Business Impact

From the Ivory Tower to the Bottom Line

In the 1990s U.S. companies cut costs, jettisoned marginal efforts, bolstered internal cooperation and formed strategic alliances. Hold on to your hats - universities are set to do the same.

Cornell University president emeritus Frank Rhodes chuckles recalling the incident. It was back around 1986. Ronald Reagan’s acting science advisor John McTague had toured the campus and come away extremely impressed with Cornell’s scientific investigations. Afterward, at a symposium attended by several hundred faculty and guests, he joked that he was going to devote the entire $67 billion-plus federal research-and-development budget solely to Cornell. That was when the Nobel laureate physicist Kenneth Wilson called out: “Not enough.”

Although tongue-in-cheek, Wilson’s quip was telling. For reasons that extend from rising faculty salaries to the struggle to modernize curricula and facilities, the nation’s top universities have long been addicted to growth-a major factor in driving tuition rates consistently above the inflation rate. Unable to curb their habit, even in the face of flattening federal and state support, they have turned to alternative financing methods that include inking more deals with industry, licensing inventions and other novel profit-making ventures.

But it’s getting harder to keep the growth juggernaut rolling-and far-sighted advisors have warned for years that universities will one day find themselves spread too thin. Now, a day of reckoning seems at hand. The issue goes beyond just holding down costs. A growing body of the nation’s academic leaders also feel that perpetuating the old ways of teaching and research-especially via isolated academic disciplines-could hinder learning and discovery. They’re pressing to dismantle outdated departments to focus better on core strengths and break down barriers between remaining departments to form more interdisciplinary majors and research centers-addressing what Stanford chemist and former National Science Board chairman Richard Zare terms “the realization that many breakthroughs require clever combinations of the methods, approaches and tools of different disciplines.”

These plans are strikingly reminiscent of the retooling many U.S. corporations undertook to spark innovation in the 1990s. Wielding terms like “selective excellence,” university presidents, provosts, deans and professors are engineering a major change in the way schools operate. Rhodes calls this overhaul an escape from the “Harvardization of the campus.” U.S. institutions of higher learning have for too long followed Harvard’s style of trying to excel at everything-liberal arts, library collections, science and all the rest-he said at a Cornell symposium last December. But given today’s rapid accumulation of information in an ever-expanding array of disciplines, that is impossible now, even for Harvard. Proclaimed Rhodes, “The next century, I believe, will belong to those that are successful in de-Harvardizing.”

No Pain, No Gain

The metamorphosis in progress promises to be gut-wrenching for traditionally staid campuses. Still, the historical record suggests that the university will survive. A little more than a century ago, the United States saw the emergence of polytechnic-type schools that walked hand in hand with industry by offering programs in the application of electric power and chemistry to business processes. But mirroring the country’s blossoming as an economic and cultural power, most schools evolved into broad-based institutions with many departments. A new, more academic model of the university arose, with campuses devoted to acquiring and dispensing “pure” knowledge without regard to direct commercial gains.

This ivory tower expansion also saw the embrace of science. By the 1930s, America’s scientists were vaulting to the world’s highest levels. Their ranks swelled after World War II, when the success of science in everything from the atomic bomb to penicillin prompted the government to pour money into academic research-resulting in a dramatic expansion of research universities. It’s the end of this era that is shaking up campuses today. Moreover, just as social and economic changes drove the push to ivory tower education, today’s revision is taking place in the context of a shift from a largely insular industrial economy to a global, knowledge-based or “conceptual” economy.

The need to adapt to a changing world forms the essence of “de-Harvardization.” But Rhodes and others also call it the “corporatization” of the campus, in part because it mirrors many changes recently undergone at companies such as IBM, General Motors and 3M, whose own golden age ended in the 1970s and 1980s. Indeed, facing fierce international competition, all realigned their structure and strategic direction. They cut costs, shed operations not related to core technologies, bolstered internal cooperation and formed new alliances-all strategies now being adopted by university leaders.

Money, of course, drives much of the university’s transformation, just as it did for corporations. In recent years, schools have somewhat offset the slowdown in federal and state support for research by cutting administrative overhead. But other forces, such as the need to keep professors’ salaries competitive and the hard-to-dispute conviction that more research does produce more knowledge, combined to make more substantial cuts impossible-and keep tuitions rising.

Inexorably, the need for new funding sources drove universities to industry. The bonds between the two had loosened in science’s golden age. But the new university need, coupled with corporations’ desire to offset their own slimmed-down research programs through better access to academic science, changed all that. Industry’s contributions to academe are approaching $2 billion a year-some 10 times 1979 rates. Meanwhile, a series of legislative changes encouraged universities to become patent and spinoff machines (see article: “The TR University Research Scorecard,” this issue).

But even these monetary measures and countermeasures could not stem the pressures on the “Harvard” model. No one understands this better than the veterans of the corporate wars. As former IBM vice president for science and technology John Armstrong noted in a 1996 talk, “There is no leading university of my acquaintance which does not have faculty deadwood, outdated programs and a few departments whose disappearance would raise the overall quality of the institution.” Although deadwood had been tolerated historically to protect campus stability, Armstrong argued that things would have to change “if the quality of good programs is not to be eroded because resources are being wasted on mediocre programs.” More than a few universities heard this message-or similar ones-and moved to create a leaner, meaner campus.

Slimmed-Down and Well-Connected

The leader on this front might well be venerable Yale, where in 1996 president Richard Levin unveiled the principle of “selective excellence.” Levin explained that “no university…has the resources to be the best in the world in every area of study.” Therefore, he explained, “our programs should be shaped more by an aspiration to excellence than a compulsion to comprehensiveness.”

Talk about taking on the status quo. Yale was about to shift its historically much broader focus to its core-Levin called them “distinctive”-strengths. That meant protecting first of all its noted arts and humanities programs. The biological sciences and medical school, accounting for some 40 percent of Yale’s revenues, were also untouchable. For other fields, though, it was often a matter of picking specialties where a few key faculty hires could make Yale a world leader-and letting others slip as tenured faculty retired. As deputy provost Charles Long explains: “The good get more and the not so good get less.”

Yale’s approach to engineering might best illustrate its new climate. Ever since its engineering school was disbanded in 1966-in favor of a scaled-down faculty of engineering-Yale has struggled to get its program back on the world map. Selective excellence could give those efforts a boost.

Seeing no way to compete on the scale of powerhouses like MIT or Stanford, Yale has already moved to strengthen the most successful areas-including microelectronics, imaging technology and acoustics-while adding efforts in biomedical and environmental engineering. It then worked to strengthen these programs further by joining forces with other disciplines: Witness its proposal to the National Science Foundation to create an engineering research center that would host 22 tenured faculty members from 11 departments at Yale and the University of Connecticut.

D. Allan Bromley, who spearheaded many of these changes before stepping down as engineering dean last June 30, says his organization now has teaching or research collaborations “with just about every one” of Yale’s schools and departments. “This is vitally important,” Bromley adds, “because we would not have a chance to hire faculty members to cover all these topics if we had to do it department by department, or school by school.” In this way, he notes, while Yale may not match bigger programs in turning out bench engineers, it is preparing students to better understand how technology will be developed in the future.

Other schools are taking similar action. Ohio State University recently hired renowned Berkeley chemist C. Bradley Moore as vice president for research-a position that will help him drive OSU’s own version of selective excellence. Moore describes his challenge as addressing the heightened need to focus research, while extending excellence to more disciplines. “An important aspect of most of these new horizons is that they are fundamentally multidisciplinary-so if you don’t have the strength in most of the disciplines you need, and the ability to build collaborations in the areas where you don’t have the strength, you’re out of luck,” he says.

Even before Moore’s official arrival, OSU’s College of Food, Agricultural and Environmental Sciences was leading the way to this goal-in part through its six-year-old Project Reinvent. Backed by a $1.5 million Kellogg Foundation grant, the college canvassed some 650 faculty, staff and constituents before revealing four prime elements of future success. Two centered around the traditional focus on agricultural production and economic viability. But the remaining pair expanded the program emphasis to address issues of environmental and social responsibility.

These four principles not only guide evaluations of existing efforts but the creation of new programs as well. What’s more, Project Reinvent was launched against the backdrop of a fundamental reorganization that saw the number of academic programs cut from 11 to eight-and much of the rest reoriented. The college launched new partnerships in medicine and cancer research while continuing others in areas such as veterinary medicine, biology, engineering and human ecology. It even teamed with the college of arts and sciences to bring cultural events-music, plays, readings-to rural communities. A few years ago, says dean Bob Moser, the school mustered only a handful of interdisciplinary teams. Today, there are more than 40. “I’m saying three years from now, the majority of what we do will be in a team environment.”

That same outcome isn’t far off target for Stanford University, whose sights are turning increasingly to multidisciplinary research. Few efforts, though, approach the scope of Bio-X, an initiative that blends biology, chemistry, physics, engineering and medicine to explore basic and applied biomedicine and bioengineering. The project, bankrolled by $100 million from Netscape founder Jim Clark, involves the creation of a new facility that will be staffed by some 50 faculty drawn from Stanford’s engineering, medical and humanities and sciences schools. Richard Zare, a project steering committee member, says that although interdisciplinary research has been around for decades, the growing understanding that technological innovation requires diverse skills makes it vital to unite previously individualistic departments. In the case of Bio-X, he says, immunologists and surgeons can team up to overcome organ transplant rejections, or lasers can be combined with the biology of muscle motion to explore molecular motors.

U.S. University, Inc.

Many worry that the new corporate attitude threatens the very fabric of the university. “The danger is that you unwittingly lose sight of the ultimate aim of education and that you confuse commercialization with the deeper purposes of higher learning,” warns Stanley Ikenberry, president of the American Council on Education.

Ikenberry says schools are therefore engaged in “a constant yin-yang struggle between trying to focus and prioritize on the one hand and on the other trying to maintain some idealized vision of the classical university.” Not so long ago, corporations gave unrestricted money to colleges to cultivate good will. Now, they mainly back projects that have direct commercial payoffs. Sponsors typically get first rights to the fruits of research they support, and scientists must often delay publishing their results to give corporations a leg up on commercialization.

All these concerns merit constant vigilance. But when Rhodes and other educational authorities insist the “de-Harvardization” and “corporatization” of the American campus is inevitable-and only just beginning-it’s best to take note. After all, no school can do it all. And to thrive in the current climate virtually requires a corporate-like attitude of watching the bottom line, bringing down institutional and departmental barriers to innovation-and wheeling and dealing.

Meanwhile, a host of university officials believe the potential rewards are vital to economic well-being. Frank Rhodes cites statistics that show that the alumni and faculty of MIT, long a leader among “corporate” campuses, have spawned some 4,000 companies that employ 1.1 million people and generate $230 billion in annual sales-a feat that as a stand-alone economy would rank it 23rd in the world, “between South Africa and Thailand.” That’s a strong argument for continuing on the current path. And, if revitalized firms such as Lucent or IBM are any model, anything that brings better focus and interdisciplinary teamwork to the campus will likely create a fresh spark of discovery, unleashing what Yale’s Long terms “a powerful impact on scholarship, teaching and larger society.”

Kenneth Wilson, the voice from the back of the room during McTague’s talk at Cornell, won his Nobel Prize in 1982, at the height of the ivory tower era. Now at Ohio State, even he is an advocate of the new course. “You don’t get things done by being an island unto yourself anymore,” he says. “Each university has to have its own character now. Each can figure out a way to pick its areas of strength, and then leverage those to partner with somebody else.”

By the way, he adds, that budget for university research? Still not enough.