In the knowledge economy, the Metropolitan University is King
Universities traditionally had two roles in the economy; they educated the workforce and they conducted basic research which in the main, the private sector would commercialise. For sure, governments would nudge university research towards their own industries and corporates and universities had partnerships. However, the latest move by the UK government, building on existing trends elsewhere, is to move universities directly into the economic system not merely as suppliers of brains or useful research but as critical components in the innovation economy.
The UK government’s new policy is the Knowledge Exchange Framework (KEF) which will accompany TEF (Teaching) e.g. the supply of brains and REF (Research) the supply of basic research. KEF aims to encourage and support universities in the UK to match their peers in the USA and Australia in creating economic value via knowledge transfer(e.g. transferring expertise into industry) and university spin offs. The timing isn’t ideal, TEF and REF are forcing universities to compete on two different tables (previously they were largely judged on research outcomes) and it comes as fees and funding is are under considerable strain.
For the successful Universities however, there could be considerable gains to be made. Traditionally universities take government funds to undertake basic research which by definition tends to be the most risky and the chance of a commercial pay-off being slim. When the basic research reaches a more advanced stage, the private sector steps in, often conducting further research to translate basic into applied and then attempts to commercialise it. The classic example are pharmaceuticals, universities conduct basic research into say cancer cell behaviour, if they find a promising avenue, a pharmaceutical company will turn that into a drug for profit. The problem is that the university which did the legwork often gets nothing in return, leading to what the economist Mazzucato refers to as ‘socialisation of risk, privatisation of rewards’. By encouraging and supporting universities to support and commercialise their research themselves (or in partnership with the private sector). KEF offers universities a chance to take a share of the profits and gain a return on their investment. This could lead not only to a return on investment but potentially increase the funds available to for research, critical at a time when the taxpayer funding is under strain. Many universities already do this with Oxford University’s Innovation and MIT’s new venture capital fund but two examples.
The benefits are not just to the university. A new report by the Brookings Institute has shown that Universities in urban areas deliver more economic value than their rural peers and in doing so contribute to economic growth and jobs. Urban universities produce more patents, startups and corporate partnerships. The reason they argue lies in the factors of production: cities tend to have more educated workers, entrepreneurs and venture capitalists, coupled with universities geared towards knowledge transfer and you have a thriving ecosystem for innovation.
The same logic has driven Tsinghua University to partner with University of Washington to open a new campus called the Global Innovation Exchange in Seattle. The project is unusual in that Microsoft will contribute $40m to the project with the aim of developing Seattle as a tech hub, Microsoft will sit on the board and help facilitate university-industry collaboration. This isn’t an isolated deal, Cornell University partnered with Technion to create a technical campus in New York. Governments, cities, businesses and universities are increasingly developing dense ecosystems to facilitate the innovation required for knowledge economies with the current examples likely the start of this emergent trend.
