Capability Building and Risk Management: Lessons from Radiata

By Matthews, Mark | Innovation : Management, Policy & Practice, September 2007 | Go to article overview

Capability Building and Risk Management: Lessons from Radiata


Matthews, Mark, Innovation : Management, Policy & Practice


SUMMARY

This paper examines the wider lessons to be obtained from the story of the CSIRO-related start-up company, Radiata Inc. It shows how CSIRO's sustained trans-disciplinary capability-building efforts in radio-astronomy helped to produce a generation of electronic engineers well-versed in cutting-edge integrated circuit design and development who were also able to work effectively in commercial environments. Collaboration between radio-astronomers and engineers continued to develop via joint CSIRO-Macquarie University work examining wireless Local Area Network solutions based on mathematical techniques used in radio-astronomy and utilising state-of-the-art chip design methods. This work culminated in the formation of Radiata Inc. and its subsequent acquisition by Cisco Systems in 2001, to be followed by Cisco's withdrawal from wireless chip development in 2004. The paper considers the wider implications of this story, highlighting the importance of transdisciplinary capability-building to increasing the odds of success in the risky process of innovating. It concludes that CSIRO should continue to develop its options-based approach to valuing R&D outcomes in order to better demonstrate the ways in which capability-building can generate improved odds of success in innovation for a wide range of businesses - provided that they have access to the skilled staff generated by this type of 'rounded' training related to basic research.

KEYWORDS

Radiata; capabilitybuilding; innovation; networks; risk; astronomy; semiconductors

This paper considers the role played by CSIRO in the story of the well-known spinoff firm, Radiata. The paper tells a fairly technical story in order to communicate an important message to policy-makers. This message is that long-term capability-building involving close links between blue-sky research and engineering design skills can be extremely valuable. The paper explains how strategic decisions about post-graduate research training and research investments made by radio-astronomers in CSIRO in the 1960s helped to generate some major commercial outcomes some thirty-years later - notably the formation and sale of the company Radiata Inc. to Cisco Systems Inc. for a substantial amount of money.

The story told here covers technical issues because these are critical to understanding what capability building means in practice - beneath the rhetoric that can characterise policy debates over research commercialisation. The paper draws heavily upon a more detailed paper prepared for the Australian Government Department of Education, Science and Training (Matthews and Frater 2003). The names of individuals are intentionally omitted because specific recollections differ between members of the 'community of practice' involved and it may be unfair to name particular individuals in the context of this group-based activity that extended beyond CSIRO per se. The fact that patent infringement litigation is currently taking place reinforces the need for anonymity.

The lesson for policy-making in general, and for CSIRO's future mission in particular, is twofold; first, that this type of long-term capability building generates important option-values as a by-product of blue-sky research and, second, that these options can only be exploited if the necessary engineering and investment risk management skills linked to international networks of 'communities of practice' are also available. The inter-dependence between option values and commercial acumen complicates policy-making designed to encourage 'research commercialisation'. Whilst it is necessary to protect the intellectual property (IP) that arises from publicly-funded research, not least because businesses may appropriate and suppress potentially useful technologies if they threaten the value of corporate balance sheets, there is a significant difference between formal IP protection and extracting significant value from this IP. …

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