The strategic examination of R&D review currently being undertaken by the Australian Government issued a discussion paper to facilitate public input into the review. Surprisingly the paper did not include a definition of R&D. This made it difficult for me to provide feedback as it was unclear whether their definition was constrained to systematic research processes (as reflected in their current incentive programs), or included more incremental and iterative processes typically used by start-ups when developing innovative software.
There are various definitions of R&D available across the internet. Some link it to systematic processes for discovering new knowledge while others define it as the first stage of creating new services and products.
Another way of defining R&D is by breaking it down into more basic constituent components:
These components are shown in a the stacked chart below which shows their overlap on a spectrum that goes from knowledge (left) to profit (right).
I wont go into defining these components as they are quite obvious and easily further investigated, however note the following:
The real value of this breakdown can be seen when considering the overlaps of the components. The chart below shows some key elements of these overlaps:
If we look at the development column, we see examples of the types of development projects associated with basic research, applied research and innovation. For research (basic and applied) projects, development is far more specification driven with new knowledge up front, and process oriented. On the other hand, the iterative nature of innovation development means that new knowledge is gained in small amounts with each iteration. This necessarily requires more flexible processes.
The commercialisation column shows commercial related activities specific to R&D and the approach to profits/costs. For commercialisation at the applied research level, managing costs is important however profit is not a driver. For commercialisation of innovation, profit is a driver. However, in all cases, minimising development (and production) costs is important.
Obviously the above is a generalisation and there are other ways to slice and dice R&D. However the beauty of looking at these overlaps, is that they clearly show how development of novel services and products in areas like software, fit into the R&D pipeline.
Also by considering commercialisation in the R&D pipeline, it suggests that the overlap of innovation and commercialisation is the sweet spot for policy focus if we want to improve Australia’s commercialisation of R&D.
As Chris Berg and colleagues point out in their submission to the Australian review, previous efforts to improve Australia’s R&D commercialisation have achieved only limited success. I think this reflects an excessive focus on the “knowledge” end of the spectrum and insufficient attention to the “profit” end. The knowledge side is easier to reshape through policy: it is organised, procedural and benefits from concentrated advocacy. The profit side is far more complex - the boundaries between engineering and innovation are far more blurred, and regulatory change is politically difficult; our culture tends to deprioritise growth and progress when judging acceptable levels of change in safety and lifestyle insulation.
So it is understandable that reviews tend to focus on the easier knowledge side of the above knowledge/profit spectrum. However it is then somewhat incongruous for the R&D review to lament about Australia’s lack of commercialisation while limiting focus on this.