Education or enterprise: is a new university the same as a business start-up

 

By James Newby – President and CEO at NMITE.

 

Is a university the same as a business?

It is tempting to start this article with the often asked question, what is a university? But that would risk inviting a long and soul searching debate about the value and purpose of education which I think is better explored some other time. Let’s take it as red that, beyond their clear and obvious role in educating and preparing the next generation of young people to be the graduates with the skills our economy needs and, more broadly, to be the responsible citizens that will contribute positively to society, universities are businesses and must overcome most of the same challenges that companies face.

Most of the UK’s traditional universities are large, often multi-national organisations with multi-million pound budgets and thousands of staff. They generate billions of pounds in inward investment into the UK, can drive the economic development of whole regions and often influence the shaping of entire new industries with their knowledge, creation, and industry partnerships. Whatever your view about whether they are businesses or not, there is no doubt that they are important to business.

Given the importance of universities to business and economic success, one would assume that we need more of them, especially in those regions of the country that have no university to call their own – the so-called Higher Education “cold spots.” New businesses start up all the time; they are positively encouraged – even incentivised to do so – by national and local government. But new universities are so rare that they almost never happen. The New Model Institute for Technology and Engineering (NMITE), one of the country’s first new Higher Education Institutions to start-up from scratch in a generation, provides some interesting comparisons with the more common experience of starting up new businesses. After a couple of years on this higher education start-up front line, I can share some lessons about the experience of leading a new HE provider and the role they could play in warming up those cold spots.

NMITE: A new model for a new world

NMITE is one of the first completely new Higher Education Institutions created in the UK for a generation. We aim to change the way engineers are trained and provide life chances for the people in our region, which has been left behind by the economic development enjoyed in other parts of the country.

We are different mainly because of our unique academic philosophy. NMITE students learn in multi-purpose studios, not lecture theatres, on project-based challenges provided by industrial and community partners. Our programmes include, along with all the expected engineering content, substantial elements of humanities, the arts and business. It’s integrated engineering with the emphasis on integration. Admissions processes are far more open than normal – A level maths or physics are not prerequisites for entry and the programme is designed to ensure that people with less academic backgrounds can succeed. Other institutions include elements of these in their programmes, but only NMITE brings it all together into a completely new academic offering and learning experience. Our students are not taught engineering, they learn how to be working engineers.

The role of universities in supporting business and economic development

Policy makers have long grappled with how to get the new knowledge created in universities into productive use in the real economy. Universities with deeply ingrained industrial partnerships are incredibly powerful forces for economic activity. They attract businesses to the skills, innovation and knowledge hot zones that emerge around them, often creating geographical clusters of organisations that become world leading centres of innovation and technical development in specific industries.

The ”golden triangle” of Oxford, Cambridge and London is a good example of the economic power of universities. The world-leading institutions in these cities attract thousands of high value jobs, hundreds of innovative businesses and billions in investment into the UK economy. On a much smaller, and more local scale, NMITE is starting to generate the economic green shoots of activity in our region. Businesses have relocated to position themselves close to our specialist centres, developers have invested in new buildings to house our activities and government is agreeing new grants for social projects led by NMITE, which will create important new educational opportunities in our community. NMITE is already generating new economic activity and improving the life chances of our local population.

Does anyone want or need new Universities?

No one would disagree about the need for new investment in left-behind areas of the UK, and most also accept that economic recovery will need to be driven by the creation of higher-value jobs and the new technology-based industries that are emerging from the research centres in Britain’s university system. But despite this, the UK government has an uneasy relationship with higher education. The sector is perceived by some as one of the last unreformed bastions of the public sector. Bloated and inefficient, and enjoying a privileged status that protects it from the rigours of the free market. Demand for places to study generally outstrips supply so the sector as a whole enjoys a pretty guaranteed annual student intake (accepting that there is much jostling for students between individual institutions). Top universities, the so-called “selecting institutions” don’t even need to work too hard to attract students. Their job is to simply select the best individuals from the thousands of applications they receive from well-qualified A-level students, drawn to the institution by its heritage, reputation and globally recognised brand.

 

But the language used by government in recent years to describe its priorities for higher education is starting to sound a lot more like the language used to describe its approach to business. It speaks of wanting to encourage innovation via new providers who will challenge those traditional institutions. It wants more choice for students, particularly via different models of delivery and different approaches to the traditional three year, residential undergraduate experience. The government believes the sector should do more to remove the barriers to higher education for those large groups of people who won’t ever be in a position to apply to a Russel Group university. The sector must help address the chronic skills deficit which is hampering the national drive to improve productivity. And areas of the country that don’t host a university need special attention to ensure their populations enjoy the same educational opportunities as their counterparts in more affluent areas.

 

We need new universities because they drive innovation, and they need leaders prepared to challenge the status quo.

 

Leading new universities: lessons from the front line

Is leading a university anything like leading a business? Of course it is, especially when leading a new provider at an early and entrepreneurial stage of its development. You worry about all the same things: cash flow, customer acquisition and retention, regulatory compliance, finding and keeping the right staff, building your reputation and connecting with the local community.

 

Anyone with the grit, determination and creativity – and the required amount of luck – to start a successful business could probably also effectively lead an innovative new university. But they are not entirely the same. Anyone fortunate enough to get the opportunity to move from leading a business to a university – especially a new provider – should be aware of the differences. My five lessons from the front line, learnt the hard way, might help.

 

1. Knowledge is not created on production lines. Universities are communities of scholars and learners and their leaders need to respect this. Academic colleagues need time to think and time to debate things. They will maintain a loyalty to their academic discipline in addition to their institution and this means collaborating with competitors and sharing knowledge. Leaders need to allow the time and space for that to thrive. There is a reason why very few Higher Education Institutions are led by people who were not previously academics.
2. Everyone has an interest. Universities do not (normally) have shareholders, but they do operate with a range of stakeholders who often act as though they own the place! Students are more than customers; they are part of that community of scholars and learners. The local community will expect a direct say in the development of the institution which could impact on their lives, and local and central government and regulators, will wag their finger at you regularly. You will never be short of advice.
3. You work with fixed prices (but rising costs). Universities are one of the only businesses where the price of services are fixed by government and capped at a limit set several years ago. The key challenge for leaders is making the numbers work when costs rise continually but tuition fee levels stay fixed. The £9,000 fee limit for undergraduate courses in the UK was set a decade ago and in today’s money is worth about £6,000. This fundamental constraint affects everything – you will need to adapt constantly to keep the ship sailing.
4. One size fits all regulation. Universities are subject to all the same regulations that businesses are – and that is onerous enough. But at least business regulation is tailored to ease its burden on new and small businesses. Policy makers understand that regulation in business must enable and encourage innovation, entrepreneurship and enterprise. University regulation makes no such allowances, and the smallest providers must comply with exactly the same regime as the behemoth institutions with much greater resources.
5. Life on the edge. The most important lesson I have learnt is that a new university must have something new to offer, and it must stay new. We kept the word in our institution’s title as a constant reminder to us of this. New universities must push the boundaries of knowledge and of educational and teaching practice or else what is their point? This does mean that the yearning for the safety and stability of the “steady state” where everything is predictable and reliable is probably the signal that it’s time to hand over to another leader.

Extending the social and economic benefits of new higher education providers to those left behind areas of the UK is an opportunity we cannot afford to miss. It will be the key to successful Levelling Up. And leading a new university is a unique experience. The job is so worthwhile, the mission so important and the magic that can be created so inspiring, that I hope many more get to experience it.