Coursework masters degrees in Australia have experienced rapid, decentralised growth since deregulation at the end of the 1980s. The result is an extraordinarily high level of diversity and some confusion as to standards, strategic positioning, purpose and educational approaches. Throughout this period of growth, a sense that large-scale (often distance-education based) collaboration between universities and with industry would be beneficial has not always led to successful outcomes. Using a new collaborative, industry-funded postgraduate coursework program as a case study, this paper describes the issues that decision-makers need to address and evaluates the challenges and benefits of the coursework masters in higher education. The outcomes of industry surveys, student interviews and action research suggest that postgraduate coursework can facilitate technology transfer and aid capacity building, through mechanisms similar to "mode 2" research. With some additional systems to ensure sustainability and standards, this could position coursework masters to be uniquely valuable nationally.