Universities and Innovation: Clever Financial Plays May Help Big Companies, Not Students

February 7, 2024

green-dino_thumb_thumb_thumbThis essay is the work of a dumb dinobaby. No smart software required.

I read an interesting essay in The Economist (a newspaper to boot) titled “Universities Are Failing to Boost Economic Growth.” The write up contained some facts anchored in dinobaby time; for example, “In the 1960s the research and development (R&D) unit of DuPont, a chemicals company, published more articles in the Journal of the American Chemical Society than the Massachusetts Institute of Technology and Caltech combined.”


A successful academic who exists in a revolving door between successful corporate employment and prestigious academic positions innovate with [a] a YouTube program, [b] sponsors who manufacture interesting products, and [c] taking liberties with the idea of reproducible results from his or her research. Thanks, MSFT Copilot Bing thing. Getting more invasive today, right?

I did not know that. I recall, however, that my former boss at Booz, Allen & Hamilton in the mid-1970s had me and couple of other compliant worker bees work on a project to update a big-time report about innovation. My recollection is that our interviews with universities were less productive than conversations held at a number of leading companies around the world. The gulf between university research departments had yet to morph into what were later called “technology transfer departments.” Over the years, as the Economist newspaper points out:

The golden age of the corporate lab then came to an end when competition policy loosened in the 1970s and 1980s. At the same time, growth in university research convinced many bosses that they no longer needed to spend money on their own. Today only a few firms, in big tech and pharma, offer anything comparable to the DuPonts of the past.

The shift, from my point of view, was that big companies could shift costs, outsource research, and cut themselves free from the wonky wizards that one could find wandering around the Cherry Hill Mall near the now-gone Bell Laboratories.

Thus, the schools became producers of innovation.

The Economist newspaper considers the question, “Why can’t big outfits surf on these university insights?” My question is, “Is the Economist newspaper overlooking the academic linkages that exist between the big companies producing lots of cash and a number of select universities. IBM is proud to be camped out at MIT. Google operates two research annexes at Stanford University and the University of Washington. Even smaller companies have ties; for example, Megatrends is close to Indiana University by proximity and spiritually linked to a university in a country far away. Accidents? Nope.

The Economist newspaper is doing the Oxford debate thing: From a superior position, the observations are stentorious. The knife like insights are crafted to cut those of lesser intellect down to size. Chop slice dice like a smart kitchen appliance.

I noted this passage:

Perhaps, with time, universities and the corporate sector will work together more profitably. Tighter competition policy could force businesses to behave a little more like they did in the post-war period, and beef up their internal research.

Is the Economist newspaper on the right track with this university R&D and corporate innovation arguments?

In a word, “Yep.”

Here’s my view:

  1. Universities teamed up with companies to get money in exchange for cheaper knowledge work subsidized by eager graduate students and PR savvy departments
  2. Companies used the tie ups to identify ideas with the potential for commercial application and the young at heart and generally naive students, faculty, and researchers as a recruiting short cut. (It is amazing what some PhDs would do for a mouse pad with a prized logo on it.)
  3. Researchers, graduate students, esteemed faculty, and probably motivated adjunct professors with some steady income after being terminated in a “real” job started making up data. (Yep, think about the bubbling scandals at Harvard University, for instance.)
  4. Universities embraced the idea that education is a business. Ah, those student loan plays were useful. Other outfits used the reputation to recruit students who would pay for the cost of a degree in cash. From what countries were these folks? That’s a bit of a demographic secret, isn’t it?

Where are we now? Spend some time with recent college graduates. That will answer the question, I believe. Innovation today is defined narrowly. A recent report from Google identified companies engaged in the development of mobile phone spyware. How many universities in Eastern Europe were on the Google list? Answer: Zero. How many companies and state-sponsored universities were on the list? Answer: Zero. How comprehensive was the listing of companies in Madrid, Spain? Answer: Incomplete.

I want to point out that educational institutions have quite distinct innovation fingerprints. The Economist newspaper does not recognize these differences. A small number of companies are engaged in big-time innovation while most are in the business of being cute or clever. The Economist does not pay much attention to this. The individuals, whether in an academic setting or in a corporate environment, are more than willing to make up data, surf on the work of other unacknowledged individuals, or suck of good ideas and information and then head back to a home country to enjoy a life better than some of their peers experience.

If we narrow the focus to the US, we have an unrecognized challenge — Dealing with shaped or synthetic information. In a broader context, the best instruction in certain disciplines is not in the US. One must look to other countries. In terms of successful companies, the financial rewards are shifting from innovation to me-too plays and old-fashioned monopolistic methods.

How do I know? Just ask a cashier (human, not robot) to make change without letting the cash register calculate what you will receive. Is there a fix? Sure, go for the next silver bullet solution. The method is working quite well for some. And what does “economic growth” mean? Defining terms can be helpful even to an Oxford Union influencer.

Stephen E Arnold, February 7, 2024


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