| The Future of U.S. Research
Universities: Adapting to Global Competition Thank you for that kind introduction. It is a great pleasure for me to be here today at Rensselaer, one of America’s treasures. For almost two centuries, Rensselaer has been a leader in science, technology, and innovation. The school’s alumni have been instrumental in developments that produced revolutionary change in the world around us—from the Apollo Project to the microprocessor. There is every reason to believe that Rensselaer will continue this legacy into the future. The Rensselaer Plan you adopted in 2000 reflects foresight about the sweeping changes that are reshaping the economy, the workplace, technology, and academe. It recognizes the unprecedented opportunities that information technology, biotechnology and other emerging technologies hold for entrepreneurship and economic growth, and that research universities can play a major role in turning those technologies into wealth and a rising standard of living. Clearly, Rensselaer seeks to be a catalyst in this regard. But you have not lost sight of the need to serve the “common purposes of life,” the principle on which Rensselaer was founded. For example, understanding that hands-on training in research is valuable to the companies that create our wealth. And, that world class universities must meet the continuing education needs of working professionals who must acquire new knowledge and skills to keep pace with rapid change. You are changing with the times in directions that are in step with the times. That bodes well for growth and greater success for this institution. In my remarks this afternoon, I would like to offer some thoughts about emerging trends that could have significant effects on America’s research universities, and on the U.S. system of innovation. I hope you find them useful as you implement your long term plan for world class excellence. Three trends that have revolutionized U.S. industry—globalization, technology-driven disruption, and increasing competition—are coming to campus. First, globalization, but not your father’s globalization that involved welcoming foreign students on campus, study tours abroad, foreign exchanges, or assessing global trade. The research, development, and technology enterprise is rapidly globalizing. Nations everywhere recognize the power of technology to create wealth, jobs, and a rising standard of living, as well as the global influence that results from economic strength. They are building research universities and investing in key technology programs. They are focused on developing technical manpower. Countries around the world are working hard to attract foreign direct investment and high-technology companies, and industry’s R&D facilities are major targets. Lured by low wage rates for technical manpower, growing markets, burgeoning research universities, and often a range of other incentives, companies are taking the bait. As a result, leading-edge R&D and world-class manufacturing capacity are growing around the world. Second, disruptive technologies—the kind we may see only once in a century—are beginning to emerge or coming to full flower. These include the maturation of biotechnology and information technology, the emergence of nanotechnology, and the convergence of the three. New energy sources—such as commercially viable fuel cells capable of powering homes, automobiles, and a wide variety of handheld devices—also are on the horizon. The effect of these technologies will be profound, affecting every aspect of our lives, our economy—and on the work of the research university. All bets are off when disruptive technologies emerge. For example, in nanotechnology there is little established base in infrastructure, skilled manpower, standards, or production capabilities. Countries and companies that invest wisely with an eye on the future have the opportunity to leapfrog today’s technology and move to the head of the pack. And while the United States is making substantial public and private investments in nanotechnology research, others have their eye on the prize too, including China, Japan, Korea, and the EU. These countries believe that developing expertise in nanotechnology and other emerging fields—including a strong academic research base—is vital to attracting the foreign direct investment and state-of-the-art manufacturing that will make their economy grow. But let me highlight an important difference between some of these nations’ academic research enterprises and our own. It is a key philosophical difference that may grow in importance in the years ahead. Many U.S. research universities adhere to traditional notions of basic scientific inquiry for the purposes of human enlightenment, human betterment, sharing knowledge with the world, and, of course, publication. This is the traditional Jeffersonian view of the academic enterprise. Today, despite the dramatic increase of university-industry partnerships, many in academe remain uncomfortable with more practical partnerships with industry. Some commentators have bemoaned the commercial takeover of academic research. In contrast, in many of our competitor nations, academic research institutions are squarely focused on industrial and economic goals. In their science, engineering, and technology programs, they are training their people explicitly for work in industrial and business settings. And, frankly, many of the world’s corporations find this approach very attractive. It can produce professionals with hands-on technical skills who are sensitive to the needs and culture of the business world, and the bottom-line. The third major force shaping today’s environment is competition. Over the past several decades, our economy evolved from one that was principally domestic, to one firmly planted in the global marketplace. We are accustomed to competition for traded goods, pressures on the manufacturing sector, and the impacts of trade on less skilled workers, such as the loss of lower wage manufacturing jobs in the United States. While these conditions have continued to evolve, a new dimension to competition has taken shape. Thanks to rising technical capabilities around the world and a rapidly expanding global information infrastructure, competition is moving rapidly upscale; that is, competition to perform the world’s knowledge work, competition for jobs—the good jobs, the high wage knowledge jobs. Few Americans are feeling greater uncertainty these days than information and communications technology professionals. Among the reasons for their fears is that companies that employ these workers have led the way in off-shoring IT work. While they have been battered by a number of factors—including the end of Y2K preparations, the bursting of the Internet bubble, post 9/11 conditions, and reductions in corporate IT spending—the volume and value of off-shored IT work has increased rapidly. In fact, 2001 was the first year in more than two decades with negative growth in U.S. IT employment, and unemployment rates for computer programmers and electrical engineers rose higher than the national average. It started with call centers, help desk, and low level programming jobs, and little national attention was paid to this trend. Now, however, off-shoring is moving up the knowledge work food chain, and IT jobs such as software engineering and chip design are moving offshore as well. The national media has substantially increased its coverage of this trend, and politicians are beginning to worry. With wage rates as low as ten cents on the dollar, the movement of knowledge work to places like India and China would seem irresistible to profit conscious companies. And while the movement of IT jobs off-shore is at the center of a growing firestorm, less noticed is the broader array of knowledge jobs and work for which global competition is growing. Off-shoring is coming to high wage occupations such as financial analysis, accounting, architectural work, tax preparation, radiological diagnosis…and, yes, even research and development. While we once could comfort ourselves with the proposition that those being displaced in manufacturing could trade up to better knowledge-related jobs, now those jobs too face global competition. Countries such as India, China, the Philippines, and others are building technical infrastructure, training large numbers of technical workers, and some, such as countries in Eastern Europe, already have a well-trained cadre of scientists and engineers. And these people need work. Many American companies want to tap this low cost scientific and engineering talent, and they are beginning to locate their R&D facilities off-shore to get it. U.S. companies facing global competition, such as GE, Microsoft, IBM and others are investing heavily in new research facilities in emerging technology clusters such as Bangalore, India and Guandong Province, China. And while India and China are attractive in this regard, they are by no means the only destination for U.S. R&D investment. Why are U.S. companies investing globally? As I mentioned, cost is a major motivating factor. In addition, many foreign nations offer businesses and researchers significant financial incentives to locate R&D, technical services and high-tech manufacturing within their borders. Availability of skilled talent also is a factor. There are more than six billion people on the planet who are not U.S. citizens, and growing numbers of them are becoming highly talented researchers. Some foreign nations such as China and India are now graduating more physical science and engineering students than the United States every year. While recent studies still show the U.S. to be the world’s technological leader in all key emerging technology areas, other countries are rapidly gaining ground, becoming innovators, not imitators. In this rapidly changing competitive environment, it is not clear whether or for how long the U.S. lead will last. Our companies are also attracted to infrastructure in other nations. Foreign governments are making their own investments in university and other research facilities, high-speed Internet and telecommunications, transportation, and energy to more effectively compete. It is no accident that the new global clusters attracting the most foreign investment and most knowledge work are precisely those with the most advanced infrastructures, though America retains an advantage here for now. As foreign nations raise their scientific and technical sophistication, U.S. firms are locating facilities near foreign universities to gain access to the flow of R&D being generated in those institutions. Our companies are also attracted to the business-friendly climate other nations are creating. A great number of top-tier innovative companies explain moves to Asia by pointing to their less burdensome taxation, regulatory and litigation environments. These reflect both bottom-line and speed-to- market concerns, although many appropriately question whether nations lacking in freedom, robust intellectual property rights, and thorough worker protections can sustain innovation leadership over a long period. In addition, companies often favor locating R&D facilities in proximity to offshore manufacturing. While the rise in offshore IT service work does not appear to result predominantly from the global migration of manufacturing, some suggest that other knowledge and R&D jobs may be pulled abroad by off-shored manufacturing. Semiconductor industry experts, for example, indicate chip design work needs to happen close to manufacturing facilities. Thus the movement of manufacturing work may foreshadow the movement of more innovative activities. Probably the most important factor driving the globalization of R&D is market access. Many business leaders are attracted to the perceived market possibilities in rapidly developing nations such as China and India, with over 2.4 billion people between them. Proximity to customers is often essential to compete for service sector business. What does the emergence of disruptive technologies, the globalization of R&D and technology, and growing competition for the world’s knowledge work mean for research universities? The future is up for grabs. Research universities will compete for global R&D dollars on an increasingly crowded, talented, and global playing field. In the competition for private R&D investment, U.S. research universities will compete against foreign research enterprises that offer significantly lower wage rates for scientists and engineers than American institutions. Clearly, U.S. universities will not be able to compete on price. It will therefore be vitally important to retain our leadership in innovation. It also will be necessary to work more closely with industry. Why? the private sector’s research dollars are large and growing. For example, the U.S. private sector, which has doubled its R&D investment in the past decade, now spends twice as much as the Federal government on R&D. In addition, anticipating that biotechnology and nanotechnology will produce the next waves of innovation, private firms are shifting some of their research dollars to basic science related exploration. They recognize that the production of products and even some services, such as genomic-related health services, is likely to become more science-based in the future. Willie Sutton advised to go where the money is, and the big R&D dollars are in the pockets of the private sector. Yet U.S. research universities still strongly favor competing for the Federal R&D dollar. But the role those Federal dollars play in the global R&D portfolio is diminishing, with U.S. government investment in R&D now accounting for only one in ten R&D dollars worldwide. To understand how different the world looks today, consider that in 1950, the U.S. performed about 70 percent of the world’s R&D. And by 1964, the U.S. Federal R&D investment exceeded the civilian, defense and industrial R&D investments of all other developed countries combined. Moreover, competition for Federal research dollars has never been greater as many U.S. states have worked hard to build research capacity at their universities, and these universities are becoming more competitive. Another challenge facing research universities is the emergence of an increasingly wide variety of learning opportunities and models to provide post-secondary and adult continuing education. Students have far more choice today than they did a decade ago. With 46 percent of working-age adults participating in adult education, with about one-third of university students of an age that is older than the traditional college-going cohort, and with rapid technical change in the workplace, the diversity of education market needs will grow and a wide range of institutions will respond. In fact, we are already seeing a wide range of innovative offerings, such as completely on-line programs for attaining bachelor’s degrees; DeVry’s accelerated three-year BA program; the TechnoMBA; technical minors; professional masters programs in a range of technical, technology, and business subjects; certification and certificate programs (some of them quite advanced); community colleges who target non-degree-seeking adults wishing to gain job skills; and a range of private sector trainers who are entering the market with short term, intensive boot-camp types of programs. Working adults and, increasingly, traditional college goers, need choices, and institutions will rise to meet those needs. But even more change is coming. Advanced technologies under development have the potential to revolutionize education and training in ways previously unimaginable—intelligent tutors; modeling, simulation, and visualization; digital libraries and museums; and even virtual worlds. These technologies have the potential to provide rich and compelling education and training that is personalized to the individual, and provide it any time and any place. These technologies are expected to deliver substantial improvements in student performance, improve the productivity of learning, and lower its cost. Not only will this offer more and more choices for students, it will result in more and more competition for the student dollar. Education and training are one of the most knowledge intensive activities in our society, and more of the education and training process will be digitized in the years ahead. There is every reason to believe that education and training institutions will enter the global market, just as competition has encroached on other knowledge work. We have already seen MIT put its entire curriculum on the web, and professors in other nations are already developing programs modeled after what is taught at MIT. Will they eventually offer a cut rate MIT education? Little stands in their way. Moreover, some institutions—both domestic and foreign—will not be saddled with America’s academic traditions. They will rise as leaders in the emerging technology fields, they will be responsive to industry’s needs, they won’t take months or years to review and approve new courses, they will offer timetables that work for students, and they will work hard to attract the world’s R&D dollars. And private R&D dollars will move quickly to the most responsive institutions. There are many signs to suggest that cracks will form in the ivory tower as we have known it, as technology, competition, and the need for life long learning sweep into our traditional academic sector. What are U.S. research universities to do to compete? Or, as the National Academies of Science recently phrased the question: “What will the university of the 21st Century—one that serves the needs of a knowledge driven society—be like?” No one knows for certain, and the NAS concluded that it would be “impractical and foolhardy to suggest precise models.” However, some general principles are beginning to emerge. First, a sustained commitment to world-class research has never been more important. The Rensselaer Plan states the right goal in this regard: “to be a top tier, world-class research university with global reach and impact.” Several studies have shown that centers of research excellence are magnets for investment and innovation. Worldwide, we see the formation of high tech “clusters”—groups of innovative firms in the same industry sector, and supporting institutions—here in the US, and globally, in Ireland, the U.K., India and other locations. In each case, the cluster is built around centers of research excellence. Rensselaer has made great strides toward attracting internationally-recognized faculty, and made significant investments in the infrastructure needed to support work in nanotechnology and other emerging disciplines. Second, be relevant and customer-focused. The NAS sums this principle up as follows: “Universities must transform themselves from faculty-centered to learner-centered entities, becoming more responsive to what students want to learn—whenever, wherever, and however they wish to learn it.” This means making strong connections with the customers for your research and the customers for your graduates. That means close connections with industry and all that carries with it in terms of your research programs, what you teach your students, and how you handle intellectual property. Most of our students in science and engineering will not work in an academic setting. They will work in industry. If you cannot provide them with the training that pays-off, the training that makes them competitive in private sector labor markets, someone else will. Third, relevance means providing students with the knowledge and skills employers want. On the technical side, employers want workers who have the scientific and technical fundamentals that allow them to perform deep and robust work, and allow them to quickly learn new technologies when they emerge. But employers also want immediately applicable skills, practical skills that allow new hires to “hit the ground running.” That means when your students hit the job market, they need the technical skills in use in industry. Employers want workers with experience. Employers look favorably upon students who have demonstrated that they can accomplish the work at hand. That means science and technology-related education needs to be hands on, with practical industry-related dimensions. Students need to be taught in terms of what they will face in the industrial setting; employers value that and students value that too. That is one reason students rate instructors from industry as being highly relevant and valuable. Employers’ desire for experience raises the value of internships, co-ops, and summer work experiences—all of which a university well-connected to industry is better positioned to provide. But technical knowledge, skills, and experience are not enough for today’s employers. They want technical workers who understand the business and the bottom-line, workers who can communicate and work with customers, workers who can solve problems, workers who can participate on teams, workers who can think out-of-the box and learn on the fly. Employers also want and need scientists and engineers who can think creatively and solve problems. And if we as a nation are to remain the word leader in science and technology, we must produce a new generation of innovators and creative thinkers. Not just individuals with leading edge technical skills, but individuals who bring creative approaches to the drive for innovation. And this means broadening the base from which we draw scientists and engineers. To stay on the leading edge of innovation, we need to draw the best and brightest into science and engineering—and that means drawing from a more diverse talent pool. Since women and minorities will make up two-thirds of all U.S. new workforce entrants in the very near future, we must ensure that the next generation of scientists and engineers “looks more like America,” to borrow a phrase from President Clinton. As Bill Wulf, President of the National Academy of Engineering, said in a recent speech: Collective diversity….is essential to good engineering…Men, women, people from different ethnic backgrounds, the handicapped—each of them experiences a different world. Each of them has had different life experiences. I think of these life experiences as the “gene pool” out of which creativity comes.” There are many examples of product design in which a lack of diversity on the design team produced negative results. Airbags were designed by men, and safety tested using male subjects, resulting in death or serious injury to women and children. This point is simple. To win the race to the future, we must be the best. And we cannot be the best unless we fully utilize all of our talent. Fourth, offer options for students. The part-time and working adult student population wants flexibility and choice. They need evening and weekend programs. They need accelerated programs, and programs that teach specific technical skills to bring skill portfolios up to date. The need programs when they need them, instead of waiting months for a new semester to begin. And they need on-line and technology-enabled courses that they can pursue any time and any place. The traditional model of academic education is appropriate for fewer and fewer of our nation’s learners. Our learners—who increasingly buy their education and training with their own dollars, instead of employer dollars—will look for the best value, and the institutions and learning models that best serve their needs. To respond to this new market, it may be necessary to discard some of our traditional notions of what education in science and technology should be about. Fifth, it is increasingly unattractive for American science and engineering students to pursue graduate level studies and post-doctoral training. These students struggle through extra years of study earning low wages, while their counterparts graduating from business and law schools hit a labor market that often rewards them handsomely. Markets do work, and students are picking up those market signals, concluding that fields like law and business make more personal economic sense. This challenge is demonstrated by the large number of foreign students in our graduate schools. Many experts decry this trend, and wring their hands about getting more Americans into these programs. I agree that this is a cause for concern, and that it is vitally important to draw more Americans into these programs. However, what goes largely ignored in this debate is the poor economics associated with traditional graduate-level education and training. Foreign students stay in U.S. graduate programs for a range of reasons—often because there is a desire to stay in the United States. For these students, the economics are different, and monetary considerations may not be paramount. However, for American students, those considerations often are. It is okay to love the science, but some students want it to pay well. Sixth, use advanced learning technologies and education and training models as they emerge. With competition for the world’s knowledge work growing every day, U.S. knowledge workers—many of whom are still the best in the world—are nevertheless going to have to sharpen their edge substantially to retain that distinction. Our students and especially our workers will need these technologies to compete against other nations whose knowledge workers work for less. These technologies will be needed for: collaboration, to speed-up learning, for R&D, knowledge exchange, for just-in-time training, and for rapid knowledge management in a wide range of fields where knowledge is value and time-to-decision is critical. Seventh, universities should play a larger role in helping local companies commercialize new technologies. This means going well beyond traditional notions of “technology transfer,” beyond finding ways to push technologies developed in university laboratories out into the commercial marketplace, or focusing on the licensing of Federally-funded inventions. Instead, it is necessary to provide all kinds of commercialization assistance: access to facilities and equipment, assistance with industry-directed applied research, prototyping, demonstration and testing, business incubation, partner identification and matchmaking, entrepreneurial education, and connections to sources of capital, to become a true source of wealth creation and economic growth. Finally, I believe that universities must take a more active role in public policy. The future is simply too important to be left up to the politicians. In the past few months, people in Washington have awakened to the challenge of off-shoring of knowledge work, and so far, the policy responses have been somewhat inappropriate: adopting tariffs on imported steel; calls for “buy-America” rules in government contracting; pressuring foreign countries on exchange rates. Instead, the U.S. needs a comprehensive re-thinking of its innovation, trade and education policies to adapt to today’s competitive science and technology environment. Federal investments in science and technology clearly are critical. Yet the process through which we make investment decisions at the Federal level is badly broken. We desperately need to re-evaluate the composition of our research portfolio in light of future challenges and opportunities. Yet funding decisions are made on a piecemeal, agency by agency (and program by program) basis, with little coordination across agencies and across budget accounts. Moreover, authority is spread over 13 Congressional committees, with each Member of Congress having his or her own agenda and priorities. Once programs are established, they frequently continue to be funded year after year, sometimes long after they outlive their usefulness. Areas that catch the imagination of the public—and Members of Congress—are funded more generously. For example, funding for health-related research has doubled over the past five years. Meanwhile, other areas critical to competitiveness—such as funding for the physical sciences and engineering—remain in long term decline. Although I strongly support increased funding for the life sciences, other areas also require increased attention. This issue is not only of concern because we should be directing our scarce national resources to the highest priorities, it is having a potentially serious impact on S&E education. As you know, there is a close correlation between the level of Federal funding for any scientific discipline and the number of students pursuing careers in that field. If we don’t pay attention to these issues, we run the risk of over-producing technical professionals in some disciplines, and under-producing them in other areas. Another cause for concern is the politicization of the process. President Reagan used to say that to compare Members of Congress to drunken sailors is an insult to drunken sailors. The number of Congressional earmarks has increased dramatically in recent years, proving President Reagan correct. For example, this year, one office at the Department of Energy has been directed to fund more than 90 specific, Congressionally-directed projects. In this environment, it is very difficult to begin new programs as opportunities emerge. In closing, technology, competition,
and market forces are coming to come to the world of knowledge generation,
attainment, and management. These forces will dramatically impact
the U.S. innovation system, and our system
of science and engineering education. It is time for us all to
take a deep breath, to seek to understand the dynamics of the new
global innovation system, and chart a bold course for American research
universities, for the U.S. government, for companies and other
supporting actors—to ensure that the U.S. remains the world leader in science, technology and innovation. |