Why consolidation destroys the relationships Australia’s innovation system needs
The latest panel of experts have seen their report released on Australia’s research and development system (SERD). And once again it is highlighting Australia’s persistent challenge in supporting local innovation to bridge the valley of death. The framing in this latest report is remarkably consistent with decades of policy discussions, including the usual mix of projects, programs, initiatives, funding rounds, collaboration agreements and the need for coordination and consolidation.
Before we charge off re-organising the deck chairs into the latest set of acronyms, we should stop and consider what is missing. I would recommend starting with the most obvious and consistent gap; input from those with hands-on experience bringing innovation to market.., successful Australian companies.
This is much more than just simple semantics. Proposals like CRC to NSI consolidation exemplify the structural flaw as to why Australia’s innovation system consistently underperforms despite decades of well-intentioned policy intervention(s).
What is a realistic timeline
Cochlear required two decades to translate university research into the implant that now dominates global markets today. ResMed spent over a decade building sleep apnea treatment technology into commercial success. TechnologyOne has been at it for 37 years, NextDC 14. These timelines are normal for industrial innovation, well beyond individual project cycles.
Consolidating 38 entities into 18 National Strategic Initiatives (NSIs) appears to be administrative simplification but in reality is institutionalisation at scale, highlighting how project-based thinking is embedded in Australia’s innovation architecture.
While NSIs might coordinate projects, they can’t carry innovation through the ten-year plus development cycles markets typically demand. They won’t build sustainable end customer relationships, establish distribution networks, develop commercial channels or absorb market risk. They are, by design, coordination bodies managing projects, ensuring the gap becomes locked in and permanent.
Why CRCs work
The Cooperative Research Centre program has survived thirty years through multiple different governments. The program has sustained relationships between researchers and industry long enough for outcomes to have a fighting chance. Continuity has provided timeframes that allowed the program itself to evolve and adapt. It allows individual CRCs to both succeed and fail, to sustain or not, and that is ok (as it should be).
The success of CRCs is not their governance structure or their institutional coordination capability. They work because of the sustained commercial relationships, which are built through industry co-investment requirements. For industry to invest and participate, industry wants a (measurable) return.
When companies commit their own capital they also demand commercial accountability. They stay engaged not because the CRC structure compels them to, but because they have skin in the game. The companies participating in successful CRCs often become the entities that commercialise the research. The CRC provided the research, insights and a sustainable relationship framework, and the companies participating provide the commercial translation and deliver the financial outcomes. Each one learns independently. They evolve, they pivot, they persevere. Some endure beyond funding, others re-organise and ‘go again’, and others run their course.
The consolidation risk
The Strategic Examination of Research and Development proposes consolidating 32 CRCs into a smaller number of NSIs. Consolidating them doesn’t simplify governance, it destroys the commercial relationships and corporate knowledge that took decades to build, and breaks the trust needed to deliver outcomes.
The new NSI might coordinate projects efficiently. It might manage intellectual property portfolios professionally. It might facilitate collaboration between researchers and industry systematically. But could they really recreate the commercial relationships that made the original CRCs work? Can it rebuild the trust that took a decade to establish?
The organisational DNA principle suggests no. Purpose-built commercial relationships do not transfer cleanly to new institutional architectures, particularly when those architectures are optimised for coordination rather than commercial translation.
Programs are not the solution
We have previously discussed the fact projects end, companies endure. Just like projects, programs have defined start dates, milestone schedules, deliverable requirements, and completion criteria. While this is appropriate for research, the SERD architecture is a structural mismatch for commercial translation.
Companies operate in a different reality than project frameworks anticipate. Markets determine survival. Customer delivery commitments shift as competitive conditions change, as technical challenges emerge, as economic cycles turn. Capital constraints force constant reassessment of what gets built next, which capabilities get developed first, where limited resources create the strongest competitive advantage.
These decisions happen in real time based on market feedback, not according to milestone schedules established when funding agreements were signed.
What policy should support
Australia does not need more coordination bodies or project funding mechanisms. Institutional frameworks have been unable to manage research collaboration outcomes. What is missing is systematic support for Australian companies with the right incentives to access research that strengthens their competitive advantage in global markets. These companies aren’t lining up for hand-outs, minister meetings, or lobbying departments. They are working hard to succeed, doing it on their own, with no support in sight.
We need to do more than hand out research vouchers to visit universities. We need systematic connection to innovation that helps them build competitive advantage in markets they already understand, with customers they already serve.
There is a foundational element missing from innovation policy in Australia. We must strengthen what each actor does best. Companies translate research into commercial outcomes. Government research institutes like CSIRO deliver research excellence at world-class levels. Rather than creating institutions to address commercial activities, policy could support existing Australian companies to access institutional research for competitive advantage.
Why don’t we double-down on research excellence where it exists, and build on commercial translation capability where Australian companies already operate.
Coordination is not commercialisation
The NSI architecture will deliver what it is designed to deliver: coordinated research projects, facilitated collaboration, managed intellectual property portfolios, and supported startup creation. These are important activities but they are not commercial translation.
Commercial translation requires companies that persist through market cycles, absorb commercial risk, build customer relationships, and develop capability that compounds across decades. These companies exist in Australia. They demonstrate commercial success formulas that policy makers attempt to create through institutional coordination. Most of them were either not invited to contribute to the Strategic Examination or were too occupied with surviving commercially to attend consultation processes designed for institutional stakeholders.
Projects will end, and programs will always complete. The question policy makers must consider is how they will strengthen and support Australian companies to endure.