Funding higher education - World Banksiteresources.worldbank.org/INTECAREGTOPEDUCATION/... · Funding higher education 5th World Bank ECA Education Conference Budva, Montenegro, 29

Funding higher education

5th World Bank ECA Education

Conference

Budva, Montenegro, 29 October 2009

J.G. Wissema

Delft University of Technology

Wissema Consulting Ltd

www.wissema.com

Wissema Consulting Ltd 2

Main theses

1. Universities are subject to a number of developments that will lead to a new business model for universities called the 3GU

2. This change requires different models for funding of higher education

3. Knowledge-based enterprises adopt the Open Innovation concept

4. Universities have become cradles of NTBFs and thus play an important role in the National Innovation Systems

5. Universities will therefore be engaged in the commercialisation of their know-how. This will be their third objective

1.

Towards the Third Generation

University

Wissema Consulting Ltd4

Three generations university

First Transition Period

Second Transition

Period

1100 14001250 1550 1700 1950 2100 2250

Medieval or First Generation University

Humboldt or Second

Generation University

Third Generation

University


Contours 3rd Generation University:

1. The basis is fundamental research

1. The difference between Higher Professional Schools and universities is research

2. The difference between top universities and lesser universities is fundamental research

3. It is essential to have a good output of international publications (national publications do not matter anymore)

4. Membership of the top league is obtained by publications in top journals

5. It is essential to have academics in Editorial Boards and have them attend international congresses



2. The future is in transdisciplinary

research

1. The 19th century had mono-disciplinary research, the 20th

had multi- and interdisciplinary research

2. Transdisciplinary research is: there are more disciplines than people sitting around the table

3. Transdisciplinary research is best carried out in Institutes, not faculties

4. These University Institutes are highly focused and they have an international orientation

5. They incorporate PhD research and specialised MSc courses



3. the 3GU is an open university

1. In research, education and commercialisation of know-how there is considerable cooperation with industry (technology-based enterprises, production firms, start-ups)

2. There is also collaboration with independent research institutes and other (international) universities

3. The motto is: “Even the best cannot go it alone”

4. The 3 GU is an open university: via know how carousel and including an academic hospital


The Cambridge Phenomenon

• In 1960: few commercial activities around the university

• Now 3000 high tech firms with direct employment of

60 000

• Development largely due to private initiative and

initiatives of Colleges

• After 1996 university seeks cooperation with industry

• After 1997: government funds for commercialisation

• Business School in 1990, Centre for Entrepreneurship

in 2003

• Many groups of business angels and professional

service firms and other private initiative

• Still largest number of Nobel Laureates (72)



4. The 3GU has to compete in an

international market

1. In fact, there are three competitive markets: for the best students, the best academics and the best corporate and state-funded research contracts

2. The 2GU was very much a stand-alone institution with almost a regional monopoly for the intake of students

3. By contrast, there was a good deal of competition in the Medieval university (1GU)

4. The 3GU realises it has to compete in international markets; national status does not count for much



5. The 3GU is a two-tier university

1. Except for a few, universities cannot avoid being mass universities with standard courses for all students and focus on educational efficiency

2. In order to provide for the best students, the 3GU offers special courses (“honours degrees”) that have extra value in the market

3. Such students get better facilities, more staff time and no multiple choice exams

4. Only invited students can participate in these courses

5. The two-tier university offers special opportunities for the best academics and serves to keep them



6. The 3GU fosters creativity

1. In the 3GU, there is place for research other than “more of the same” (small science)

2. Original work needs special support and protection

3. There is a central role for the Design Faculty; no 3GU without a Design Faculty

4. The Design Faculty is instrumental in the commercialisation of research



7. The 3GU is cosmopolitan

1. The 3GU is a cosmopolitan university with English as lingua franca

2. This puts a heavy burden on staff and students who have to master command of English language

3. It also puts a burden on the Board of Management which has to provide for a cosmopolitan culture, taking into account the different cultures and religions of staff and students



8. the 3GU has three objectives

1. The 2GU had two objectives: research and education

2. The 3GU has a third objective: Know-how exploitation, of equal importance to the other two

3. This is reflected in the composition of the Board of Management, in which there is a member responsible for this subject

4. Know how exploitation will be integrated with research and education



9. The 3GU is disentangled from the

state1. 2GUs were mainly funded directly by the state

2. 3GUs do not receive direct state funding

3. Funds for (fundamental research) comes from state grants, via Science Foundations, industry and grants

4. Students pay cost-covering fees, getting scholarships from state- or privately funded Education Foundations


The 3rd GU octagon

Exploitation as

third objective

International

know how hub

Transdisciplinary

research

Cosmopolitan

university

Distentangled

from state

Two-track

university

International

competition

3GU: basis is

fundamental

research

Creativity and

Design Faculty

2.

Models for funding HE


Financing the Medieval University

Fees from students

Income from property

UniversityGrants from princes


Financing the Humboldt University

Fees from students

Research grants

UniversityGovernment grants

Research funding

agencies


Financing present universities

Fees from students

Research grants


Research funding

agencies

Third party income

Endowments


Financing the 3G University

Fees from students

Research grants


Research funding

agencies

Third party income

Endowments

Scholarship

foundation

3.

Knowledge-based enterprises

adopt the Open Innovation

concept


Five stages of industrial R&D

pre-scientific

introduction of

scientific

methods

technology market strategy

driving force

'technology' of

research

management

introduction of

collaboration

1. Trial and

error

2. Technology-

push3. Market-pull

4. Strategy-

steer

5. Tech

business


Regime 5: Tech-business

• R&D becomes a profit centre

• It can work for internal clients as well as externals

• Basic research is farmed out

• The company will only carry out those activities in which it has a leading edge; the rest can be outsourced

• Emphasis shifted from technology management to innovation management and research became part of a value chain that clearly created value


Open innovation at Shell

• Operational problems are solved by the company itself

• Shell has cancelled fundamental R&D in the downstream and gas businesses

• It has merged R&D and engineering in a company that also works for third parties, hence a full profit centre (Shell Global Solutions)

• For backup from fundamental research, the company has signed framework agreements with 8 leading universities, the world over

• “Chief scientists” act as intermediaries


Innoventive

• “the world’s first open innovation market place”

• Started in 1998 at Eli Lilly, spun out in 2001

• “Seekers” post problems on their website, offering prizes

• “Solvers” (180 000) offer services

• As of Sept 2009, 900 challenges from 150 firms, including multinationals. 400 have been solved

• In one case, ROI was 74% (3 months)

• Innoventive takes great care of IP issues

• Now “Innoventive@work”, seeks solutions inside a company


Open innovation is more…

The company's Business

Units and Corporate

Business Development

The company's Know-how

Department

Buying IP

Selling IPSelling new

ventures

Collaborating

with partners

Buying new

ventures

Selling old

ventures

(advice)

(advice)

4.

Universities and technostarters


Who are the technostarters?

• Technostarters are students or staff members who establish their own technology based firm

• They are people with initiative who are willing to take full responsibility of their own life and work

• Technostarters are learners and good organisers

• Most technostarters do not want to work for a boss …..

• ….but some see the start-up as a career opportunity as industry needs entrepreneurs, not managers

• It does not take a special gene. Every student or staff member can become an entrepreneur


Why do people do it?

• I want to take responsibility for my own future (53%)

• I relish the challenge of going it alone (52%)

• I want to be my own boss (48%)

• I have a unique idea (43%)

• I want to make more money (28%)

• I am unhappy in my job (19%)

• I want flexible working hours (8%)

• I am unemployed (6%)

Source: Shell LiveWIRE Entrepreneur of the Year Award Finalists Report

2004


Role of the technostarters

High technology companies are both an

important part of our world’s economic growth

as well as the place where many young

entrepreneurs realise their dreams

John L. Hennesy, President of Stanford

University and (co-)founder of high tech firms


Bank Boston Report

• In 1997 there were 4000 MIT-related companies (located world wide)

• These employed 1.1 million people

• Annual world sales of $232 billion

• That is roughly equal to a gross domestic product of $116 billion, which is comparable to the 1996 GDP of South Africa or Thailand

• MIT also “imports” entrepreneurs as many companies were not spin-outs of the university but rather company founders who came to Massachusetts to benefit from the presence of MIT


Social trend

Year EU NL

2000 51% 41%

2001 48% 33%

2002 45% 30%

2003 47% 35%

2004 45% 33%

Percentage of workers who want to be self employed

Source: EU Survey

5.

Universities will therefore be

engaged in the commercialisation

of their know-how. This will be

their third objective


How to go about commercialisation?

• Distinguish different kinds of customers and different kinds of R&D

• Create specific instruments for know-how commercialisation and collaboration with industry

• Make this subject the third university objective, with a Board member allocated to this task

• Create interdisiplinary institutes for fundamental research (faculties are old hat). These institutes can give high focus Master’s courses as well

• Create facilities and lectures for technostarters


Examples commercialisation

• Universities like the top US universities and Cambridge, TU Munchen, Wageningen and Leuven have concluded multi-million contracts with leading industrial firms, especially in the areas of IT, life sciences and energy. These are often long term contracts

• TU Wroslav has created Wroclawskie Centrum Transferu Technolgi and an extensive incubator and science park

• Many universities support local industry with short term contracts, often not in a systematic way


Know how commercialisation

Collaboration and

commercialisation of

know-how

Contracts with existing

enterprises

Creation of new

technology-based firms

Pre-

competitive

research

Production

firmsSpinouts

Techno-

starters

Large

compa-

nies

Effort

obligation

Embedded

research

Licensing of

patents

Research-on-

demand

Result

obligation

Interactive research

Documents

Funding higher education - World Banksiteresources.worldbank.org/INTECAREGTOPEDUCATION/... · Funding higher education 5th World Bank ECA Education Conference Budva, Montenegro, 29