Icon in Crisis: The Reinvention of CSIRO
By Ron Sandland and Graham Thompson
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Icon in Crisis - Ron Sandland
ICON IN
CRISIS
RON SANDLAND spent 38 years of his career with CSIRO, after joining in 1969. From 1999 to his retirement in 2007 he was Deputy Chief Executive with executive responsibility for the flagship initiative. He was the foundation Chair of the Flagship Oversight Committee. In 2006 he won the CSIRO Medal for Lifetime Achievement and was made a Member of the Order of Australia. He is also a Fellow of the Academy of Technological Sciences and Engineering and an Honorary Life Member of the Statistical Society of Australia.
GRAHAM THOMPSON worked in a wide range of administrative and management positions in research divisions and corporate groups during his 30 years with CSIRO. His final role was as General Manager, Flagship Implementation, where he developed systems and processes to ensure the flagships achieved their stated goals. He retired in 2007.
ICON IN
CRISIS
THE REINVENTION OF
CSIRO
RON SANDLAND
GRAHAM THOMPSON
To the remarkable and passionate people of CSIRO, whose hard work, belief and persistence made the flagships happen.
A UNSW Press book
Published by
NewSouth Publishing
University of New South Wales Press Ltd
University of New South Wales
Sydney NSW 2052
AUSTRALIA
newsouthpublishing.com
© Ron Sandland and Graham Thompson 2012
First published 2012
10 9 8 7 6 5 4 3 2 1
This book is copyright. Apart from any fair dealing for the purpose of private study, research, criticism or review, as permitted under the Copyright Act, no part of this book may be reproduced by any process without written permission. Inquiries should be addressed to the publisher.
National Library of Australia Cataloguing-in-Publication entry
Author: Sandland, R. L. (Ronald Lindsay)
Title: Icon in crisis: The reinvention of CSIRO/by Ron
Sandland and Graham Thompson.
Subjects: CSIRO.
Other Authors/Contributors: Thompson, Graham J.
Dewey Number: 658.402
Design Josephine Pajor-Markus
Printer Griffin
This book is printed on paper using fibre supplied from plantation or sustainably managed forests.
Contents
Acknowledgments
Acronyms
Foreword by Catherine Livingstone
Preface
PART I A glorious past: but what of the future?
1 CSIRO January 2001
2 Big hairy audacious goals
3 A new way of doing science
4 Building up steam
5 Emerging challenges
6 Finding the money to do it
7 The challenges of governance in a creative organisation
PART II Dealing with the issues
8 2001: A cultural odyssey
9 Roles, authority, responsibility: Who does what to whom?
10 Surviving in Horizon 2: Making ends meet
11 Help wanted: But where to find it?
12 Getting the message across
PART III Facing the future
13 Transition to a truly national initiative
14 Full steam ahead
15 Lessons learned
Appendices
Glossary
Notes
References
Index
Acknowledgments
Our ability to write a book about an initiative as diverse in scientific disciplines, participating institutions and geography as the CSIRO Flagship Initiative, would have been seriously curtailed without the active cooperation and positive assistance of many individuals. We record here our gratitude to all concerned for their willingness to give us their time for interviews, for their efforts in collecting and providing us with information, and for their enthusiastic and unflagging support throughout the process of writing this book.
Geoff Garrett, CSIRO’s former CEO, has remained one of our staunchest champions, encouraging us to finish the book despite knowing that it would be a ‘warts and all’ account of the sometimes fraught process of creating the flagships and giving them their own space in the organisation. Geoff ’s successor, Megan Clark, continued Geoff ’s backing.
We received significant assistance from a wide range of CSIRO’s senior managers, and, while it is always dangerous to single out individuals, we would like to acknowledge in particular the efforts and unflagging cheerfulness of John Williams and Michael Edwards. John Manger and Paul Reekie of CSIRO Publishing were very generous with their time and support of our efforts, and their knowledge of the publishing process proved invaluable. We are also immensely grateful to the many flagship directors, division chiefs, flagship theme leaders and stream leaders, who responded willingly and generously to our requests for input. Kathy Dunn and Sue Kingsland were always there for us whenever we needed assistance.
Despite all the help we received from CSIRO and elsewhere, we take sole responsibility for the accuracy of all facts and figures contained here. The views expressed here solely represent those of the authors, not those of any person or organisation from whom we have received assistance or input.
We owe a special debt of gratitude to our editor, Biddy Greene, whose advice, encouragement and close attention to detail was a key factor in bringing the work to fruition. She refused to be daunted by the fact that she was located in Cape Town and we were in eastern Australia, and took time zone differences and many other obstacles in her stride. We count ourselves blessed that she agreed to work with us on the book.
Finally we would like to thank our wives, Lyn and Fiona, who cheerfully endured the long days and nights we spent staring at computer screens, our absences and our sometimes inconvenient preoccupations as we brought the book to fruition. We hope they think it was worth it!
Acronyms
Foreword
As we entered the 21st century there was a growing recognition around the world that innovation was a key ingredient in the quest for continuing economic, and indeed social, wellbeing. However, at the National Innovation Summit in February 2000 – a joint federal government and Business Council of Australia initiative – the optimistic tone of the opening session of the summit was somewhat dampened by the announcement that, regardless of the merit of proposals recommended, there would be no new money from the government. Undeterred, the delegates enthusiastically embraced the intent of the summit, which was to provide an opportunity to create a strategic vision and achieve a cultural shift in Australia towards innovation. The concept of a National Innovation System was launched.
Notwithstanding the government’s funding posture, and no doubt helped by the opposition’s emerging Knowledge Nation policy, the Backing Australia’s Ability (BAA) innovation funding program was announced in January 2001. Incredibly – and shockingly – despite a pool of $2.9 billion funding over five years, nowhere in the BAA package was there a funding line item for CSIRO.
To its credit, CSIRO recognised this as a burning platform event. Reasons for loss of confidence in the organisation included previous senior leadership styles and uncertainties, the hollowing out of research impact for industry as a result of the 30 per cent external earnings target, and a cultural setting wherein researchers’ loyalty was to their project rather than the organisation: people worked in CSIRO rather than for CSIRO. It had few champions inside, and even fewer outside.
The ability to respond to the situation was helped by the arrival of a new CEO, Geoff Garrett. I joined the Board in January 2001, just as he was appointed, and became chairman later that year.
At the core of the problem was a lack of clarity as to what CSIRO was trying to achieve, and hence its inability to articulate its role in the National Innovation System. There was a clear imperative, therefore, to go back to the basics, and develop a strategic view and framework that would resonate both internally and externally. The CEO, the Board and management team set to work together to develop the strategic framework. The new framework, which clarified the roles CSIRO plays in the system, deriving from its scale, multi-disciplinary nature and national reach, provided an effective communication tool, both inside and outside the organisation.
Geoff also set the organisation’s sights on big aspirations – including a doubling of revenue and big hairy audacious goals (BHAGs). In the event, the concept of flagships emerged as the mechanism through which CSIRO could embrace BHAGs and discharge one of its four key roles, that of solving national challenges and taking advantage of national opportunities. Flagships were intended to be multi-disciplinary, long-term, collaborative research and delivery programs focused on outcomes for national challenges and opportunities.
In late 2002 and early 2003 Geoff and other senior managers set about briefing ministers on flagships. This was a lengthy process but there was a funding clock ticking: the agreement between CSIRO and government to provide funding for the following triennium was due to expire in June 2003. CSIRO needed more time to develop support for flagships, so the Board endorsed management’s recommendation that we seek to defer funding renewal for one year but seek a seed funding amount for the flagships concept in order to be able to show progress by the following year. It was a significant risk and tied CSIRO’s fortunes even more to the flagship idea.
In April 2003 John Howard announced initial funding of $20 million for flagships, and, using this, together with internally reallocated funding, CSIRO launched three flagship programs: Light Metals, Preventative Health and Healthy Country. These provided the hoped-for demonstration effect, and the following year CSIRO received $305 million additional funding over seven years, substantially on the back of the flagship promise.
Promise was the operative word. The most sophisticated marketing companies in the world would have been full of admiration for CSIRO’s approach: we had sold the customer on the new product before working out how we planned to make and deliver it!
The implications for the organisation were profound, and provided an accelerant to the changes already underway in terms of the science investment process and the performance management framework led by Deputy Chief Executive, Ron Sandland. Instead of being organised around divisions and projects, with division chiefs having the ultimate say with regard to investment, a matrix organisation was being introduced, with research organised into streams and themes, led by stream and theme leaders respectively. The Division Chief ’s role was changing fundamentally, as was the process for allocating resources, and projects were now being subject to fast fail review. Into this mix came flagship directors.
It was a challenging time for CSIRO – staff morale was low; the somewhat abrasive style of the CEO had taken the organisation out of its comfort zone and polarised some in the media, leading to consistently negative commentary on CSIRO in the press. The organisation felt as though it was under siege.
The Board also felt the challenge. In developing a strategic framework it had worked with management to characterise the risk profile of CSIRO, with a focus on strategic risks. This approach to risk analysis was cascaded down to the flagship initiative and its governance framework, which was itself going through an iterative learning process, led by Ron Sandland and Graham Thompson. Needless to say, the risk profile of the flagship portfolio was dominated by the colour red – the highest level – for much of its early stages. The Board was required to hold its nerve and recognise that the management team was trying to solve concurrently for science governance, organisational governance and strategic governance.
As chairman, I was faced on one occasion with the choice of supporting management over my Board colleagues. I chose to support management and faced a subsequent accusatory delegation from my board colleagues. I knew that not to do so would have compromised the flagship initiative, and I was certain this would have been the wrong outcome for CSIRO. I felt so strongly about it that I was prepared to put my role as chairman on the line. It was a decision I had to make in the moment; my ability to make it was a testament to the rigour of thought and analysis the management team had undertaken since that initial shock of the BAA announcement.
The review of the flagship program in 2006 by the Chief Scientist concluded with a glowing endorsement.
Observing CSIRO today, having approximately 50 per cent of its resources allocated to flagships, belies the turmoil, disappointment, uncertainty and risk that led to their current success. But these are the very factors that must be borne in mind. The essence of innovation is the taking of risk in the quest for a desired outcome, often an outcome that seeks a solution to a problem. For CSIRO the problem was not the absence of BAA funding but that its unique role in Australia’s National Innovation System was neither well articulated nor understood. It could have led to its dismantling and reallocation of funding regionally to universities. Had this happened, Australia would have forfeited a critical ability to apply collaborative and multidisciplinary resources at scale to national challenges.
There are myriad such challenges emerging today, not least of which are those pertaining to food, water and energy security and adaptation to climate change. It is hard to imagine more fundamental challenges for any nation than these, nor a more innovative approach to finding solutions than the flagship concept itself; one developed through determination and persistence, anchored in the conviction that it was the way forward not just for CSIRO as an organisation but for Australia as it faced the inevitable challenges of the 21st century.
Catherine Livingstone
Former Chair of CSIRO Board, former Chief Executive Officer of Cochlear and Chair of Telstra Board
Preface
In 2001 Australia’s iconic national research agency, CSIRO – the Commonwealth Scientific and Industrial Research Organisation – took the bold step of betting the farm on a very risky proposition that represented the largest new multidisciplinary science investment made by any Australian organisation.
This initiative, which came to be known as the National Flagship Initiative, was CSIRO’s response to the complex challenges facing Australia that only science could address. It was also a response to an urgent wake-up call about its own role and performance. The Australian Government had recently provided the largest single fillip to national science funding, but CSIRO had failed to share in any direct way in this largesse. Talk of funding cuts to the agency was everywhere.
The situation required change on a massive scale and the response has had an unprecedented impact in every laboratory, office and field station in the organisation. More recently, the initiative has grown to embrace collaborators from industry, governments, universities and publicly funded research agencies across Australia.
Ron Sandland and Graham Thompson were both deeply involved in the development of the National Flagship Initiative. Ron was CSIRO’s Deputy Chief Executive and carried executive responsibility for the flagships from the inception of the initiative. He was the foundation Chair of the Flagship Oversight Committee. Graham was General Manager of the Flagship Implementation Office, in which role he was responsible, working closely with the flagship directors, for the development of the systems and processes essential to support the initiative.
The flagships represented a new way of doing science, aiming to bring together the very best scientists from across the nation to tackle some of the biggest challenges facing them: water, energy, the future of food and managing Australia’s vast exclusive economic zone, to name a few. In setting up the initiative, CSIRO had to wrestle with significant challenges in almost every facet of its identity as a scientific enterprise: its culture, and the ‘immune reaction’ that developed in response to the necessary change; its systems and processes, which were not up to the mark when the initiative com-menced; the need to develop and gain acceptance for a totally new strategy; the need for a new way of thinking about scientific leadership, including the adoption of a matrix management approach; understanding and managing a new risk profile; governance issues; the strain imposed by the initiative on the financial models under which the organisation had been working for more than a decade; and the requirement for a new class of business models imposed by the medium-to-longer term focus of the flagships (‘Horizon 2’). All these, and the communications challenges that had to be confronted when CSIRO’s leadership dared to tamper with a national icon, were truly formidable.
It was decided early on that each ‘flagship’ must have a BHAG (a ‘big hairy audacious goal’) upon which the research agenda and disciplinary contributions would be based. This required a substantial realignment of CSIRO’s research agenda, because simply re-badging existing research as flagship science was not going to be permitted. Of course, much of CSIRO’s science was already focused on Australia’s national challenges and its governance processes were put to a stern test in discriminating between such science and attempts to re-badge.
Putting this initiative together represented the largest single change to CSIRO’s approach to research in the organisation’s history.
In little over five years the National Flagship Initiative was highly successful in rebuilding the Australian Government’s confidence in CSIRO, leading it to substantially increase its investment in the organisation. There was a total increase in funding (in three tranches) of $499 million over an eight-year period before the change of government in late 2007. To establish its economic credentials, the incoming Labor government trimmed CSIRO’s budget (along with those of most other agencies). As generous (and necessary) as the government contribution has been, it is dwarfed by the massive reallocation of CSIRO’s existing resources to the flagships, which now represent some 45 per cent of its total budget.
Nine flagships are now fully operational, each one addressing a truly significant national challenge. There is vastly increased collaboration across CSIRO as flagship directors select capability from within and outside the organisation to address the research challenges they are facing. The constant through all of this change has been the creativity of its researchers. Far less interested in the gyrations of the leadership to bring this initiative to fruition, the scientists now see a real opportunity to make an impact and a difference (as well as doing excellent science) through the flagships’ work. After a very rocky start, they have come on board, as CSIRO’s internal polling clearly demonstrates.
The National Flagship Initiative always aimed to go well beyond the borders of CSIRO to bring in outstanding researchers from the universities and other publicly funded research agencies to help it address the critical national challenges that are the focus of the flagships. This program has made excellent progress through funding specifically earmarked for collaboration, and has attracted some of Australia’s finest non-CSIRO researchers to make seminal contributions to the flagships.
In the course of developing the flagship initiative, there were many lessons learned that merit sharing with a wide audience. However, too often such stories are told in a manner that suggests the managers involved completely understood the systemic challenges they faced and simply applied the appropriate nostrums when required. We make no such pretence; CSIRO was exploring the frontiers of how science could be done.
The flavour and impact of the flagships’ achievements vary widely, but it is appropriate to foreshadow some of these here. The flagships developed an international hub for solar-thermal energy production; constructed modelling and prediction tools to provide a world-leading approach for predicting ocean climate; modelled the course of Australia’s energy futures with input from a broad range of stakeholders to enable effective evidence-based policy making at a national level; provided US maritime authorities with a dynamic map of the location and movement of the massive oil spill in the Gulf of Mexico in 2010 using a prototype carbon sensor array; used advanced statistical tools to identify biomarkers for the early detection of colorectal cancer; solved the complex structure of amyloid beta proteins definitively associated with the development and progress of Alzheimer’s disease; achieved a systems-level understanding of Perth’s water supply to make it more robust and sustainable following major long-term reductions in rainfall; mapped and modelled sustainability of water flows in key river systems such as the Murray Darling; developed new processes to enable titanium and titanium products to be produced at half the current cost; engineered a new form of canola oil, rich in health-enhancing omega 3 oils, using sophisticated gene manipulation techniques; and made a scientific breakthrough for a world first in the domestic breeding of tiger prawns, to be used in providing a breeding stock for high-quality production, unaffected by erratic supply and seasonal variability.
Anecdotal evidence suggests that there is a great deal of interest in science circles internationally about how CSIRO managed to put the initiative together. Some Australian institutions are already trying to develop their own versions of the flagships. In this book we explore the progress of the initiative and the many challenges that were faced and met along the way. In the context of the growing importance of multidisciplinary research aimed at solving national (and indeed global) challenges, this book highlights the complexities of assembling such projects and outlines valuable lessons that will make it easier for others to follow in the same path.
This book can be read in several different ways: as a history of the development of an important scientific initiative; as an in-depth study of a major change initiative in an organisation stacked with highly intelligent and creative individuals; or as an examination of the impact of different leadership styles at different levels of CSIRO, and their relative strengths and weaknesses. It lays bare the difficulties and benefits of undertaking major change in a large public sector organisation and concludes with reflections on how one might do all of the above successfully – perhaps even more successfully than CSIRO managed to do it.
PART I
A GLORIOUS PAST:
BUT WHAT OF THE FUTURE?
CSIRO enjoyed a reputation as Australia’s pre-eminent research agency for some 80 years, but in 2001 its entire existence was called into question when it was completely overlooked in a major government funding initiative. Something had to be done, and fast.
1
CSIRO January 2001
Waking up on New Year’s Day in January 2000, most of the 6500 people who worked for the Commonwealth Scientific and Industrial Research Organisation (CSIRO) would have felt pretty confident about their lot. They were working with exceptionally bright colleagues for an organisation that had a strong international scientific reputation and the status of an icon within much of Australian society. While there had been changes in the work they had been undertaking since the late 1980s, they would have expected to continue basking in the glory of CSIRO’s significant past achievements for many years to come.
However, all that was about to change. Just over a month later their highly respected CEO, Dr Malcolm McIntosh, passed away after a long illness. There were also the first signs of a distinct chill in the atmosphere – the federal government was increasingly questioning what it was getting for its investment and the organisation was finding that it was no longer industry’s flavour of the month.
CSIRO is Australia’s largest and most diverse research agency. By the turn of the 21st century its budget was of the order of $750 million per annum, about two-thirds of which came from the Australian Government as direct appropriation funds, with the remainder coming from external sources, including industry and a range of granting agencies. CSIRO was consistently ranked among the world’s top research institutions by groups such as the Institute for Scientific Information.¹
CSIRO’s reputation had been built mainly on its success in tackling some of the challenges faced by Australia in the first half of the 20th century. One legendary example was the work carried out by Francis Ratcliffe and ‘Bunny’ Fennessy in using the myxoma virus to (temporarily) solve the rabbit plague that was decimating the country’s crops.²
There were many other examples. In its earlier life, CSIR³ had provided scientific input to the Commonwealth Prickly Pear Control Board, which then used biological control with spectacular success to put an end to the prickly pear scourge across vast tracts of Queensland and New South Wales (this plant had been spreading at a rate of almost a million acres a year). More recently, CSIRO used biological control with similar success to overcome the choking growth of the tropical waterweed Salvinia. The organisation also addressed major problems of the wool industry, which included emerging competition from synthetic materials. In doing so it played a major part in helping Australia continue to ‘ride on the sheep’s back’. Inventions such as Siroset, which enabled permanent creases to be put into wool fabrics, were part of this program.
Another example was the spectacular growth of an Australian wine industry, based on CSIRO’s research into the suitability of grape varieties for Australian conditions, the development of nematode-resistant rootstock, and mechanical harvesting techniques.⁴ The breadth of the organisation extended to exploiting CSIRO’s unique position in the Southern Hemisphere to develop exceptional strength in radioastronomy; ‘The Dish’ – more properly referred to as the Parkes radio telescope – became an icon in Australian science, and earned a worldwide reputation for its manifold discoveries of pulsars. It also played an important part in the transmission of signals from Apollo 11 during the first lunar landing. In a similar vein, concern over the security of Australia’s paper currency led to the development of polymer banknotes. Add to this groundbreaking research in mining and minerals, and the development of one of the first ten large-scale electronic computers in the world, and it is easy to imagine the temptation for CSIRO to rest on its laurels.
By January 2001 a new CEO, Geoff Garrett, had been appointed to the organisation, almost 12 months after the death of Malcolm McIntosh. It was expected that he might shake things up, but there was other news more critical than this. The federal government had just announced one of the largest fillips for Australian science in many years. Known as Backing Australia’s Ability (BAA), it comprised a $3 billion increase in government science funding. Its primary focus was scientific excellence, which translated into increased funding for the Australian Research Council (ARC), largely for university research. Astoundingly, CSIRO was not mentioned at all.
Government research laboratories – a vanishing species
To understand how CSIRO had arrived at this point it is necessary to understand something of the global context within which it and other national research agencies were operating. Elsewhere in the world the national research agencies, laboratories and councils had been having a difficult time. For example, in 1992 DSIR New Zealand, a close equivalent to CSIRO, had been broken up into autonomous Crown Research Institutes, which were forced to bid competitively for their funding. Similarly, in Britain there had been a massive shift in direct government support for the Government Research Laboratories. At almost exactly the same time, after dramatic reductions in such support, the British Government Defence laboratories (DERA) became QinetiQ, a company that was floated on the London Stock Exchange in 2006.
Figure 1.1
Australian government support for science and innovation, by main component, 1981–2007
SOURCE Based on Public Support for Science and Innovation, March 2007, Productivity Commission Research