It was late in the afternoon, on a typically harsh Canadian winter day, as Rob McEwen, the CEO of Goldcorp Inc., stood at the head of the boardroom table confronting a room full of senior geologists. The news he was about to deliver was not good. In fact it was disastrous.

The small Toronto-based gold-mining firm was struggling, besieged by strikes, lingering debts and an exceedingly high cost of production, which had caused them to cease mining operations. The gold market was contracting, and most analysts assumed that the company’s fifty-year old mine in Red Lake, Ontario, was dying. Without evidence of substantial new gold deposits, the mine seemed destined for closure, and Goldcorp was likely to go down with it.

That afternoon McEwen turned to his geologists and said, “We’re going to find more gold on this property, and we won’t leave this room until we have a plan to find it.” At the conclusion of the meeting he handed his geologists $10 million for further exploration and sent them packing for Northern Ontario.

Most of his staff thought he was crazy but they carried out his instructions, drilling in the deepest and most remote parts of the mine. Amazingly, a few weeks later they arrived back at Goldcorp headquarters beaming with pride and bearing a remarkable discovery: test drilling suggested rich deposits of new gold, as much as thirty times the amount Goldcorp was currently mining!

The discovery was surprising and could hardly have been better timed. But after years of further exploration, and to McEwen’s deep frustration, the company’sgeologists struggled to provide an accurate estimate of the gold’s value and exact location.

In 1999, with the future still uncertain, McEwen took some time out for personal development. He wound up at an MIT conference, listening intently to the remarkable story of how Linus Torvalds and a loose volunteer brigade of software developers had assembled the world-class computer operating systemLinux over the internet. The lecturer explained how Torvalds revealed his code to the world, allowing thousands of anonymous programmers to vet it and make contributions of their own.

McEwen sat back in his chair. If Goldcorp employees couldn’t find the Red Lakegold, maybe someone else could. And maybe the key to finding those people was to open up the exploration process in the same way Torvalds “open sourced” Linux.

McEwen raced back to Toronto to present the idea to his head geologist. “I’d like to take all our geology, all the data we have that goes back to 1948 and put it into a file and share it with the world,” he said. “Then we’ll ask the world to tell us where we’re going to find the next six million ounces of gold.” McEwen saw this as an opportunity to harness some of the best minds in the industry. Perhaps understandably, the in-house geologists were just a little skeptical.

Mining is an intensely secretive industry, and apart from the minerals themselves, geological data is the most precious and carefully guarded resource. It’s just not something companies go around sharing. Goldcorp employees wondered whether the global community of geologists would respond to Goldcorp’s call in the same way that software developers rallied around Linus Torvalds. Moreover, they worried about how such a call would reflect on them and their inability to find the elusive gold deposits.

In March 2000, the “Goldcorp Challenge” was launched with a total of $575,000 in prize money available to participants with the best methods and estimates. Every scrap of information (some four hundred megabytes worth) about the 55,000 acre property was revealed on Goldcorp’s website.

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This story of Goldcorp launches the book “Wikinomics: How Mass Collaboration Changes Everything” by Don Tapscott and Anthony D. Williams (Portfolio, New York, December 2006).

Based on a $9 million research project led by Don Tapscott (author of the seminal bestseller “The Digital Economy”), Wikinomics shows how the masses of people can participate in the economy like never before. They are creating TV news stories, sequencing the human genome, remixing their favorite music, designing software, finding a cure for disease, editing school texts, inventing new cosmetics, and even building motorcycles.

Throughout history corporations have organized themselves according to strict hierarchical lines of authority. Everyone was a subordinate to someone else—employees versus managers, marketers versus customers, producers versus supply chain subcontractors, companies versus the community.

There was always someone or some company in charge, controlling things, at the “top” of the food chain. While hierarchies are not vanishing, profound changes in the nature of technology, demographics, and the global economy are giving rise to powerful new models of production based on community, collaboration, and self-organization rather than on hierarchy and control.

Millions of media buffs now use blogs, wikis, chat rooms, and personal broadcasting to add their voices to a vociferous stream of dialogue and debate called the “blogosphere.” Employees drive performance by collaborating with peers across organizational boundaries, creating a “wiki workplace.” Customers become “prosumers” by co-creating goods and services rather than simply consuming the end product. So-called supply chains work more effectively when the risk, reward, and capability to complete major projects—including massively complex products like cars, motorcycles, and airplanes—are distributed across planetary networks of partners who work as peers.

Today, encyclopedias, jetliners, operating systems, mutual funds, and many other items are being created by teams numbering in the thousands or even millions. While some leaders fear the heaving growth of these massive online communities, Wikinomics argues that this fear is folly. Smart firms can harness collective capability and genius to spur innovation, growth, and success.

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So what happened with the Goldcorp Challenge? We should make you read theWikinomics book to find out – but that would be cruel and unusual punishment, even by our standards. Here’s the rest of the story:

News of the Goldcorp contest spread quickly around the internet, as more than one thousand virtual prospectors from fifty countries got busy crunching the data.

Within weeks, submissions from around the world came flooding in to Goldcorp headquarters. As expected, geologists got involved. But entries came from surprising sources, including graduate students, consultants, mathematicians and military officers, all seeking a piece of the action. “We had applied math, advanced physics, intelligent systems, computer graphics and organic solutions to inorganic problems. There were capabilities I had never seen before in the industry,” says McEwen. “When I saw the computer graphics I almost fell out of my chair.”

The contestants had identified 110 targets on the Red Lake property, 50 percent of which had not been previously identified by the company. Over 80 percent of the new targets identified substantial quantities of gold. In fact, since the challenge was initiated an astounding eight million ounces of gold have been found.

Today Goldcorp is reaping the fruits of its open source approach to exploration. Not only did the contest yield copies quantities of gold, it catapulted an underperforming $100 million company into a $9 billion juggernaut while transforming a backward mining site in Northern Ontario into one of the most innovative and profitable properties in the industry.

Perhaps the most lasting legacy of the Goldcorp Challenge is the validation of an ingenious approach to exploration in what remains a conservative and highly secretive industry. Rob McEwen bucked an industry trend by sharing the company’s proprietary data and simultaneously transformed a lumbering exploration process into a modern distributed gold discovery engine thatharnessed some of the most talented minds in the field.

Check with your local bookstore for copies of “Wikinomics” or get it via Amazon by clicking here.

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