The nature of the contemporary university and the forces that drive its evolution are complex and frequently misunderstood. The public still thinks of us in very tradi-tional ways, with images of students sitting in large classrooms listening to faculty members lecture on subjects such as literature or history. The faculty thinks of Oxbridge—themselves as dons, and their students as serious scholars. The federal government sees another R&D contractor or health provider—a supplicant for the public purse. And armchair America sees the university on Saturday afternoon as yet another quasi-professional athletic franchise. The reality is far different—and far more complex.
The classic and highly simplified triad of higher education, of teaching, research, and service, branches extensively. In one of our early planning exercises, we attempted to list the various activities of the university in the hopes that we might be able to red-pencil all but the most important of these activities—our “core competencies”—
in our efforts to reallocate limited resources. Our brainstorming sessions led to the following network of activities:
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We could break up each of these missions still further. For example, the education mission branched as follows:
The research mission can be best understood by identifying our intellectual products:
Research
Alumni: lifelong learning and enrichment Faculty, administrators and students
The most complex mission is public service.
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After identifying these multiple missions, we asked the planning group to cross off all but the most critical activities. Not surprisingly, we managed to cross out only a few of the items on the list. All of the other activities were felt to be essential by someone in the group. (And those we had marked out were later reinstated by several members, after further reflection.)
This branching network of multiple missions creates a very different image of the modern research university than that commonly perceived by students, faculty, or society: that of a very complex, international conglomerate of highly diverse busi-nesses. To illustrate, consider a simple organizational diagram of “business lines” of the University of Michigan, Inc.:
The University of Michigan, with an annual budget of roughly $3 billion per year, and an additional $3 billion of investment assets under active management, would rank roughly 390th on the Fortune 500 list. We educate roughly 50,000 students on our several campuses at any given time. This would correspond to an educational business line with a budget of roughly $1 billion per year. The University is also a major federal R&D laboratory conducting over $450 million a year of research, supported primarily from federal contracts and grants.
The U of M, Inc.
We run a massive health care company. Our university-owned hospitals and clinics currently treat almost a million patients a year, with a total medical center income of
$1.2 billion per year. We have a managed care corporation with almost 150,000
“managed lives.” In 1995 we formed a non-profit corporation, the Michigan Health Corporation, which allows us to make equity investments in joint ventures to build a statewide integrated health care system of roughly 1,500,000 subscribers—the patient population we believe necessary to keep afloat the tertiary hospitals that we own.
We are already too big and complex to buy insurance, so we have our own captive insurance company, Veritas, incorporated in New Hampshire. We have become actively involved in providing a wide array of knowledge services, from degree programs offered in Hong Kong, Seoul, and Paris, to cyberspace-based products such as the Michigan Virtual University. And, of course, we are involved in public enter-tainment with the Michigan Wolverines. That $250 million under the Michigan Wolverines on the chart is not our athletic budget—our operations amount to “only”
$40 million per year. But when we include licensing and marketing—including even the “block M,” which we have copyrighted—our college sports activities become a far larger enterprise. It is big-time show business!
The corporate organization chart shown above would compare in both scale and complexity with many major global corporations. And it is not unique to Michigan.
Most of the major research universities in America are characterized by very similar organizational structures, indicative of their multiple missions and diverse array of constituencies.
The university today has become one of the most complex institutions in modern society—far more complex, for example, than most corporations or governments. We are comprised of many activities, some non-profit, some publicly regulated, and some operating in intensely competitive marketplaces. We teach students; we conduct research for various clients; we provide health care; we engage in economic development; we stimulate social change; we provide mass entertainment (athletics).
In systems terminology, the modern university is a “loosely coupled, adaptive system,” with a growing complexity, as its various components respond to changes in its environment.5
The modern university has become a highly adaptable knowledge conglomerate because of the interests and efforts of our faculty. We have provided our faculty with the freedom, the encouragement, and the incentives to move toward their personal goals in highly flexible ways. We can see the university of today as a type of holding
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company of faculty entrepreneurs, who drive the evolution of the university to fulfill their individual goals.6, 7
We have developed a transactional culture, in which everything is up for negotiation.
The university administration manages the modern university as a federation. It sets some general ground rules and regulations, acts as an arbiter, raises money for the enterprise, and tries—with limited success—to keep activities roughly coordinated.
The entrepreneurial university has been remarkably adaptive and resilient through-out the 20th Century, but it still faces serious challenges. Many contend that we have diluted our core enterprises of learning, particularly undergraduate education, with a host of entrepreneurial activities.8 We have become so complex that few, whether on or beyond our campuses, understand what we have become. We have great difficulty in allowing obsolete activities to disappear. We face serious con-straints on resources that no longer allow us to be all things to all people. We also have become sufficiently encumbered with processes, policies, procedures, and past practices that our best and most creative people no longer determine the direction of our institution.
If we are to respond to future challenges and opportunities, the modern university must engage in a more strategic process of change. While the natural evolution of a learning organization9 may still be the best model of change, it must be guided by a commitment to preserve our fundamental values and mission. We must find ways to allow our most creative people to drive the future of our institutions. Our challenge is to tap the great source of creativity and energy associated with entrepreneurial activity in a way that preserves our core missions, characteristics, and values.
1 John Henry Newman, The Idea of a University, Frank M. Turner, Ed. (New Haven: Yale University Press, 1996) 366 pp.
2 John Dewey, Democracy and Education (New York: MacMillan, 1916).
3 Gerhard Casper, Come the Millennium, Where the University?”, Annual Meeting of the American
Educational Research Association, San Francisco, April 18, 1995.
4 Harper’s Weekly, 1885.
5 K. E. Weick, “Educational Organizations as Loosely Coupled Systems,” Administrative Science Quarterly 21: 1-19 (1976).
6 R. S. Lowen, Creating the Cold War University: The Transformation of Stanford (Berkeley: University of California Press, 1997).
7 B. S. Clark, Creating Entrepreneurial Universities: Organizational Pathways of Transformation (Surrey:
Pergamon Press, 1998).
8 S. Slaughter and L. L. Leslie, Academic Capitalism: Politics, Policies, and the Entrepreneurial University (Baltimore: Johns Hopkins Press, 1997).
9 Peter M. Senge, The Fifth Discipline (New York: Doubleday Currency, 1990).
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