What is an entrepreneurial university and how does it fit with your organisation?
This is just one of a series of questions posed by the keynote speaker at the 5th edition of the Entrepreneurship Development in Higher Education (EDHE) Programme’s Executive Leadership Workshop (ELW), that concluded in Cape Town recently.
Professor Calie Pistorius (below), Extraordinary Professor at Stellenbosch University, and Director of a UK-based innovation management consultancy, DeltaHedron, was addressing deputy vice-chancellors, deans, executive directors and managers from 24 of South Africa’s 26 public universities. This was at an annual ELW, which, this year, sought to explore how innovation can be encouraged in undergraduate programmes across disciplines, and how to strengthen universities’ innovation commercialisation for social impact.
Speaking on The Impact of a Healthy University Innovation, Commercialisation and Entrepreneurship Pipeline, Professor Pistorius said he was sceptical of textbook definitions of terms like entrepreneurial and innovation as meanings change over time.
He said a talk on innovation ought to be interpreted in social innovation terms. “The question we need to ask is: Are you solving the right problem? What is the Job to Be Done?” For example, he said, people bought washing machines because they want clean clothes, not washing machines. “That is the problem to be solved and the job to be done. You need to ask what job it is you want done at your institution and to examine how to optimise your options.”
He mentioned the importance of framing the question correctly: Do we know enough about the problem? In the knowledge domain there were known knowns, known unknowns and the dangerous unknown unknowns – ‘problems you didn’t know existed’. The questions to ask are: What am I missing here? What am I trying to solve? He cautioned the academics about their biases and assumptions when solving problems and urged them to write them down and challenge them, saying: “Avoid getting caught up in the moment.”
Universities, whose job it is to educate students, are in the people business. “But it’s about the alumni, not the students, about what happens to students when they’ve left. Universities are in the knowledge business: you can create, improve, store, transmit or diffuse it. You can also transform knowledge and apply it.
“Universities should be in the business of taking the knowledge that they create, doing stuff with it and then teaching the students how to apply it.” He added that knowledge can also become obsolete and be replaced by new knowledge that provides a better solution. He cited the original analogue cell phones which were replaced by digital devices, and Pluto, once thought to be a planet, that is not one anymore because of a change in definition.
The point was to provide students with the latest, not the original, knowledge.
For or not-for-profit
Professor Pistorius said the distinction between for-profit and not-for-profit organisations is that the former exists to make money, and success is measured by the share price (if a public company) and profit reinvested or paid out as a dividend.
In not-for-profit public universities, profit is called a surplus. Success is measured against how you perform against your mission, which is what you set out to do and how well you did it. “Therefore, you need to understand what your mission is as well as its vision and value. In for-profit organisations, you do things to make money; in not-for-profit ones, you need money to do things.”
He said academics should ask themselves if they had used the resources (surplus) they had to do the job needed to meet their mission.
Quoting from Peter Drucker’s book Innovation and Entrepreneurship, Professor Pistorius said not every new business is an entrepreneurial enterprise. To be entrepreneurial you need to create something different and the way that changes and transmutes values.
An important element, he said, is the risk aspect, without which an initiative is not entrepreneurial.
He described universities as being conservative and risk averse and warned: “They don’t change easily so be careful to think you run an entrepreneurial university. It sounds good, but if, at the core, it is conservative and risk averse, it doesn’t happen.”
Who is the entrepreneur?
He then said it was crucial to establish whether the university itself or the student, was the intended entrepreneur, posing a series of questions academics needed to ask.
- “If it’s the university, the question is: should it be?
- “If the university works in a bigger eco-system, should it be the midwife rather than the entrepreneur?
- “If entrepreneur means someone who commercialises stuff and you have a start-up or organise resources to make money, who appropriates the benefits?
- “Should the university empower its alumni, its students, its staff to do the entrepreneurship as opposed to the university?
- “Do you do entrepreneurship through the university – in a spin off company (the registrar gathers a team and registers the company, the finance department runs finances, the university marketing department markets the product). Or, do you bring in partners, incubators, techno parks, campus companies and venture funds.”
“Doing business” which you do in an entrepreneurial venture – whether for profit or for surplus — is very different from “doing academia,” he said, adding that people who work in a university – teaching or doing research – have a certain mindset. “Is the university best positioned to run businesses? There is also the danger of mission drift: organisational structures need to be aligned; people need who know what they are doing. They need space and money and partners (local, regional, national, international) who can help with this. Ultimately, you need not an output but an outcome.”
“If you want to be an entrepreneurial university you have to act like one. Commercialising all your investments is great, but make sure that you:
- Invest in your stars
- Incubate, feed and nurture new programmes without taxing them to death before they’ve had a chance to grow
- Improve the quality of decision making
- “Bonfire of Bureaucracy”: Cut bureaucracy, don’t encourage it
- Invest in ways to (seriously) improve efficiency and effectiveness
- Encourage paperless, continuous meetings to speed up decision making
Professor Pistorius said inventions create new knowledge while innovations create new wealth (financial wealth, cultural wealth etc). “Something novel and new is not innovative; the market has to adopt or diffuse it first, which is where commercialisation comes in. But there has to be an organisational fit.
“I’m an engineer and we’re good at teaching students how to design things. We should be teaching them about the need for successful innovations that include invention and getting them to think what it will take for the market to adopt these.
“To be a good innovator do you need to be good at both invention and diffusion and decide whether you, as the university do it, or get someone to do it for you.” He told how inventor Elias Howe could not sell his sewing machine. His friend, Isaac Singer, helped by a new financial innovation – the higher purchase scheme – sold millions.
“Often the inventor is not the innovator.”
He mentioned three types of innovation, namely radical innovation (no pilot drones have replaced World War II spitfires and jet engine planes); incremental innovation (continuous improvement): and preventative maintenance (innovative entrepreneurial universities need intellectual sustainability.)
What the university produces
- Educated students (Alumni)
- Impact of/by alumni (they are the multiplier of university’s impact)
- Teaching (empowering) students to be good researchers
- Making a difference
- Researchers and/or research
- Measuring performance: understand your Mission; what has your alumni achieved? It’s a metric that UK universities are measured on: how many graduates are employed six months after they graduate.
Questions academics need to ask around commercialisation
- Don’t confuse “commercialisation” with “diffusion/adoption”
“Commercialise” means a spin-off, manufacturing, licencing, royalties and market adoption.
- Who appropriates the benefits?
- Should (public) universities commercialise new knowledge?
- What do you want from it? Revenue? Diffusion? Public benefit?
- What do you need in the university to do it? (Organisational fit).
- “For profit” vs “not-for-profit”: doing both at the same time is difficult.
- Using experts leads to real business unconstrained by the university mindset.
Some case studies
- The University of Pretoria
Changing a rule that restricted consulting to the engineering faculty; allowing all academics to consult as long as they went through the university’s prescribed entity and had dean’s sign off led to the successful creation of Pty Ltd companies owned by the university. Companies were created specifically to do consulting, contract research, commercialisation, venture funds, running a campus bookstore, selling T-shirts etc. Partners were brought in. The University, as the owner, appointed directors of the board and did not interfere with the running of the company.
“This supported the University’s academic endeavours. There was no misalignment. It took a long time to shift the culture, but everybody eventually saw the benefit. It’s been consolidated into one company called Enterprises University of Pretoria (Enterprises UP) which saw a total turnover of R232,4 million in 2021.
- Hull University in the United Kingdom
Recorded an impact on the economy of £590-m while supporting 6 100 full time jobs. For every pound the University handled, it created 25 jobs in the UK.
Created an innovative (hybrid, online) new Master’s Degree in engineering management, targeted at early to mid-career engineers and scientists. The programme is entrepreneurial and innovative and has been structured to fit their life environment. Enrolment has exceeded expectation: 84 in 2022 and 105 this year.
Professor Pistorius summed up by outlining what he thought were pertinent questions to be asked by universities and areas to concentrate on:
- Framing the question … good place to start
- What is the “job-to-be-done”?
- What is the “best way to do it”?
- Business model: do you go it alone or get partners?
- Do you produce research or researchers and where is the balance?
- Are you empowering people to make an impact (knowledge) are they proactively shaping the future, rather than reactively to a world they inherited?
- Is your mission clearly articulated?
- Does everybody know what your mission is? (stakeholders, staff, students, alumni, funders and donors, council, the public)
- Is everything they do aligned to promote the mission?
Professor Pistorius left his senior academic audience with this question: “What will happen if we, perhaps, start thinking in terms of the ‘Smart University’?”
Charmain Naidoo is a contract writer for Universities South Africa.