University Business Relationships – No Easy Fix

Howard Partners
21 Aug 2014

The recently published ACOLA Report, The role of science, research and technology in lifting Australian productivity provides an excellent summation of the opportunities for applying knowledge and skills in science and research across a range of industries and sectors. The Report has a strong focus on the manufacturing sector.

The Report laments, however, the paucity of university-business relationships. It proposes a number of ways to address the problem including enhanced incentives and rewards, funding, cluster development, and intermediary organisations. I would argue that relationships need to be addressed in a “business to business” framework, rather than business people and academics looking for transactional opportunities in some sort of ‘market for ideas’.

Universities and businesses have fundamentally different missions but, increasingly, universities are being run on a ‘business-like’ basis. In fact, universities are among some of Australia’s (and a region’s) largest businesses, with five having revenues in excess of $1.5bilion. Collaborations must therefore make ‘good business sense’. Whilst most Australian universities are public organisations, they are not charities. Only a small part of their funding now comes from government. Increasingly, universities are looking for ways to improve their internal businesses practices and processes in order to lift their own productivity performance.

I have had a long standing interest in the issue of university-business relationships through projects for government and industry, and my time as a university executive (Pro Vice-Chancellor Innovation and Engagement) at the University of Canberra. I was successful in negotiating a number of collaborations between the university, industry and NGO organisations. I sought to get to know business through membership of boards/committees of business organisations in Canberra and the Capital Region with good effect.

A large part of my role involved introducing academic staff to business people (and vice-versa). It was clear at the beginning that many of these organisations did not understand a university, or what it was all about. Business was also very poor at being able to articulate what it would like a university to do to assist them. This applies to both the teaching and research domains. Governments, of course, have grown to understand the economic, social and cultural significance of international students.

I recall that whenever I brought a collaboration proposal to the VC, he would always pose the question about ‘what’s the benefit for the university?’ This had to be in the academic domain as well as being able to stack up financially. Proposals from academic staff generally had to go through the same ‘business case’ assessment with Deans and DVCs-R. I also spent a lot of time writing grant applications which involved extensive financial modelling.

It is also worth making the point that while the issue of university-business relationships gets a lot of airplay, there is less given to the complex relationship between academic staff and university executive staff, and between individual academic objectives and institutional policies and practices. This is not well appreciated outside a university – and quite often within it. One area I had to deal with concerned policies relating to outside work where there were substantially differing views – ranging from laissez faire to very tight control. Enterprise agreements also have a lot to say about how staff can use their time.

Even now some academic staff would still like to negotiate their own IP arrangements (outside the purview of Technology Transfer Office). Others like to seek funding opportunities to support their research interests directly from business, on transactional basis, without involving the Research Office – but which generally involve very small amounts. These can work against developing institution wide collaborations, partnerships and ventures.

Consultancy income generated by academic staff does not account for much within this academic assessment process (although it might be essential for the financial viability of a research centre – see below). Results, impact, and change effected rarely get a weighting in these internal processes – although they are becoming important in the external ERA contexts.

My observation is that, contrary to overseas practice, Australian universities do not see economic, industry, or regional development as part of their missions, and taking a central place in their strategic plans – except where it contributes to research and teaching. There is no ‘third stream’ funding mechanism. I have argued before that this should be principally a State/Territory responsibility – but only Victoria and Queensland have taken this really seriously. A number of LGAs have strong relationships with their regional university.

I see evidence that universities are getting much better at developing their research strategies and priorities. These have a very strong focus on achieving academic standing (and global rankings) rather than specific industry engagement. There are, nonetheless, many very successful collaborations where there is a win-win for the university and business partner. Quite a number are global in their orientation. The ACOLA report, The role of science and technology in lifting Australian productivity, makes reference to a number of these. I also saw examples in my recent work on knowledge transfer in the steel industry where there are several large collaborations between Australian universities and Chinese businesses.

I am not convinced that ‘transactional-based’ solutions such as independent intermediaries and vouchers will do the trick in building strong university-business relations. The ACOLA report did not refer to the Howard Partners work on intermediary organisations several years ago. Many intermediaries are heavily transaction oriented, in a ‘brokerage’ role, whilst others largely operate as consultancies. Intermediaries are probably best located within universities. In research organisations ‘intermediaries’ are often referred to a business development managers (BDMs).

Relationships between business and universities develop around trust and mutual understandings which take time to develop. Personal interactions and relationships rather than money are generally much more important. University of Canberra and some other universities are using honorary and adjunct appointments as ways of building relationships with business: these are not trophy positions. The MoU is a good way to start the ball rolling too.

The business model of the university is changing as a result of continuing government cutbacks (and the growing need to be self financing), the emergence of a global higher education industry, and the greater requirement for a combination of theory based and practice based learning. In this context a significant amount of university-business collaboration is conducted through university research centres and institutes which generate their own funding, have clear objectives, and often separate arrangements for staffing and visiting appointments. CRCs are of course a special case – but there are scores of others.

I have referred to these type of organisations as “Institutions for Engagement”. But there is comparatively little understanding of the models, their modus operandi, how they relate to the main business of the university, and what works best. It may be worth exploring the opportunities for building and strengthening these institutions as a foundation for improving university-business collaborations in the science and technology area. My premise is that industry engagement is much easier through these institutions rather than direct faculty engagement. There are quite often healthy tensions between Directors of Research Centres, Deans, DVC-Rs, and VCs.

My report on university business engagement in the steel fabrication Industry identified and explored a number of institutional arrangements for greater collaboration. But getting the ducks lined up can be a major challenge. Time and money are very scarce resources these days.