Australia’s major government research agency, the Commonwealth Scientific and Industrial Research Organization (CSIRO), has recently changed its style of management. This paper traces the development of CSIRO from an institutional research organization to a body taking responsibility for Australia’s strategic civilian research, from an organizational perspective. The problems that this change might create in disturbing the organizational balance are outlined. Possible remedies to counter-balance and stabilize the strategic bureaucratic trend are innovative forms of organizational structure, the strengthening of individual incentives to perform applied work, increased exposure of CSIRO scientists to external influences, and improved community involvement in CSIRO’s decision-making structure.