The notion of building a better product–a better mousetrap, if you will–is a powerful one, and more often than not the central figure in the story has been the lone individual who is frequently portrayed as diligently laboring away in his basement or garage devising a new or improved product. The importance of individual skill, initiative, knowledge, and capability will always remain important, but a new dynamic is now growing in power and it lies outside of domain of the individual. If one replaces the term mousetrap with mountain bike, this idea becomes clearer.
It may surprise you to learn that the popular off-road mountain bike wasn’t invented by a single person toiling away in his garage. Rather the bike morphed over time as a variety of committed, dedicated, and passionate cyclists began tinkering with their bikes to help them better meet the stringent requirements of their off-road pursuits.
First someone decided that the bike should have large balloon tires to better withstand the rough terrain. This was followed by thumb-shifting derailleur gears to allow bikers to more easily navigate steep mountain slopes. Next came motorcycle lever-operated drum brakes (to better stop while moving downhill), and eventually flat handlebars and lightweight tubing were added to confer additional advantages.
The lesson in this story is twofold. First, products evolve. Secondly, evolutionary advances are often developed by the people who rely on the product and not employees of the company manufacturing the product. There is nothing new or radical in this idea, but today’s technology has now sufficiently advanced to the stage where businesses can do a much better job of reaching out to those users to harness their ideas and speed up the evolutionary progression of their products.
At the forefront of this trend is the open-source movement. To fully understand the potential of the open-source movement, however, we will focus on something tangible: gold.
In 2002 GoldCorp’s CEO, Rob McEwen, wasn’t fully convinced that, in spite of what his company’s experts were telling him, there wasn’t more gold to be mined in his company’s main Red Lake mine.
To test his hunch, he proposed to do something radical. He wanted to open up his company’s geological data–which in the gold industry is a closely held proprietary secret–to the world’s most knowledgeable mining experts and give them a chance to determine if there might be more gold in the mine. As an incentive, McEwen offered a sizeable financial prize to anyone who could make a compelling case as to why his company should look for gold in a particular location. If the person’s hypotheses proved correct, he or she would be awarded the money.
Over the objections of his board of directors, McEwen posted his company’s information on the Internet. Within days the Web site generated 500,000 hits, and 1,400 people from over fifty countries entered submissions. The company then selected the five best entries and began mining. Goldcorp struck gold on four of five selections. Today the company has increased its market capitalization almost fourfold, and Red Lake mine remains one of the world’s more profitable gold mines.
There is no shortage of other companies tapping into the open source movement. Lego and iRobot, the maker of the robotic Roomba vacuum cleaner, are allowing their best customers to see and experiment with early beta versions of products, and they are listening to their suggestions about how to improve these products. IBM is opening up its patents to outside lawyers and even its competitors in an effort to speed up the patent-approval process, and Proctor & Gamble and a handful number of pharmaceutical companies are using a Web site called InnoCentive.com to post some of their more intractable problems in the hopes of tapping into the expertise that exists within the broader research community.
In fact, back in 2000, P&G, which has a large research and development staff of 8,000, announced an ambitious goal of having half of its new products and technologies come from outside the company. Seven years into the initiative, the company reports that 35 percent of all new products bear at least some input from outsiders. Moreover, it reports that productivity of its in-house staff has increased by 60 percent.
Exponential Insight
Right out of college I served as a naval intelligence officer and was privy to classified photos from supersecret satellites flying above the earth. Today anyone can go to Google Earth and download comparable photos.
What is more interesting is that with this information citizen-sleuths are now making discoveries that have eluded even the best intelligence analysts. In 2006 the Associated Press published a story about a man who had a passion for viewing Chinese landscape. One day he discovered a peculiar topographical feature in a remote corner of northwest China. Something looked familiar about it, but he couldn’t put his finger on it. Eventually he realized the site was identical to a strategic piece of real estate along the Sino-Indian border. From this he correctly deduced that China had replicated the territory to better practice attacks against the target in India. In the exponential economy, secrets might actually yield more value by being declassified.
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