Billions With Zero Knowledge

BLOGGER ETHICAL DISCLOSURE: I find gold jewelry looks tacky on me and I refuse to wear it. This opinion in no way influenced this article.

I come from a large family. I have seven siblings and by the time I was a teenager the idea of a family vacation where all ten of us flew to Disneyland was very much out of the family budget.

My father, being the smart guy that he is - did something one year that I’ll remember as one of my first real introductions to the capital markets. He taught my brother and I about the junior resource exploration market, and we saved all the money we made doing household chores and invested together in a gold company. (I still remember the name, Pundata Gold Resources - my $200 investment would later return $1200 so he didn’t steer me wrong). I was maybe 11 years old at this time, and the only kid on my school bus checking my stock prices.

That summer our family vacation consisted of a great motorhome trip to the area near where the gold exploration was occurring in British Columbia. We rode some trail bikes, attempted our luck at gold panning and played poker while camping out in the family motorhome, the only real way to travel with a family of 10. No Partridge family jokes please : )

I was reminded of this story as I read an interesting story about Rob McEwen, then CEO & Chairman of Goldcorp and the Goldcorp Challenge in the book Mavericks at Work.

I’m interested in the different models of architectures of participation, including community production. My previous posts on the topic of crowdsourcing can be found here. In my interview with Hugh from Librivox, I found a great example of community production. In this post I wanted to explore a different model.

In the book the authors describe how Rob McEwen and Goldcorp tried a new method of exploration that was inspired by the open source software communities.

The more McEwen learned about the open-source phenomenon, the more intrigued he became. People didn’t have to work for his company, he realized, in order to work with his company. He could prospect for drilling strategies from the farthest reaches of the world. “All of a sudden a light went on,” he recalls. “It was like a flash: this is the template I’ve been searching for! I went running back to Toronto convinced that we had to change how Goldcorp thought about mining. I was us to create a new approach to exploration at Red Lake.”

McEwen sketched the outlines of his idea to Goldcorp’s geologists and executives. The company would use the Internet to post all of its data on the mine - 50 years worth of maps, reports, and raw geological information - along with software that displayed the data both in the two dimensions and three dimensions. It would then invite scientists and engineers from anywhere in the world to download the data, analyze it as they saw fit, and submit drilling plans to Goldcorp, which would convene a blue-ribbon panel of judges to evaluate the submissions. The goal would be to help the company find its next 6 millions ounces of gold. Unlike the early days of Linux, this wouldn’t be a labor of love or a symbol of geek rebellion. There would be a reward - prize money of $500,000, to be divided among 25 semifinalists and 3 finalists chosen by the judges.

The chapter goes on to describe how happy the company was with the results.

…as word got out to the worldwide fraternity of scientists and geologists in the mining industry, the reaction as enthusiastic - a virtual gold rush. More than 1,400 qualified participants downloaded Goldcorp’s treasure trove of data. More than 140 of them crunched the numbers, ran the data through software programs and submitted detailed drilling plans. More than half of the targets identified by the award-winning submissions were new to Goldcorp - site the company had not considered drilling. Several years after the completion of the Challenge, Goldcrop was still drilling targets identified by the winners. Inspired by the success of Linux and open-source software, the company had discovered a new way to discover gold.

Is this crowdsourcing? It fits the basic model that Jeff Howe has referred to, which is the migration of open source models into other fields such as business and science.

This is just one of the reasons I believe there needs to be some discussion of the different models of crowdsourcing, community production, social production and open-source community models. There are a lot of competing ideas here, which are all interesting - but insightful analysis is required to differentiate the elements of successful communities and how they can be used in open business innovation models.

From my perspective, I don’t see any real use of open source models in the Goldcorp example. Did the company do something innovative by releasing their data to non-employees? Well I guess. How is this different from the countless of open bid competitions used in architecture, public buildings or even generic request for proposal business bid competitions?

Should open business & science competitions such as the Anasari X-Prize or the Methuselah Mouse Prize be grouped together with these type of business competitions as crowdsourced innovation’?

I think there are a number of aspects of Goldcorp’s challenge that miss the core elements of the open-source model. Teams are competing for financial reward, but I don’t see how their competition is co-operative. I don’t see how community is formed between different teams, there is no benefit for participants aside from stature and money. There is no overriding community goal beyond helping Goldcorp improve it’s bottom line.

This isn’t a criticism of Goldcorp for doing something new in their industry. This is just an observation that some of the most interesting parts of open source innovation models, are not accomplished in this approach. No community, no fun, nothing for people to believe in or work for beyond the chance to win a competition.

I learned during that summer vacation that,

1. Panning for gold to make money is frustrating and pointless - the fun lasted about as long as I held out hope that I could find something. Once I realized I was leaving without gold - the fun of looking for it stopped soon thereafter.
2. If I want to find gold, I should invest in gold companies - don’t look for gold - they are much better at it then I will be.

My fun memories from that summer vacation involved poker, riding bikes and hanging out with my family. They didn’t involve counting gold nuggets.

As more companies tap into the collective intelligence of outside communities through these models - I believe they will all face the question “Why?” from their community constituents. If the answer involves panning for gold with a small chance to earn a bit of money while the companies extract all the value from the communities efforts then I suspect these efforts will start to return results that direct mail advertisers would be scared of.

This months Business 2.0 also has an article on a different take on the meme, that of crowdcasting.

Tara Hunt’s presentation Commodity or Community (pdf) from the Business Blog Summit tackles similar issues from a great perspective.

So inbetween crowdcasting, crowdsourcing, social production, community production, open-source innovation, business competitions, scientific awards and now goldsourcing - where does your community strategy fit?

On Tue 7 Nov 2006.