Innovation: Going for the gold

The author compares what a conventional KM approach might have been to that of a multi-billion dollar result, achieved through an innovation approach to knowledge development.

By Bryan Davis

Stimulating innovation: art or science?
How can organisations encourage more dynamic market-based and open thinking so as to spark truly extraordinary inventions and innovations? Indeed, is there a bright new formula or process available to help springboard radical innovation and invention in your organisation?
The practice of stimulating innovation is both art and science. There are many ways to achieve success. In this article I’d like to highlight some amazing new approaches that can help unlock extraordinary knowledge performance in any enterprise.

The challenge
There is a recent case of intellectual capital innovation that we should find particularly compelling. Six years ago, Goldcorp was a small Toronto-based mining company.
It was listed on the Toronto Stock Exchange and had a market cap of a mere $60m. Rob McEwen, CEO at that time, did something unheard of in the mining industry. He decided to pursue a radical path to sourcing new innovative ideas. It involved tapping the imagination, experience, brainpower, and new technology available in the global mining community.
He staged a competition called the Goldcorp Challenge. It was promoted using the internet. Participants were promised they could win prize money to the tune of $500,000 US. People who signed up for the challenge were given access to Goldcorp’s reserves knowledge base. Being this open was extraordinary in the mining industry.
The challenge – participants were invited to propose the best ideas, methods, and systems for mining Goldcorp’s gold deposits. The results were incredible.

Success
Many new ideas, innovative methods and technologies were put forward. Among the winners was a small software company from Australia called Fractal Technologies. Using system they had developed, they showed how modelling Goldcorp’s reserve information proved that Goldcorp actually was sitting on way more gold than was previously thought. They also showed how these deposits could be mined more economically. Their ideas and systems were implemented. The results were dramatic.
Today, Goldcorp has become one of the world’s premier gold mining companies. Its production costs are among the lowest in the industry, and the company has been extremely profitable. Goldcorp’s market cap now exceeds $20bn. The benefits that have flowed from Goldcorp’s success have not just been splendid for investors. Rob McEwen has used his wealth to endow medical research such as the McEwen Centre for Regenerative Medicine at University Health Network (UHN). A $20m donation represents the largest cumulative gift in regenerative medicine and stem cell research in Canada.
So there have been spillovers into the realm of what we might call social innovation.

Knowledge perspective
Let’s now make a comparison with what a rather conventional KM approach might have involved. The contrast with what Goldcorp actually did is illuminating.
As illustrated above, there is a colossal performance difference between these two approaches. This is also not a speculative, academic, or theoretical difference. The high-performance results Goldcorp achieved are real-world measurable achievements.

Lessons learnt
There are many reasons I believe we should pay particular attention to cases like this. Among them are:

Organisations need to be more open to accessing the best intellectual capital and the best ideas. Often these may be sourced from outside, and not necessarily from within, the normal boundaries of the enterprise. Great ideas can come from anywhere.
Open innovation approaches have already resulted in mind-expanding transformations of products and services. Open innovation is a really big idea.
Embracing more market-oriented platforms and pathways to future innovation is a gateway to vast new opportunity horizons. Knowledge markets and the stimulation of innovative ideas using prizes and challenges have an exciting future.
The internet and network connectivity are extending the reach and richness of the enterprise in its quest to mine the best ideas from the global brain.
Goldcorp is not a rare isolated case, but a part of a powerful growing trend. There is a rapidly expanding wave of new practices that are at the cutting edge of knowledge-inspired innovation.
The entrepreneurs and innovators who are driving and delivering such phenomenal transformations are operating with a fabulous new knowledge-market mindset.

Knowledge inspired innovation
Some of you may be mired in the slow, tired and low rewarding trenches of traditional knowledge management. There are also many voices that talk of the demise and failure of knowledge management. Indeed, if we are stuck on the traditional approach highlighted in the table (p.25), then may its importance indeed be reduced. However, I am happy to report from our active research from the knowledge frontier that bright days are ahead.
To see this, we need to change our thinking and mental models when it comes to managing knowledge. Imagine that 10 years from now a whole new industry like nanotechnology will mature. It is projected that nanotech will grow to be a trillion dollar economy by 2015. Nanotech is inherently a knowledge-driven and knowledge-intensive enterprise. And yet nanotech is just one of many new emerging business ecosystems, rapidly evolving and coalescing on the knowledge frontier.

Expanding knowledge economy frontier
In many other fields, creating and harnessing new knowledge will be critical to sustaining new wealth and prosperity. In the life sciences, it is knowledge innovation that will radically reshape the prevailing wasteful blockbuster drug development model. It will be challenged by a new era of personalised medicine.
In our declining oil-based energy economy, it will be knowledge-based investments and creativity that will help to move us onto a greener hydrogen and alternative fuels economy. In the global tourism economy, it will be the thirst for a newer type of knowledge and cultural tourism that will expand our appreciation of the rich and diverse intangible heritage of the nations that inhabit the planet.
It will require the kind of imagination and radical use of networks, open systems, knowledge markets, and business model innovation, shown by Goldcorp and others, to unlock the promise and riches of the global knowledge economy to come.

Knowledge markets
Knowledge markets are formal or informal community contexts, platforms or environments (real or virtual), used to promote knowledge commerce, trade and exchange, demand and supply, between knowledge buyers and sellers.
They are being leveraged today to better organise, coordinate, aggregate, facilitate, communicate, broker and network flows and exchanges of knowledge between knowledge seekers and knowledge providers. A wide range of knowledge capital assets can be traded, swapped, bartered and exchanged.
These assets can be in the form of questions and answers, ideas, expertise, know-how, intellectual property, designs, social capital, intangibles, talent, human capital, brain power, learning, training, education, software, professional services and projects. We have created a taxonomy of the innovations occurring in knowledge markets. Here is our categorisation of the various approaches:

Knowledge auctions;
Knowledge banks;
Knowledge stores of malls;
Question and answer/experts exchanges;
Intellectual property and idea exchanges;
Education/e-learning exchanges;
Community-oriented or social capital exchange;
Intellectual capital/e-lance/professional-services exchange/talent markets;
Business-to-business knowledge exchanges;
Vertical industry-specific knowledge exchanges;
Information and prediction markets;
Knowledge grid;
Knowledge market events (e.g., a time-boxed knowledge fair)

We maintain online links to many real-world examples of knowledge-markets innovation, which can be explored further at http://www.kikm.org.
Our taxonomy may seem rather innocuous. However, we have discovered that there is over $5tr worth of intellectual property available in the US alone. Only a small percentage of this, perhaps five per cent, is traded today. Technology and software licensing is estimated to be a business, already in excess of $200bn. So this is indeed becoming a big deal. Even so it is the tip of the iceberg.
We know, for example, there are many corporations that engage in cross-licensing of their IP. There has also been a trend towards the pooling of software patents by vendors who want to work together to expand markets where they have a shared interest in accelerating future growth. This is evident with wireless technology patents, for example. Pooling and cross-licencing may not involve direct monetary exchange. However, the implied strategic knowledge sharing creates additional value for the stakeholders involved. So there is a real accrual of benefits.
There is much fragmentation of ownership and information about who has what know-how available for trading. Even in the open source community one cannot always easily discover who has what knowledge for exchange. So now we see impressive and rapid new developments towards the creation of different forms of online intellectual property exchanges.
There is a vast ocean of patents, trademarks, copyrights, creative designs and digital intellectual property assets that are becoming available from government labs, private corporations, individual inventors, universities, film studios (movie rights) and other stakeholders. Facilitating their trade and exchange will be a boon to future innovation agendas.

Idea economy
There is a growing realisation too that innovation in a knowledge economy is about creating, developing and sourcing the best ideas and putting them to work. We have been learning, through our research activity, that many entrepreneurs and innovative organisations have been setting up various types of idea exchanges to harvest innovative ideas.
Following the Goldcorp challenge example, Barrick Gold Corporation has set up a challenge site at www.unlockthevalue.com. There will be some $10m awarded for the best ideas about mining silver. Barrick’s Unlock the Value programme invites scientists and researchers from around the world to propose new methods or technologies to unlock the silver at its Veladero mine. Notice that the incentive is now 20 times the value of the Goldcorp incentive scheme. It reinforces the point that this way of approaching innovation is becoming a very big deal.

Prizes
It may also surprise you to learn of other activities involving the award of monetary prizes for innovation. In some cases it is an award in recognition of a lifetime of achievement. For example, Massachusetts Institute of Technology Professor Robert Langer recently received the Millennium Technology Prize from Technology Academy Finland for his research. It has advanced the treatment of cancer, heart disease and other illnesses.
However, prizes are also being offered for the best new innovations to come. For example, here is a selection of interesting examples. There are many similar examples of new approaches to knowledge innovation we could cite, which may have to be the subject of a future article.

Knowledge Innovation Zones
Debra Amidon and I have also written about our research into knowledge innovation zones in other issues of this magazine. Therein we address the fast changing context of new high-performance innovation. You can learn more about those developments at www.inthekzone.com

Conclusion
Suffice it to say, in conclusion, that the time has come to update, reorient and adapt our thinking surrounding how we leverage knowledge and intellectual capital assets. There is ample evidence from our research of next innovation practice to support this assertion. We now need to move on from more traditional approaches, and courageously, to embrace imaginative and knowledge-inspired innovation.

Bryan Davis is president of The Kaieteur Institute for Knowledge Management. He is a consultant, researcher and educator, currently engaged in researching knowledge markets and knowledge innovation zones. E-mail him at bdavis@kikm.org; internet: http://www.kikm.org or http://www.inthekzone.com.