To the business campus, all knowledge is success

Companies are becoming more like universities and universities are becoming more like companies. These twin phenomena predate the internet. Glaxo, the drugs group, was almost like a university research department that just happened to be a quoted company until it discovered Zantac, the anti-ulcer treatment which became the best-selling drug in the world. Profits from that catapulted the company into the global premier league, then came the merger with Wellcome and so on.

Companies are becoming more like universities and universities are becoming more like companies. These twin phenomena predate the internet. Glaxo, the drugs group, was almost like a university research department that just happened to be a quoted company until it discovered Zantac, the anti-ulcer treatment which became the best-selling drug in the world. Profits from that catapulted the company into the global premier league, then came the merger with Wellcome and so on.

Similarly, Arthur Andersen operated almost as a small university on a campus in St Charles, Illinois, long before Andersen Consulting was spun off into a separate entity. The St Charles operation has actually been one of the few unifying elements of those two groups in an increasingly difficult relationship.

But universities have been spawning entrepreneurial ventures for decades. Long before the Cambridge science park was built, or Massachusetts Institute of Technology thought of setting up Nicholas Negroponte's Media Lab, the University of Manchester Institute of Science and Technology was pioneering business ventures.

The new communications technologies have put pressure on both sides to step up the pace at which they narrow the distinction. Thanks to these, knowledge has become more diffuse and more valuable. Companies have to find ways of developing the intellectual capital of their people. If they don't, the best people walk.

Universities have to develop new income streams because their present funding would render them unable to pay enough to retain staff. Each side is under the gun.

So both race on. Every university worth its salt has an incubator fund. Every company worth its salt has relationships with universities to pick up and help develop commercial applications for their ideas.

How will these relationships develop? It is tempting to conclude that if the present trend continues, the gap between a university and a corporation will become blurred to near-invisibility. Yet there are a host of difficulties. The success or otherwise of both types of institution will depend largely on their ability to overcome these.

The biggest single difficulty is the culture gap. The way academics and business-people work is utterly different.

An example: the managing director of an economics consultancy took an angry call from a client when a report was late and the client could not contact the man responsible. The MD confronted the miscreant. Oh, he explained, they were waiting for more data, the project would be ready in a couple of weeks and he was sure the client would want the best possible report.

What had happened was the consultant was applying university culture - a culture where PhD theses are often handed in months late - to the commercial world. It did not occur to him that if something was late this was big trouble, and failing to return a phone call was bigger trouble still.

And when someone who has spent a career in business becomes head of an Oxbridge college, they think their job is to be an executive, to identify what needs doing, obtain the resources for it and make it happen. In fact, that key skill in most instances, has been to be a good fund-raiser.

But as the cultures merge, each needs to take on the cloak of the other. Thus, conventional fund-raising is much less effective than successful incubation, which does require business skills. And the loosely-structured research approach of universities is a key aspect of the generation of big ideas, a few of which will eventually generate big money.

The other great difficulty is the different structure of ownership of universities and commercial institutions. Ultimately, a commercial institution has to produce results for its shareholders. It may do so by increasing the capital value of the stock rather than paying dividends, and that may involve trying to grow the business rather than growing profits. Arguably, growing the business may turn on reputation for excellence, something to which universities also aspire.

Universities are under more commercial pressures, because higher education has gone from an industry where there is shortage of supply to one where there is shortage of demand. It is almost like changing from a command economy to a market one. But being responsible to shareholders is different from being responsible to the governing body of a university.

Universities cannot be taken over if they underperform; they cannot raise large-scale funds by issuing new shares; they cannot finance overseas acquisitions, and without substantial new capital they cannot turn themselves from largely domestic organisations into multinational ones.

Given these still-sharp distinctions, how should the thoughtful business executive, or the thoughtful vice-chancellor, employ this convergence to improve the performance of their organisation?

The idea for both is to build relationships at every level. The more a university knows about local businesses, or businesses which have activities relevant to its areas of special expertise, the more likely it is that each will spot things which will help the other. This must pertain at all levels, for good ideas are as likely to be "bottom-up" as "top-down".

At its simplest, the more undergraduates do summer jobs in local companies the more likely it is that some idea in the university will be transformed into a commercial venture.

The idea for universities is to use their long-term "club-like" relationship with their students, past and present. It is much easier to run virtual clubs now that the internet has cut the cost of communication.

People identify to an extraordinary extent with their university; much more so, indeed, than to their first employer. Up till now, universities have tended to use this asset mainly to raise money. Instead, they should use it to give as well as take, because if they do that, they, too, will benefit from the relationship.

And finally the idea for companies is to create a learning culture by grabbing people from local educational institutions and getting them to help lift general educational levels.

This should not be too utilitarian: if people want to learn ancient Greek then that is fine. The key point about knowledge now is that it is impossible to know what knowledge is useful and what is not.