"We're not like India, we can't waste talent," Chappell told the Sydney Morning Herald. "They can have a few fall over and there will be someone there backing them up, but we don't have the talent pool they have, so we have to be a lot more efficient.
"You might have ten players at the end of the under-19 programme, but we need to get the majority of those guys through to the next level. How does a player develop mental toughness? You develop mental toughness in the heat of the battle; nobody has come up with any other way.
"That means we have to work with the states to make sure that if we have identified these players, they get opportunities in all formats over the next few years, which can sometimes counter what the state thinks is important for them."
The Test team, he said, could use the services of the three senior statesmen, Ricky Ponting, Michael Hussey and Simon Katich, but only so long as their selection remains "viable", with them scoring runs and guiding the transitional team. "They are mature cricketers, they know what the landscape is and that they can't play forever. As long as they can bring something to the table, not only the runs or wickets, but the input they can have with the group, they are viable.
"We've got a new captain (Michael Clarke). Change isn't just about personnel, it's about attitude and intent and about tactics, and I'm sure Michael will bring different thought processes to the captaincy. That is a positive thing. I don't think we need to make wholesale changes to see regeneration within the team."
Shane Watson, Australia's new vice-captain, should remain in the opener's slot, Chappell said. "We need players who are going to help us win games, and Shane Watson opening the batting can help us win games. His bowling also gives the flexibility to play an extra spinner in Sri Lanka or an extra pace bowler in South Africa."
Chappell, who took over Australia's captaincy from elder brother Ian in the '70s and then had his sibling play under him, said Clarke and Ponting should be able work around the rather awkward scenario of a team containing its former leader. "The one that is stepping down has to be conscious of the fact he is no longer in charge.
I was fortunate [with Ian], I leaned on his experience and I am sure there were times when he had to bite his tongue and wait for me to either ask questions or wake up. I am sure there will be such times for Michael and Ricky as well, but they will work it out."
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