While physicists argue the possibilities of the existence of multiple universes, big business is creating multiple universities. By Leon Gettler
In Lilliput and Brobdingnag, Gulliver discovered that growth is not everything. But Jonathan Swift’s hero probably learned something even more important when he visited Laputa.
There he discovered linguists streamlining language by cutting polysyllables into one. These learned scholars were developing a type of discourse that left out verbs and participles. This was based on the understanding that every word was in effect a noun because it named something. In fact, some linguists were even working on eliminating words altogether and having men carry around the things being named.
Knowledge, we are told, is the essence of competitive advantage. But as Gulliver discovered, there is no advantage in knowledge without wisdom. A detailed linear didactic underpinned by a rigid world view is no way of staying ahead of the pack.
Hence the emphasis on the so-called “learning organisation” where learning is encouraged and where raw knowledge is transformed into creative lateral applications and new products (otherwise known as innovation). Such an organisation, as Peter Senge says in his book The Fifth Discipline, is one “where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free and where people are continually learning how to learn together”.
Learning and its application has been linked to business and the business of learning is booming. Among the examples are the 1000-plus corporate universities spreading through the United States and a radical plan for the world’s first private, corporate backed university linked to an established campus in Melbourne.
So much for the straightforward stuff.
For while learning and knowledge have been buzzwords since the 1980s, the issue is also characterised by misunderstanding and failure. A 1996 Booz Allen & Hamilton study, Why Knowledge Programs Fail, found that the business impact of most knowledge management or learning organisation programs was, at best, modest. According to the study, only one in six programs had any significant impact in the first two years while half resulted in “small but important benefits”. One third of the programs had little impact.
The study found that executives under pressure for short-term profitability were more inclined to shelve knowledge management or learning-organisation programs unless the programs themselves generated significant business value.
The less successful programs failed because behind the initial fanfare and general excitement, the intellectual foundations were as flimsy as sticks pushed into sand. Such programs were characterised by a lack of specific business objectives, poorly constructed programs that did not exploit the dynamics of knowledge creation and organisational change, insufficient focus on strategic priorities and an “all-care, no responsibility” management attitude where management sponsored programs without continued, active involvement.
Herein lies the problem. Few in the business world doubt the importance of knowledge; but many organisations are still grappling with its meaning. In their book, The Witch Doctors, John Micklethwait and Adrian Wooldridge echo the Booz Allen & Hamilton findings when they point out that many companies still regard a learning organisation as a product rather than a process and that few managers can explain what it actually means.
One way companies become learning organisations is to establish formal networks that absorb knowledge and channel it through its divisions. The proliferation of so-called corporate universities in the United States is part of that process. It is estimated that there are between 1000 and 1500 corporate universities in the USA. The most famous of these are McDonalds Hamburger University and Motorola University. Others include Volvo University, Southwest Airlines University for People and Disney University.
The first of these universities were established in the 1950s to train managers, but the list has expanded as major corporations began leveraging knowledge for competitive advantage and send thousands of their employees and managers through the courses. Says Norm Friberg, of Volvo’s human resources development department: “What we have to do as a learning organisation is to get everybody competent in being able to satisfy customers, and to do it in a way that’s going to be profitable for the company”.
This could of course apply to just about all the corporate universities.
But the different corporate cultures explains why there is such a variation in the types of corporate universities now available in the US. Even mid-sized companies there are now getting in on the act and setting up their own universities. As with the large corporations, the aim is to train staff and ensure that their own particular culture and winning ways percolate through the organisation.
“The corporate university is very much a state of mind”, says Mr Henry Kenyon, an associate editor of Corporate University Review magazine. “You almost have to go into the zen of the company to see what its university is doing.”
Some examples. Dell University is entirely on-line. With new products being introduced every 45 days, sales staff of the Texas-based computer giant cannot go to class but need to know the latest innovations. The way they achieve this is on a virtual campus that provides just-in-time learning of information specifically tailored for the job at hand. The New Jersey-based Prudential Insurance, which has 80,000 employees serving 50 million customers, has another approach. Its Centre for Learning and Innovation has been compared to the hub of a wheel with the business units functioning as the spokes. The role of the centre is to locate the best ideas, talents and practices in the organisation. It then arranges for these to be shared out with other parts of the corporation by inviting the skilled sections to develop a specific curriculum for the rest of the Prudential organisation. Then there is Volvo. With half its North American employees scattered across the United States and Canada the rest are around its Rockleigh, New Jersey headquarters the Swedish automotive manufacturer has a multi-site campus.
To train offsite corporate staff and independent retailers, Volvo also uses hotels, conference centres, even the training facilities of other organisations. As with a standard university, VU offers set texts and a curriculum with a variety of programs pitched at different levels within the organisation. Although training at Prudential is from supervisor level up, everyone at Volvo is required to do it from janitor through to President. Each person in the company is required to submit a development plan and individual bonuses are based on getting the right training and following through.
At Polaroid in Massachusetts, arrangements are kept more fluid and the onus is placed on employees to determine how they want to be trained.
In her book Corporate Quality Universities: Lessons in Building a World-Class Work Force, Jeanne Meister predicts that the best corporate universities of the future will grant degrees comparable to traditional undergraduate awards and will take in students outside the pool of employees. Training departments will be streamlined into smaller units with direct links to the chairman and CEOs will become “chief learning officers” responsible for channelling information through the company and building educational partnerships. Curricula will be broken into modular units, and students will be offered a range of learning options, including on-campus instruction, distance learning through satellite, on-line applications, conferences and desk-top tools such as CD-ROM. Most importantly, employees will be expected to do as much as 50 per cent of training in their own time. Corporate learning centres will be expected to turn a profit and training staffs will become professional service firms.
Costs and returns on investment are critical if organisations are to maintain their commitment to learning. According to Mr Kenyon, the first sign that a company is in trouble is when it cuts back on its university. The commitment to training, he says, is a barometer of a company’s health.
Many companies now expect their corporate universities and training centres to generate their own revenue by providing services to client sectors of the company. At Dell Computer, for instance, if the head of a division does not like the corporate university’s training, they can look outside the company for training services.
The advantage of this system is that the costs for one section of the company becomes the revenue for another, and there is a in-built imperative to ensure that the training offered by the corporate university is satisfactory and so kept in-house.
Some companies and corporate universities outsource almost all their training to consultants and training companies. Indeed, these companies are now beginning to attract venture capital and are expected to expand their operations and reach significantly over the next two years.
The demand for perpetual learning is also changing the way public institutions are delivering education. It is now standard for corporates and public institutions to strike educational alliances. One example is the Western Governors University, a virtual campus whose corporate backers include Apple, AT&T, KPMG, Microsoft, Novell and the Sloan Foundation. Due to open later this year, it will work as a clearing house for the state public universities that are approached by corporates for training curricula and fully accredited degrees.
Ms Marcy Boyd, a consultant in higher education for Coopers & Lybrand, says the focus on perpetual learning is changing the way universities look at the traditional degree: “We are moving from a degree framework to a portfolio framework that describes the particular skills of an employee. In order to put that portolio together, the employee might take classes from many different places to enrich their skill set.”
But the most striking model for an alliance between the corporate and academic world is in Australia. Melbourne University Private, which is expected to open next year, will be structured as a company limited by shares. Under this model, the University of Melbourne is negotiating with potential stakeholders who had funded the initial feasibility studies for the venture. They include CSR, Edison Mission Energy, Ford Australia, Fosters Brewing Group, Grocon, Mobil Oil, Shell Australia, Solaris, WMC Limited and United Energy. The University intends to keep majority ownership and all award courses offered at Melbourne University Private will have to be established, approved and validated by the University of Melbourne.
Stakeholders will be able to either invest in the schools and receive a dividend, qualify for a tax concession by backing the institution itself, or spread the benefits both ways. It is estimated that the venture will be worth up to $40 million. The University of Melbourne has allocated up to $25 million. This is based on an initial allocation of $10 million and a commitment to match the corporates dollar for dollar up to $15 million. It is envisaged that the return to investors will be at a modest five to 12 percent, although potential corporate backers say the real value, at least at this stage, is more strategic.
The companies have chosen to invest in a model which eschews the US corporate university line of inculcating its students with specific corporate culture. It is cheaper, but the other issue is independence.
Colin Sutherland, the general manager of Edison Mission Energy says: “For the credibility of these places, they need that independence to foster research. They don’t need to feel that any particular barrow is being pushed.”
But if the corporates have an interest in keeping Melbourne University Private independent, there is another imperative at work. The project was initially established in response to the perceived inability of many corporates to deal effectively with damaging environmental issues.
The company that has been most active in getting the idea up has been Grocon. Its executive officer, Mr David Mullaly, acknowledges that the concept arose in the wake of that company’s controversial proposal in 1995 to establish a ski resort on Mount Stirling. Significantly, Grocon has since helped establish Australia’s largest alpine university campus, the La Trobe University at Mount Buller which opened in 1997. The university is one of the first to offer a Bachelor of Business (Tourism and Hospitality).
“What we discovered was that there were significant policy and technological gaps in corporate Australia,” Mullaly says. “We were working within a technology and policy vacuum. The environmental movement was great at talking about the environment but they had no solutions either.”
Melbourne University Private will have two foundation schools energy and the environment and multimedia and information technology. These will offer advanced education, training, consultancy and R&D services in graduate and cognate undergraduate areas. The programs will be more tailored for corporate and industry needs than what exists now in the standard university programs. At the public university, the clients are individual students but at Melbourne University Private, demand will come from the corporates seeking special training and development programs. It will be a modular approach, structured to address specific requirements. The components when put together could make a formal post-graduate qualification.
The university’s vice-chancellor, Professor Alan Gilbert, says that the venture will address the problem of over-dependence on scarce federal funding. For the public university to be competitive with comparable institutions overseas, he says, it would need to spend $2 billion a year. Its revenue was now sitting at just over $600 million.
The answer lies in a model that is driven by demand and not supply. “Because of that shortfall, the university has only been able to market itself around the edges,” Gilbert says. “Unless we change, unless we are a dynamic innovative organisation, we are going to be on a pathological downward curve. We will get weaker rather than stronger.”
A demand-driven model implies more flexibility in responding to changing needs. That suggests bypassing the academic industrial award, with classes for corporates in the evenings, on weekends and during the slack times over summer, as well as special remuneration packages for teaching staff.
The blurring of lines separating the corporate and academic world could signify the demise of the university as a source of academic thought. In his book The Unconscious Civilisation, John Ralston Saul says the universities now fail to teach the elites to rise above self-interest and a narrow world view because the universities themselves have slipped into the self-interest and narrow perspectives of professional corporations.
“The universities have become to a great extent the handmaidens of the corporatist system,” says Saul. “While the universities ought to be centres of active independent public criticism, they tend instead to sit under the protective veils of their own corporations.”
Higher education expert, associate professor Simon Marginson, sees potential clashes in the area of environmental studies. He says: “It’s difficult territory for a university because it runs you up against lots of potential conflicts between commercial interests and academic freedom, between what scientists will say if they are free to say it versus what scientists will say when they’re being paid by the company.”
“The two cultures are quite compatible in some ways. In other ways, you’ve got to work to stitch them up and in other ways they tend to work against each other. Where you run into difficulties is when there is a major controversy surrounding an area that the company is acting in. That’s when it becomes difficult managing the potential conflict between the scientific desire to establish truth, to research the truth and circulate that truth in the public realm, and the company using that same information in a strategic way to advance its corporate position.”
However, Gilbert says that the biggest threats to universities are coming from governments, not from the private sector. Some of the best universities in the world, such as Harvard, Stanford and Yale, he says, operate in a mixed environment of private and public sector funds.
“It’s not impossible to have a world class university that receives the bulk of its funding from the private sector,” Gilbert says. “I would have thought the best universities have defended their autonomy fairly well, and the least independent university is one that has no resources. You’re not free if you are starving.”
The key to Melbourne University Private is its link to the blue-chip public institution in the University of Melbourne and it will be trading off that reputation for academic excellence, integrity and independence.
Knowledge and learning are being leveraged for competitive advantage, but the success or failure of the Melbourne University Private branding exercise will rest at least in part on preserving those qualities that have nothing to do with success in the marketplace.
And therein lies the broader conundrum of the growing knowledge economy.