Business People Meeting Conference Discussion Corporate Concept

A Vision For University-Business Engagement in Australia

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Cooperation and collaboration between universities, business, government and the community is a major plank in contemporary innovation systems thinking. There is an expectation that stronger interactions and relationships will lead to improved productivity, performance and competitiveness at the firm, regional and national levels. There is often a presumption that if potential connection points are identified, knowledge will flow through some process of transfer and translation. Governments have established programmes to facilitate these flows, although their effectiveness is rarely evaluated.

There is a vast difference between the way innovation systems are described in terms of knowledge flows, and the way they operate in formal and even semi-formal ways. The working of innovation systems relies to a large degree on initial personal contacts and networks and their subsequent formalisation through a hierarchy of understandings and agreements – starting from informal assistance and advice, transactional contracts for commissioned research and consultancy, through to more formalised memoranda of understanding, affiliation agreements and partnerships, and finally, to binding joint ventures and incorporated entities.

This movement from transactions to partnerships requires the development and application of skills and systems for relationship management and capacity for the negotiation and execution of sustainable longer term partnerships that involve senior executive level input from all parties. This input not only addresses issues relating to teaching and research outcomes, but also matters concerning commitment, cost and risk. The development of these relationships must also occur in an increasingly complex university-business model.

The changing university-business model

Universities are regarded in manifold ways the provider of common benefits and the ‘doer of social good’. Universally accessible and affordable public higher education systems have become an economic and social necessity for advanced nations, states and communities. However, Australian policy makers have not until quite recently shown much systematic interest in providing the adequate funding to secure these benefits. The foreshadowed Innovation Science Australia (ISA) National Innovation System Strategic Plan to 2030 provides an opportunity to address this issue.

The Cooperative Research Centres (CRC) Programme, established in 1992, and ARC Linkage Scheme are held up as exemplars, but like most other mechanisms aimed at enhancing the transfer and translation of research for economic benefit (Howard, 2015), the funding levels are hardly sufficient to have far reaching economic impact1. In an environment of tough fiscal restraint policymakers look to universities to raise funds from students and industry to finance these ‘third mission’ activities. Financially, Australian universities have done well out of international education and the demand driven student funding system over the last five years.

Institutionally, universities in Australia are independent and autonomous public organisations established by State/ Territory Governments. They are not charities or an arm of government. Apart from conditional funding, there is a limited range of public policy instruments to influence university decision making and resource allocation. It is well acknowledged, of course, that universities respond well to financial incentives.

There is no one single model of a university. They work within their statutes with strategies, structures, processes and systems to achieve mission, goals and objectives determined by governing boards (councils/senates). Universities have substantial regional and local impact, and can be leaders in regional innovation ecosystems. They are also substantial property developers and have an impact in the urban and regional development landscape. They can provide (and have provided) leadership in urban planning and renewal. Some have also developed integrated ‘system’ strategies covering higher education, vocational and school education – often without the policy support – to meet industry demand for skills.

Australian universities are major players in the global higher education industry, and within this industry setting they are both collaborators and competitors. They collaborate in accessing research funds from international organisations, including the EU Horizon 2020 Programmes. However, they compete vigorously for students, faculty, research grants, revenue, rankings, prestige, and senior executives. In this respect, they behave like any other global business.

Universities are also substantial businesses, run on a commercial (business-like) basis. In 2015, total revenues for all Australian public universities amounted to $28.6 billion (the largest, University of Melbourne, had revenues of $2.1 billion). Total sector net assets amounted to $50.3 billion. They generated a positive cash flow on operations of $3.5 billion, and paid $3.2 billion for property, plant and equipment. Receipts from students and ‘other customers’ amounted to $10.6 billion. Increasing size creates increasingly complex organisations, demanding greater professional specialisation. Related commercially oriented businesses are also emerging.

The competitive environment, together with the business orientation, may cut across the objectives of delivering national (and state and local) economic and social benefits. This includes encouraging (inducing) students into a university environment where other education options, including a VET based qualification would be more appropriate. Moreover, the university and VET systems operate in separate policy, jurisdictional and funding contexts. This is despite employers indicating that they require a mix of academic and occupational learning.

There is a widespread view in Australia that universityindustry research collaboration is not working well. University research focus and performance is not considered to be matching, or responding, to industry requirements. This view centres on a perceived ‘failure’ of knowledge transfer – an inability on the part of industry (and government) to tap into and exploit for industrial and economic purposes the knowledge that is generated through research. Universities, and particularly academics, are portrayed as being unresponsive to business and industry needs, and businesses are criticised for not being able to articulate their needs. University administrative processes and procedures are also major barriers.

The contemporary observations about ‘the failure of knowledge transfer’ echo those made 15-20 years ago. Much of the ‘failure’ is attributed to differences in cultures and motivations between universities and businesses, as well as behavioural and attitudinal issues among academic staff. Public policy action is advocated to change cultures, attitudes, and incentives in this domain. But the ‘failure’ may reflect a deeper innovation system failure that can be traced to a transactional approach and understanding of university-business relationships and basis of knowledge transfer. That approach reflects a commodity view of the nature of knowledge built around the idea of merchandising of knowledge products captured in Intellectual Property Rights (IPRs).

But of course, IPRs have absolutely no value unless they are used. Moreover, and apart from a few ‘blockbuster’ patents, universities make very little money out of sale and/or licensing of IPRs. Most university technology transfer offices in Australia lose money. However, for many universities, an IPR provides a seat at the table in a longer term, sustained university-industry collaborations and partnerships built around strategies that address the goals and objectives of each party. In the business community, there is a widespread appreciation that market oriented transactions are underpinned by high levels of trust and strong relationships. People do business with people they trust. The same consideration applies to working with universities.

The future of university-business interactions is heavily contingent on building stronger trust based relationships through a step change increase in the capacity and capability for engagement as a foundation for interactions and relationships. Engagement shits the relationship from one based on buying and selling to one based on a joint and genuinely collaborative approach to capturing business and further research opportunities presented by knowledge breakthroughs.

Building capacity for engagement

Relationships between organisations work best when trust and confidence is established at the governance (Board, Council) and executive (CEO, Vice-Chancellor) level. They do not work well when the approach is built around transactions with researchers looking for money to fund their already established research projects and interests. Whilst universities are oriented towards what Ernest Boyer referred to as a scholarship of discovery, businesses are much more oriented towards a scholarship of application and implementation. These forms of scholarship are not independent but are integrated into a scholarship of engagement. Building the capability for engagement is a critical challenge for effective university-business interactions (Boyer, 1995, 1997).

In general terms, business people do not know much about universities or how to work with them—notwithstanding that many business people are university graduates and hold post graduate qualifications. Similarly, in Australian universities, very few chancellery executives, faculty deans, and directors of research centres or institutes have had business experience, particularly in a line management or operational role. It follows that the task of building sustainable university-business engagement is not a trivial undertaking. It is not only a question of what to do, but also how to do it effectively.

The task of university engagement management therefore is to open conversations with business and establish an intermediary and translational role between the research, professional development and extension capabilities within a university and the strategic and innovation management roles and responsibilities within a business (or NGO) organisation. Arguably, this role is performed more effectively within university management structures than by independent third parties or agents. Recent experiments in Australia using third party intermediaries have not lived up to expectations (Howard, 2007).

These factors point to a requirement to build capacity to create longer term trust based relationships between university staff and senior managers in business. Such an approach cannot be mandated by structures: it requires agility, flexibility and acceptance of some uncertainty in relation to outcomes. This is the cornerstone of effective engagement management. Universities have been using a variety of engagement instruments, including adjunct appointment policies, to build business relationships. Senior university staff also participate actively in business forums and regional development councils.

Effective engagement is much less about structures, and more about systems and people wanting to ensure that relationships are developed, managed and sustained. But in a tight economic climate, this activity must be funded, and value must be seen to be created and delivered for all parties. Government ‘seed’ funding can be important in this respect, but it is not the role of government to dictate terms of engagement through programme funding frameworks, guidelines and conditions. Government should be there as an intermediary—not just as a resource provider (although the resources are nice to have).

Building and sustaining business-university relationships requires a specialised skill and capability with intermediaries and brokers having knowledge of missions and values of both sets of institutions. In recent years, universities have made appointments at a senior executive level for people to build engagement with industry. These roles extend beyond technology transfer and searching for research income and well into building confidence with a university about the importance of strong long-term relationships. Appointees to positions of DVC Research and Innovation are expected to be able to build trust with potential industry partners.

Successful businesses have created effective customer relationship management (CRM) systems to build greater understanding about their customer and client bases. The technology exists for universities to know much more about their ‘customers’ – the people and organisations who currently and potentially demand their knowledge and the knowledge services that can be derived from it. Building this capacity for relationships and engagement requires development of a strong service culture with supporting investments in people and technology.

The path to better engagement also means working with business and business organisations to create awareness of how universities operate, and build confidence about the prospects of working with a university as an organisation, rather than individual academics. This means engaging directly with university Councils and Vice-Chancellors on a business-to-business basis. Moreover, universities require strong guidance on what government (at all levels), industry and the community wants the national tertiary education system to deliver in terms of economic, industry and social outcomes in an economy built on the generation and application of knowledge.

 

About the Author

Dr. John H. Howards | Adjunct Professor UTS Business School | Adjunct professor and Academic Fellow University of Canberra | Managing Director Howard Partners Pty Ltd.

John Howard is a highly regarded senior executive with knowledge, skills and experience in management strategy, public policy, strategic communication, community engagement, local government and regional development. He has successfully operated a specialist management consulting and policy advisory firm over an 18-year period and hold senior executive roles in government, universities, and global professional services firms. John develops and implements corporate communication and engagement strategies; advises Ministers and public agencies providing evidence based advice; including the topic of engagement between higher education, industry and government, and the transfer and translation of knowledge for economic, social, and community benefit.