Adjusting to changing times: CSIRO since the 1970s.

SUMMARY

CSIRO, Australia's largest public research agency, has changed appreciably over the past three decades as the social, economic, political and technological environment has changed. In this paper, we address five areas of change, namely the nature of the Organisation's research, its research funding allocation, its patterns of collaboration, the way it transfers technology and its role in the national innovation scene. We look at some of the pressures leading to change and at the implications of our analysis for the future. CSIRO is no longer the dominant player in Australian science and innovation as other players, notably in the higher education sector, have grown and, despite its undoubted importance as a reservoir of scientific talent and its major scientific and commercial achievements, much uncertainty about its national role remains.

KEY WORDS

public research; Australian innovation system; organisational change; technology transfer; priority setting; research commercialisation; CSIRO

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CSIRO is an important public resource in Australia. It remains a large reservoir of scientific talent able to deliver excellent research across a wide range of fields. Over the years it has adapted constantly to the changing social, economic, political and technological environment. As this environment has changed so have influential views on the directions CSIRO should take and on the way it should be structured and managed. These views cover the nature of the Organisation's research, its research funding allocation, its patterns of collaboration, the way it transfers technology and its overall place in the national innovation system. We trace the changes in these areas in the sections which follow. Many of these issues remain live, as for example, whether CSIRO should be working mainly on public policy concerns such as climate, health and environment or whether it should be working to support the growth of new and existing industries. Another important issue concerns the structure and governance arrangements most appropriate for enabling CSIRO to contribute fully to Australian industry and society. These are matters that need to be considered in the context of the organisation's role within the broader national innovation system.

CSIRO has a long history. Established as the Commonwealth Scientific and Industrial Research Organisation under the Federal Science and Industry Research Act 1949, its origins lie back in 1926 when its predecessor organisation, the Council for Scientific and Industrial Research, was created. The extended history of CSIRO is testament to its ability to evolve in response to a changing social, economic and technological environment. While in the early years CSIRO dominated Australian scientific research, its position gradually changed with the emergence of other public and private research providers. Since the 1970s, in particular, it has had to change its role in response to changing views from governments, industry and the public on rationales for science research and to readjust its place in the Australian innovation system.

CSIRO is primarily (around two thirds) funded by the federal government. The missions of the CSIRO are to carry out scientific research 'assisting Australian industry; furthering the interests of the Australian community; and contributing to the achievement of Australian national objectives or the performance of the national and international responsibilities of the Commonwealth; and to encourage or facilitate the application or utilisation of the results of such research'. As a statutory authority, it has a high degree of autonomy in implementing its legislated functions as set out in section 9 of the Act.

CSIRO is still the nation's largest research institution and accounts for 10% of publicly-funded R&D and just over 6% of total R&D expenditures in Australia. It now employs over 6500 staff and conducts research for the agriculture, communications and information technology, health, manufacturing and construction, minerals and energy, the environment, and transport & infrastructure and services sectors. In carrying out its legislated functions, CSIRO operates in most fields of natural and physical sciences, excluding clinical medicine, nuclear physics and defence which are the province of other public research institutions. In 2005-6, its total income was $930m, comprising $594m directly appropriated from the federal government, with the balance from industry and other government sources, including royalties (CSIRO 2006: 115).

In this paper we examine the ways in which CSIRO has changed since the mid-1970s and address five areas, namely the nature of the Organisation's research, its block research funding allocation, its patterns of collaboration, the way it transfers technology and, finally, its role in the national innovation scene. We look at some of the pressures leading to change and at the implications of our analysis for CSIRO in the future.

HISTORICAL SETTING

The modern era of CSIRO can be traced back to the 1977 Independent Inquiry into the Organisation chaired by Professor AJ Birch. This report represented a turning point for CSIRO since it recommended a shift away from fundamental research toward strategic-mission orientated research and measures to involve end-users in the processes for allocation of resources for research. Since then CSIRO has adjusted its course in response to demands from its changing economic and political environment and the changing pattern of scientific research in Australia in particular. Before then its agenda had been largely in its own hands. The Birch Inquiry coincided with another watershed in CSIRO's history. For a long time it had been the dominant public research provider in Australia. By the mid-1970s, though, university R&D funding had reached rough parity with CSIRO and the organisation had reached the limits, in real terms, of its Treasury appropriation (Schedvin 1989: 214). Other public research institutions were also playing an increasing role.

The 1950s and 1960s were a golden age for CSIRO. Schedvin (1989: 211) notes that this was when it 'burst on the public stage with one scientific achievement after another. CSIRO's international reputation also spread, notably among radio astronomers and the much smaller community of wool scientists.' This period was one of growing private and public R&D spending worldwide. Policymakers and population alike were optimistic about the benefits of scientific research, which stemmed back to the early post-war years, exemplified in the Endless Frontier report by Vannevar Bush (1945) in the USA. The CSIRO Chairman during the period 1959-1970, Sir Frederick White, remarked that these were times when research 'money was easy to obtain and the increase in our annual appropriation from the Commonwealth government was quite large so growth, therefore, followed suit' (White 1976: 633).

Public belief in the powers of science to deliver economic development, which had been sustained by the decades of post-war prosperity began to wane in the 1970s. Oil shocks, concerns about the environment and growing competition in international trade, for example from Japan, challenged established thinking about innovation (Freeman 1995; Hounsell 1996). The idea that scientists left to themselves would deliver the benefits that industries and national economies needed came under question. So too did the implicit linear model of the innovation process according to which high quality scientific research was somehow 'thrown over the wall' for others to adapt and commercialise (Roussel et al. 1991). New thinking on the interactive nature of the innovation process (Kline 1985) led to calls for greater interaction between different players involved in the innovation process. In the case of publicly-funded research agencies, this meant becoming more responsive to the users of their research and to the views of their principal stakeholder, namely government. Since this time there have been several external reviews and major internal reorganisations of the CSIRO's work and operations.

The Birch Report to the Prime Minister in 1977 began reshaping thinking about CSIRO's role and function. It called for closer alignment of research with the needs of research users; the broadening of research activity to benefit primary, secondary and tertiary industry sectors and the community, and suggested that 'emphasis should be given to securing implementation of research results through close association with users, and development based on research results by users should be actively promoted' (Birch, 1977: 26). The CSIRO Act was amended in 1978 to reflect these and other recommended changes and the long-standing flat divisional structure of CSIRO was replaced by a two-level institute and divisional structure which grouped together divisions operating in similar sectoral areas.

CSIRO's structure changed several times in the years that followed. Following a report on CSIRO to the Prime Minister by the Australian Science and Technology Council (ASTEC 1985) which supported the thrust of the Birch recommendations; the CSIRO Act was amended and a new Board was set up which was responsible to the Federal Minister for Science for the overall strategy, governance and performance of CSIRO. In 1988, following a review by McKinsey and Co, CSIRO was reorganised into an industry-based institute structure. The expectations of CSIRO in its revised role were set out in Ministerial Guidelines issued by Minister Barry Jones (CSIRO 1988: 10) and the Organisation was given a new external earnings target to encourage greater interaction with research users.