Universities are remarkably robust. The average age of the top 20 European universities is 345 years. They are not only resilient in the face of profound historic changes; they are indispensable to society. They underpin scientific and technological progress, contribute to cultural life, produce knowledge and educate the highly qualified people modern economies depend upon. Universities’ challenges matter to all of society.

Addressing universities’ opportunities and problems in an age of uncertainty requires outstanding strategic leadership. All of us – inside and outside academia – should take an interest.

Universities face significant challenges

As higher education systems around the world grow in scale and scope, there are simultaneous pressures on the government and corporate expenditures supporting universities. At the same time, university research is needed to understand and ameliorate the existential threats of climate change and the environment, health and well-being (obesity, aging, microbial infection), energy and food security, economic and political uncertainty, growing inequality between and within nations, religious and racial intolerance and the use and abuse of data. And universities face growing public scepticism about their expertise along with rising demands for compliance from unsympathetic governments. Their license to operate increasingly depends on demonstrating high value and impact.

For many years, university leaders have been encouraged to learn lessons of strategic management from the best-run businesses. While many general management skills are transferable, there are significant differences in the mix and complexity of issues faced by university leaders compared with most corporations. There are many opportunities for the learning to go both ways, too, and the private sector can learn from well-run universities.

To build sustainable and impactful organizations, leaders – in academia or business – need to look beyond the current landscape, question assumptions and think critically and analytically.

The key challenges and skill requirements of university strategic leaders
Image: Mark Dodgson David Gann

Working with business is essential, but requires careful management

An important strategic issue is how universities connect with business – and this provides an example of their management challenges. Today, most universities include external engagement along with teaching and research as part of their core mission, and for some, industrial funding has become a significant component of their income. Budgetary diversity and growth are key strategic objectives as universities respond to increasing opportunities and the scale and scope of challenges in science and technology and particularly engineering.

The management of university-industry relationships has become a testing and sometimes contentious issue, with tension and conflict between “corporate-like” behaviours and traditional university culture, such as the “ivory tower” mentality. Many scholars refer to clashes between institutions of academia versus industry: the tension between norms of public-good research versus commercial interests.

But businesses are also changing, mindful of the need to address employee concerns to give purpose and meaning to work, while at the same time, address environmental and other long-term societal and economic challenges. In these areas, industry leaders can learn from academia.

Universities need effective strategies

Addressing universities’ challenges requires strategic leadership that reconciles the traditional strengths of their culture with new forms of engagement. University leaders can build upon the collegiality and common concern for the pursuit of public-good knowledge in their organisations. These traits can also help transforming business. Universities can connect the application of research to social, economic and environmental problem resolution, and to how businesses contribute to addressing these problems.

It is the risk-taking of businesses, the scale and reach of large firms and the entrepreneurship of small firms that turns research into innovations of value to society. As strategic university leaders build connections with the private sector, they must assure academics they are not being subjected to inappropriate managerial practices, and at the same time, encourage them to be more “business-focused” when engaging with pressing societal problems. Their key to success lies in enthusiastically engaging with the private sector while being clear the purpose of this engagement is to further the core academic mission of the university. The universities that succeed at this have significantly enhanced their collaboration with industry and improved the ways in which they operate and the services they provide to students, staff and communities.

There is convergence in the leadership requirements of universities and corporations. Similar skills are needed to run large, complex organizations. Universities are concerned with operational efficiencies and the service experience of their students. Leading corporations fund research and exhibit characteristics of “learning organisations.” Both university and corporate leaders prioritize ethical behaviours and environmental responsibilities. Both appreciate that in uncertain and unpredictable environments, where innovation is a key priority, there are advantages to being agile and responsive to new opportunities, and in strategies that are evolving rather than written in stone. Leaders in universities and corporations learn to build on the advantages of co-locating universities and businesses in innovation clusters and districts. All leaders need the skills of judicious delegation and the ability to avoid being bogged down in day-to-day problem resolution.

But there are also significant differences. While university leaders need not worry about their stock prices (and are less easily sacked), they do need to manage a wider range of stakeholders, deliver short-term and prepare for the very long-term as their staff are fiercely protective of their self-determined research and education agendas. They are charged with protecting the academic freedoms that may produce results uncomfortable for powerful interests.

Our research into university strategic management draws on the organisational theory concept of “hybridity” and the management literature on “ambidextrous organisations.” We find that with effective strategic leadership, universities can be both hybrid, or able to reconcile different organisational logics, as well as ambidextrous, meaning they focus both on excellence in existing activities and operations as well as explore new areas. They do so not by massive transformation in mission, strategy and structure, but by melding the old and the new. Strategic leaders use their deep domain knowledge of the sector and their institutions to craft new approaches and practices that complement existing behaviours. They support and demonstrate the way greater business engagement meets the objectives of universities and their staff of having a positive social impact. They provide frameworks, policies and incentives to support and reward academics for external engagement within clear ethical guidelines.

One implication for universities includes the greater need for focus and selectivity in the problems with which they engage, and hence the partners they choose to work with. This requires distinctive and compelling offers around their particular abilities. The strategic process of deciding what and what not to focus upon is itself highly emergent, evolving over time. It also involves the challenging strategic consideration of how to support emerging areas of science.

University cultures are slow to change, and their leaders are aware of the need to build better forms of engagement over time. Sophisticated new skills and managerial competence are being nurtured – for example, in understanding the disruptive effects of technologies such as AI on university activities. Leaders continually search for new ideas and practices to assist the development and implementation of emerging strategies, recognising their institutions are players in a diverse range of ecosystems. Organisational structures and processes are developed to align both parties and resolve potential conflicts. New roles are being created, often with the separation of responsibilities akin to a chief executive officer (vice-chancellor/president) and chief operating officer (chief academic officer/provost), along with senior leadership positions in engagement and innovation. Their governance seeks a balance between the benefits from Boards or Councils sufficiently large to draw on deep expertise from their diverse stakeholders but small enough not to be unwieldy.

For universities whose raison d’être is the furtherance of experimentation and learning, leaders should adopt strategies that are experimental and based on learning at their core.

With thanks to Professor Max Lu, President and Vice Chancellor, Surrey University, for his comments and insights.