What are international universities for?

International Higher Education Forum 2021: Keeping Higher Education Global

(Here’s a copy of my speech to the IHEF – apologies for the style!)

Let me start by thanking you for the invitation to join and congratulations to all of you and your institutions for having weathered the two storms of Brexit and COVID.

Before we get going, I have a quick question – what is the international role of universities?

• Finishing school for scions of the global elite? 
• Educational theme parks for post-adolescents? 
• Institutions for the pursuit and dissemination of knowledge?

I think we all know what we hope they’re for ... but while you ponder your answer to none or all of the above, I have good news. I mentioned Brexit and COVID but I’m not going to talk about them. 

The bad news? I’m going to talk about something equally disruptive -– the Fourth Industrial Revolution (4IR). AI, deep learning, robotics, synthetic biology – a whole suite of technologies that will drive the kind of changes the world experienced in the 19C and again through the 20C.

I can’t pretend to understand the technology but I do have some appreciation of the biggest challenge – RE-SKILLING.

The World Economic Forum – where I work – has a major, very ambitious project to work with governments to re-skill a billion people in the next decade. 

In a global knowledge economy – you would think that universities would be the natural place to start.

But I’m going to start somewhere else, with one of the companies many university graduates would dream of working for – Google.

Between 2005 and 2015 Google went from 5,000 people to 80,000. That kind of growth doesn’t just come from widening your recruitment pool from Stanford to MIT.

Back then, Google’s HR chief Laszlo Bock wanted to know who the company should hire.

He and his team looked at applicants’ academic attainment and the prestige and reputation of their degree-awarding institutions and their performance on the job and – long story short – a year or two into work, there wasn’t one.

They didn’t give up on university graduates, but they changed their approach and today roughly 15 percent of Google staff don’t have degrees. They also set the seeds for something else.

(Quick digression – Google is part of the widened global pool for elite institutions. Indian Institutes of Technology – IITs – provided elite domestic undergrad education for Alphabet CEO Sundar Pichai, and also his Google colleague and former Softbank president Nikesh Arora.) 

But let’s return to Google – a blue chip destination for grads in the 4IR. Couple of problems – university degrees don’t really equate to job performance. University grads are not the most diverse group. Typically paid higher education leaves out poorer people and minorities.

What does the 4IR mean for recruitment and training? 

World leading companies are discovering with data sourced from looking at their own hiring processes, that there isn’t really a correlation between a very expensive social expenditure (higher education) and job performance. 

They’re discovering that not just learning ability but emotional intelligence and diversity are key for workplace success, and that the last two under-served by universities. And they wonder if they could train people themselves to fill the jobs they need and get better results. 

It’s not just Google thinking this. Walmart, where a store manager can make as much as US $170k a year, has training programmes that substitute for university degrees. (Incidentally, their CEO is no Ivy Leaguer – Doug McMillon did undergrad at Arkansas, and an MBA at Tulsa.) Amazon is doing it too. 

When companies at this scale start doing stuff, in business – people get very nervous. Back in 2010, one educational chief said when Google starts issuing degrees we might as well shut up shop. He has since retired. 

Now they’re doing it. This is a Google exec mid-pandemic: 

• “College degrees are out of reach for many Americans, and you shouldn’t need a college diploma to have economic security. We need new, accessible job-training solutions—from enhanced vocational programs to online education—to help America recover and rebuild.” 

Google is offering six-month programmes that lead into entry-level jobs paying from US $65k to nearly US $100k a year. This is going to result in something that LinkedIn, another tech company, sees happening through its data. According to LinkedIn, the share of managers hired without 4-year college degrees has increased 20% since 2019.

At the top end of the employment market, blue chip employers are starting to see that degrees don’t deliver performance bonuses, or diversity, or the kinds of skills that make people valuable colleagues. 

But aren’t we in the knowledge economy? Aren’t universities engines of economic innovation and growth?

Quick pause for Robert Gordon, whose magnum opus is The Rise and Fall of American Growth. Here he is in 2018:

• “Rising educational attainment during the 20C was an important source of productivity growth, but the pace of that increase slowed markedly after 1980. Rising high school completion is no longer a source of growth, while the recent and prospective rise in the share of young people completing a four-year college degree has been slowed by a combination of declining demand and more costly supply. 
• On the demand side there has been a leveling off in the demand for cognitive skills and of the college wage premium. On the supply side the rapid increase in the cost of higher education and growing indebtedness have caused some students to drop out and others never to attempt a four-year degree.”

“Levelling off in the demand for cognitive skills” otherwise known as “too few graduate level jobs”. In the United States, the New York Federal Reserve says:

• “The unemployment rate for young college graduates exceeds that of the general population, and about 41 percent of recent college graduates – and 34 percent of all college graduates --– are working in jobs that don't require a college degree.” 

End of digression.

The second big challenge of the 4IR is what the economist Richard Baldwin calls The Globotics Upheaval – moving service jobs to more competitive global labour markets. The world has just engaged in a massive global self-enforced experiment in tele-working. Technology doesn’t remove elite education’s prestige and networks, but it removes skills barriers. 

To give an example, a friend used to manage a team of finance and legal professionals in Luxembourg. She needed to relocate to the UK. She also discovered she could do the same thing with Francophone financial and legal professionals in North Africa. These employees are not graduates of elite universities. But they have the skills and educational attainment that allow them to deliver just as good a service as those people who came from across Europe to work in Luxembourg, and their salaries buy them a better quality of life at home. 

The rarely-acknowledged secret of university education is that it is reproducible. Don’t believe me? Look no further than the United States in the 19C. That era’s land grant universities were set up to bring the exciting developments of the first and second Industrial Revolutions to farms and farmers. Offering basic curricula, and often even more basic teaching, they helped transform American agriculture and industries like mining and manufacturing.

A century or so on and a quick glance through the education histories of NASA engineers in the 1960s shows that they were not alums of Harvard and Yale, but land grants. Incidentally by the 1980s, according to Robert Gordon, two thirds of US PhDs came from these institutions. Investing legend Warren Buffett set foot on the higher educational ladder at the University of Nebraska. The CEO of Apple Tim Cook is a proud land grant graduate of Auburn in Alabama.

But, a century or so on and, like America’s private universities, they are also victims of their own success.  

• During the 1978 - 1979 school year, it cost the modern equivalent of $17.5k per year to attend a private college and $8k per year to attend a public college. By the 2008 - 2009 school year those costs had grown to $39k at private colleges and $16k at public colleges. Today, those costs are closer to $49k and $21k respectively. That means costs increased by roughly 25% at private colleges and about 30% at public colleges.

Few other things seem to have got so expensive so fast as education.

And the United States is the canary in the higher education coal mine:

• Fewer graduate jobs.
• Declining wage premium.
• Rising costs. 

The first two are society’s to fix, but what about the rising costs of higher education in our globalised world?

China’s Fudan University in Shanghai ranks an impressive 34th in the QS World Rankings (yes – I know rankings don’t matter) and charges international students about US$3.5k annually for an English-taught undergraduate degree, and that’s just a little more than the cost of a programme at one of India’s elite IITs.

Educational competition is coming in our globalised world, but so too is education nationalism. Dutch universities have pioneered anglophone international education, but now nationalist politicians and university lecturers are railing against it.

“What happens to the identity of a people of a country where the native language is no longer the main language of higher education?” – one Dutch professor told the BBC.

The threats from the 4IR are not lecturers replaced with robots. They are the same threats every industrial revolution has thrown up. Old industries will be transformed or replaced. New skills will be required. Old industrial revolutions proceeded with leaving Dickensian tales of ‘creative destruction’. E.P. Thompson’s The Making of the English Working Class details the inhumanity of a process ungoverned by law or policy. 

The humane management of this process is the responsibility of all of us – but especially of the higher education sector.

Britain had ancient universities during the first industrial revolution. They did not disseminate or pursue knowledge at the frontier. The UK’s first physics and chemistry labs were established not at Oxford or Cambridge but at Glasgow University. Adaptation came from new institutions, not from the oldest and most prestigious. 

Therein lies the hope and opportunity for the sector. If the challenge of opening up higher education to more flexible delivery, to meet the needs of the under-represented, to meet the needs of people at all stages of their working lives, is to be taken up this time around – universities need to rise to meet those challenges.

But it will need support and imagination from government and partnership with business to ensure that cost, flexibility and delivery meet everyone’s goals.