.
One of McEwen's neighbours in Canada, Professor Don Tapscott of the University of Toronto, used the Goldcorp story as one of the inspirations for his book 'Wikinomics', which describes how companies are beginning to throw open their doors and take input from a much wider range of sources.
In effect, they are mashing up the corporation by making use of skills and knowledge from anyone who cares to help. 'Social networking is becoming social production. It is no longer about hooking up online or creating a gardening community. It is becoming a new mode of production and it is beginning to change the way that we innovate. This is changing the deep structure and architecture of the corporation,' Tapscott claims. 'In the past individuals worked for companies and bought goods and services sold to them. We are now entering an age of participation.'
IT is a fertile area for this kind of remixing because the cost of distribution is so low: the price of an Internet connection. Yochai Benkler, author of 'The Wealth of Networks', points out that the Web is good for distributing highly modular tasks. But can sharing work for other industries? Benkler argues in his book: 'The patterns of social production of information that we are observing in the digitally networked environment are not a fad. They are, rather, a sustainable pattern of human production...The diversity of human motivation is nothing new.' Tapscott says of the Internet: 'We now have a global platform for collaboration,' noting that companies are forming modern-day agoras - the meeting places used by the ancient Greeks as markets. He calls them 'ideagoras'.
He uses Procter & Gamble, a user of the ideagora idea, as an example: 'P&G is looking for a molecule that will take red wine off a shirt. You do the math. They have 9,000 chemists inside their boundaries and a million outside who are organised into ideagoras: open markets for uniquely qualified minds.
'Sure, there is a retired chemist in New York or a grad student in Taipei who comes up with a molecule. P&G pays them a couple of hundred euros and P&G has a fabulous new product.' The wine-removal molecule hasn't been commissioned but P&G did set up an ideagora to find a way to print pictures on Pringles crisps: the provider of the solution was a university professor in Bologna, Italy. Bruce Brown, CTO of P&G: 'More than 50 per cent of our product initiatives involve significant collaboration with innovators outside P&G.'
The movement goes the other way: P&G will attempt to license any patent that it's had for five years or been in use in one of its products for three. Umair Haque, director of the Havas Media Lab, gave the idea of opening up a company's business a term: edge competencies, to distinguish it from the old management clich of 'focusing on core competency'.
Eighteen months ago, Haque asked readers of his Harvard Business Review blog to imagine 'what would happen if GM and Ford collaborated to invest in the components and architecture of a better public-transport network - and then licensed it for free to cities, states and countries'. Haque argued that this is not naive but being put into practice, using Google's Chrome browser as an example.
Because Chrome uses open-source code, he argued that it be 'hacked, remixed and tweaked into still-better browsers'. The more that is done 'the less Google itself has to invest' in increasing the use of the Web. Chrome is a partially 'remixed' browser. The Webkit code at its core came from open-source software originally developed by Apple for Safari. However, as some commenters have pointed out, a remixed browser could have an ad-blocker inserted into it, which isn't good for Google's core business of serving up ads.
Amazon's Mechanical Turk online application provides a way to bring users into a business, bringing the old idea of doing piecework at home into the online age. The online store presents the site as 'a marketplace for work' where individuals work on 'human intelligence tasks'. The tasks are often menial and realise mere cents each time, but the system provides a way to access a much larger base of workers than traditional approaches.
'You want to create context whereby people can self-organise,' said Tapscott at the X-Prize's Incentive2Innovate conference last year. 'All they need is a context and an incentive. Tie this in with the current economic crisis. Hunkering down is not sufficient. This is not a recession or crisis. This is a punctuation point. We will look back at this as a shock to the system: the point when we decided the industrial economy ran out of gas.' There is no requirement for the incentives to be from a large corporation.
Tapscott points to the Chinese motorcycle business as an example of market-driven self-organisation: 'Lots of little companies that meet in teahouses'. But this leads to one-third of all motorcycle production of the world, he argues. Tapscott cautions that it's not possible simply to set up prizes to make this future of cooperation work: 'You need to be open. Transparency is vital. You will be naked. And if you are going to be naked, fitness is no longer optional. If you're going to be naked, better be buff.'