A fresh perspective from many minds
September 10, 2014
GE Survey: Canadian companies are turning to crowdsourcing to solve R&D challenges
To outsiders, the mining industry may not seem like an innovative business, but as far back as 1999, Toronto-based Goldcorp Inc. did something extraordinarily cutting-edge. Rob McEwan, then chairman and CEO, issued a challenge to geologists anywhere: If Goldcorp made available all its data on its 55,000-acre Red Lake, Ontario mine, anyone who could determine if there was more recoverable gold on the declining property would win one of a number of prizes totalling $575,000.
The move astounded the mining industry, which had never seen one of their own turn over reams of proprietary data to the public. Eventually, a small company in Perth, Australia — Fractal Graphics — won the competition and Goldcorp found its next six million ounces. McEwan later told an interviewer: “Mining is one of humanity’s oldest pursuits. This is old, old economy. But a mineral discovery is like a technological discovery. If we could find gold faster we could really improve the value of the company.”
Goldcorp’s approach is today known as “crowdsourcing.” The term was coined in 2005 by Wired magazine and has gained rapid momentum. Essentially, crowdsourcing is distributed problem-solving. It is also called “open innovation” for its collaborative approach to finding new solutions to technical challenges. Canadian futurist, trendspotter and innovation expert Jim Carroll says: “It’s changing the classical approach to research and development. A lot of R&D is being done through crowdsourcing. I call it innovation occurring on the edges.”
In a recent global survey by GE, nearly two-thirds of Canadian executive respondents said their companies were committed to open source innovation involving external stakeholders. Slightly more than one quarter —26 percent — said they have already looked to crowdsourcing for ideas, content and investment from a large and varied group of stakeholders. Canadian companies surveyed were just slightly behind the global average — 61 percent versus 64 percent — in indicating that revenue has grown as a result of collaborative innovation activities over the past year.
The beauty of crowdsourcing is that it can make larger firms act like nimble new startups. GE, for one, turned to crowdsourcing in 2013 to help design lighter jet-engine brackets. It held an open competition with cash prizes. Eventually, a young Indonesian engineer, M Arie Kurniawan, discovered a way to lighten the brackets by 84 percent.
Carroll says that interest in crowdsourcing is spreading, thanks to the inherent desire of small independent firms to make a big hit. “They can get a prototype out in about a month. Big companies can’t do that. If you’re a small startup competing for ideas you can do it and get it to market a lot faster.”
The success of crowdsourcing prompted GE to create the $200 million “Ecoimagination Challenge” to fund innovative solutions to environmental challenges in its key industries. Anyone in the world may submit ideas. One facet of the program seeks to reduce greenhouse gas emissions in the oil sands of Alberta. That competition, announced in July, offers $1 million in potential awards for new solutions for using waste heat and better efficiency in steam generation.
There are potential downsides to crowdsourcing. In 2012, Canada Post Corp. filed a lawsuit against Geolytica Inc. which runs GeoCoder, a site offering geo-coding service with free access to a crowdsourced database of postal codes. Canada Post claims it owns the 890,000 copyright to Canadian postal codes and Geolytica has been using them without its authorization. In a defence unique to crowdsourcing, Geolytica argues that it compiled its list not from Canada Post’s data but from site users who included their postal codes in inquiries. The matter remains before Federal Court.
Then there’s the issue of compensation and ownership of crowdsourced innovations. Large corporations may pay little more than a few thousand dollars for a bright idea that may make them far more money. This risks alienating the crowdsourcing ecosphere. However, leveraging the resources and ability to scale of a large organization may be worth the risks for some. Carroll says that the phenomenon will “play out in different ways. People will come to realize the currency of their ideas.” Conversely, he says, a lot of promising ideas touted by crowdsource participants may not deliver on time or on spec. “It’s very hard work to get the bloody thing built and tested, and that’s a risk with crowdsourcing.”
The economics of crowdsourcing is only one aspect, however, and the compelling attraction of a thousand independent minds finding ways to solve your innovation challenge is undeniable. A fresh perspective is always welcome.
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