Industrial R&D managers have become even more focused on R&D productivity – including tighter priority setting, increased leveraging of scarce R&D funds and greater collaboration
All research and innovation managers across Australia and New Zealand are trying to be more innovative about how they perform their management function.
Both in large and small industrial companies, and in the publicly funded research sector, they are all leveraging resources through increased collaboration.
They are placing greater emphasis on working on the right problems, but also considering earlier what may be the best path to adoption and impact. In this process, they are seeking earlier involvement from prospective value chain partners to move their research outcomes into the market.
These were key aspects in presentations and discussions at the 2010 Australasian Industrial Research Group conference, titled How can R&D Managers influence and improve the future of Australasian research and innovation?
The conference noted dramatic recent changes in industrial R&D in Australia and New Zealand, including:
• closures or retrenchment at important corporate R&D installations;
• major innovation reviews in both countries;
• financial challenges for new ventures with Commercial Ready’s demise in Australia; and,
• significant recessionary pressures changing the priorities of governmental, corporate and consumer investment in R&D and innovation.
In Australia, business expenditure on R&D grew to a record $14.4 billion in 2007-08, making Australia the 14th in the OECD ranking at 1.2 per cent of GDP – but Australian large firms were noted to be last in “New-Products-to-Market” compared to all OECD countries, while the nation’s smaller firms performed only marginally better.
Since 2007-08, however, financial crisis impacts have lowered activity from this level and governments have significantly lowered historic investment levels in R&D and innovation.
As a result, industrial R&D managers have become even more focused on R&D productivity – including tighter priority setting, increased leveraging of scarce R&D funds and greater collaboration through open innovation, including increased efforts to integrate public sector researchers into industrial technology developments.
Although the Rudd Government has somewhat altered the emphasis of Australia’s long-cherished Cooperative Research Centre (CRC) program recently, major industrial companies are still working very closely with key CRCs to achieve program leverage, especially for longer term, higher risk, research targets.
However, it has been a tough time at the smaller end of business with SMEs’ focus now on balance sheet repair, with consequential cuts to their more prospective R&D and innovative developments.
The cultural mismatch between academia and industry continues to be felt in both Australia and New Zealand, speakers noted, though with different pressure points perceived in the two countries. Meanwhile, University researchers have received conflicting messages concerning where to place their emphasis to best attract continued funding in future.
New Zealand
In New Zealand, improvements have continued, although the government recognised these have grown from a relatively low base. The Crown Research Institutes (CRI) were established during radical reforms between 1989-92. While all of the CRIs are Government-owned, they have operated as independent, competing companies, each seeking its own integrated role across the spectrum from discovery research to commercialisation.
One unfortunate consequence has been considerable emphasis on process and on competition. It is now recognised that CRI funding and productivity, compared to a benchmark such as Denmark, are low, with funding basically flat over the last 10 years.
The proliferation of agencies for research and funding has created unnecessary complexity and overhead, leading to a new 10-point Science Manifesto. A CRI task force is now identifying how to turn these issues around for New Zealand’s public sector R&D.
Australia
Meanwhile, in Australia, CSIRO has considered how the context of a viable institutional research approach may have altered as a result of the evolving complexities of the global economic environment. While CSIRO’s focus in recent decades was on productivity, transparency, accountability and responsiveness, now the identified challenges involve large and complex targets such as environmental, social and economic pressures – all global issues.
While CSIRO views its scale, breadth and depth as advantages in this environment, it understands that success requires strong management if it is to draw out the full value of its endeavours.
Australasian Industrial R&D managers clearly recognise that they exist in a global market place for competitive research and innovation acquisition. Cost, productivity and quality are watchwords. Sourcing technology – not just externally in Australasia, but globally – is a key ingredient for any technology program, especially within Australasia’s larger companies.
For Australasian public sector research organisations, their traditional emphasis on a national responsibility and return, relative to the competitive global market for quality research, is increasingly a pressure point. One positive perspective, in this regard, is that CSIRO now seeks to ensure Australia always has a seat at the important international science tables.
Key issues
Speakers identified that there are many challenges in ‘Innovation Measurement’ – a relatively young science, crowded by complexity and still evolving. Therefore, international comparisons can be difficult, with disparate input and outcome measures still in development.
Key ingredients were identified in a recent international study, including:
• A culture of innovation is critical to success;
• Access to (rather than ownership of) the best global R&D centres is critical;
• It is all about accessing skills and expertise;
• Location barriers may be more about the availability of working visas than tax credits;
• Quality – not cost – is paramount – the best will only work with the best.
Key points made during broad conference discussions included:
Operating in a global versus national framework requires everyone to understand the strategic framework of a project (not just the technical aspects). Value decisions depend on this understanding – and on asking good questions;
• The key issue has become the management of a total innovation process, rather than just of the technology, or a laboratory;
• Globalisation is yet to become a two-way street for Australasian R&D – usually it is those “down under” on the late night end of international teleconferences;
• While research departments might previously have been distributed globally (but bringing people together as needed), today’s dispersed technology networks often operate across open innovation environments. Now key players in any network may not all be from the one company;
• Having the best people available is crucial but, with reducing R&D investment in Australasia (relative to some other countries), there may be reduced opportunity to continue developing good people. Placing the right people in the right roles was widely acknowledged. Today, some industry managers view a PhD as still very oriented towards an academic research career, with training elements not well aligned with the required experience for a successful industrial career;
• In one outsourced R&D program, the failure to negotiate a satisfactory IP ownership agreement was noted to be a sufficient reason to drive R&D offshore; and,
• Return on Investment evaluation of ongoing programs continues to be very challenging, especially in terms of how to present a convincing assessment to the senior management committee.
Ms Leonie Walsh is an Associate with Capstone Partners, specializing in activities related to Technology Commercialization and New Ventures. Leonie holds a BSc and MSc from Swinburne University, and an MBA (Exec) from the Australian Graduate School of Management. She has accumulated more than 20 years of technology and business leadership experience across a range of industries, both locally and internationally.
Dr. Greg Smith is a Co-Founder and Director of Melbourne-based venture capital company, SciVentures Investments. Before returning to Australia, Greg worked as Director of the Alcoa Technical Centre in Pittsburgh and, previously, as Vice-President of AlliedSignal’s Corporate Research & Technology New Jersey and Illinois-based laboratories. His technology innovation management experience began with Exxon Chemical working in Australia, USA and Belgium.
