There's Still Gold In Them Thar Golden Horseshoe Hills

There’s Still Gold in them thar Golden Horseshoe hills Preston Manning, Globe and Mail – February 26, 2009 Next to the financial sector, the auto industry has received the most attention from governments in Canada and the U.S. as they try to prevent the collapse of ailing enterprises. The fate of that industry is especially relevant to the Golden Horseshoe, the Canadian manufacturing heartland that stretches from Niagara Falls around the western end of Lake Ontario and extends all the way to Oshawa. To address the region's declining fortunes, Ottawa and Ontario have provided a $4-billion bailout package of emergency loans for Ford, Chrysler and General Motors. The federal budget has also established the $1-billion Southern Ontario Development Agency as part of its stimulus package. But investors, executives, community leaders and politicians are holding their breath. Is there still gold in the Golden Horseshoe? I believe there is. The capital facilities, human resources and service capacity of the Golden Horseshoe can be revitalized and redeployed to create new wealth and meaningful employment for decades to come. But to do so will require something more than temporary bailout packages and traditional approaches to regional economic development. The key to finding that “something more” may well lie in “open-source problem solving” - a technique employed by Toronto executive Rob McEwen more than a decade ago to revitalize a dying gold mine at Red Lake, Ont., and turn it into one of the most productive lowest-cost gold mines in the world. (The story is well told in the book Wikinomics, by Don Tapscott and Anthony D. Williams.) When Mr. McEwen took over the Red Lake mine, the gold market was depressed, the mine's costs were out of sight and its union refused to make concessions. It looked like the end was near. (Sound familiar?) But Mr. McEwen believed there was gold to be found. He gave his geologists a “stimulus package” - $10-million for further exploration - and his faith was rewarded when they brought in test results indicating rich new deposits on the Red Lake property. But getting an accurate estimate of the gold's location and value, and proceeding with development, proved frustratingly elusive. Then, in 1999, Mr. McEwen attended a seminar for young presidents at the Massachusetts Institute of Technology. He listened to the story of Linus Torvalds and how he had assembled a world-class computer system over the Internet by using the “open source” technique. At its heart was Mr. Torvalds's willingness to reveal his computer code to the world and invite thousands of anonymous programmers to vet and improve it.

Open-source problem solving! Expose your goal, your problems and all your data on the Internet. Invite proposals from anyone. Offer clear guidelines and substantial financial incentives to induce quality responses, and act on the best proposals received. So, Mr. McEwen offered $575,000 in prize money to participants with the best proposals for developing his mining property. To the horror of his company's old guard, he posted all the proprietary geological data on the Red Lake property on the Internet, inviting analysis from geologists and other experts all over the world. Responses flooded in identifying target sites for development, only half of which had been identified by the company. To make a long story short, the open-source collaborative process aided Red Lake in finding and extracting more than eight million ounces of gold and in re-establishing the mine on a more prosperous footing than it had ever enjoyed before. Back to Southern Ontario, the auto industry and the fate of the Golden Horseshoe: One wonders what might have happened if, instead of offering the $4-billion bailout package to the Big Three, the governments had offered those funds to whomever submitted the most innovative and cost-effective proposals for stabilizing and revitalizing the industry. Perhaps the proposal from the Big Three would have carried the day, but maybe alternative proposals from Honda and Toyota, the parts manufacturers, a new consortium or some market-oriented think tank would have offered an even bigger bang for the buck. Looking to the future, the Southern Ontario Development Agency could follow the well-trodden path of regional development authorities in other parts of the country with little prospect of long-term success. Or it could blaze a new trail by using some variation of open-source problem solving. There's still gold in the Golden Horseshoe, but it's going to take innovative thinking to find and extract it to the long-term benefit of Ontario and Canada.