2024

THE FUTURE OF
H I G H E R E D U C AT I O NBalancing new requirements forresearch, teaching & student needs
Part ICONTENTE XECUTIVE SUMMARY
1.

3

DEFINING THE FUTURE OF
LEARNING ENVIRONMENTS

62.

W H AT S E T S E L I T E U N I V E R S I T I E S A PA R T ?

143.

ADAP TING TO A CHANGING WORLD18

C O N C L U S I O N : N AV I G AT I N G
A N U N C E R TA I N F U T U R E

BEN THURIAUX-ALEMÁN

RAYHAAN SURVÉ

Partner, London

Senior Business Analyst, London

SIMON GUYOMARD-NORMANManager, London

2

22

ARTHUR D. LITTLEEXECUTIVE SUMMARY
Since the turn of the millennium, modern universities have adaptedand evolved from their public image as traditional old institutions ofknowledge. However, they currently face a widening range of challenges
brought on by our transforming, globalized world.
Universities must balance the conflicting demands between theirtraditional mission of teaching and research, while distinguishingthemselves within a deepening pool of quality competition in an
increasingly borderless market.
On the research side, funding is becoming more concentrated among asmaller group of institutions, but funding models are complex and canchange rapidly. Universities are stepping up to share research and playtheir part in solving current global mega-challenges, driven by increasingly
entrepreneurial academics and a focus on new ways of building innovation
ecosystems to drive greater commercial relevance and revenues. On theteaching side, the pandemic’s impact on teaching hastened the rise andreach of digital learning — but it also underscored the value of experiential
and personalized approaches to study.
Breakthroughs in artificial intelligence (AI), and the rise of commoditized
online courses from nontraditional providers, increase pressure on
universities. They must deliver quality differentiated teaching to a wider
range of students who are looking to invest in lifelong learning and build
skills over a longer (or shorter) period than the traditional four-year degree.
Student needs are changing, and they increasingly demand a return on thetime and money they invest in tuition.
The above conditions mean that individual institutions need to makestrategic decisions around their future. Universities need to embracechanges in both how they are structured and how they operate andteach. They must reexamine their strengths in a global context andrethink traditional models around their missions of research andteaching to find their place in a changing world.
In this Report, we analyze the current context, describe the trends driving
the higher education environment, and outline potential options for the
future, based on a combination of Arthur D. Little (ADL) case work, sector
knowledge, and interviews with thought leaders in education.

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R E P O R T: T H E F U T U R E O F H I G H E R E D U C AT I O N , PA R T I

Table A. Key insights for future of higher education

Table A. Key insights for future of higher education
TREND

HOW IS IT IMPACTING HIGHEREDUCATION?

Relieving tension between
teaching & research

Under pressure, institutions are finding creative
ways to specialize & blur boundaries between
teaching & research missions

Higher education is a growing business worldwide
Universities have central
but also a critical element in national developmentrole in national development
plans

Adapting tochanging world

Future learning
environments

Funding sources must bebalanced & sustainable

In many established higher education landscapes,
funding is under pressure; institutions must balance
between tuition fees, grants & alternative funding
sources

Institutions must explore
new business models

Institutions can build long-term relationships withcorporations/individuals to drive revenue streams

Courses must adapt
to modern workplace

Students are more focused on value from educationin terms of course relevancy, transferable skills &knowledge

Upgrade of contact time
to counter commoditization

There is a need to balance demand of increasing
access & digital delivery with high-quality contact
time, creating flipped classrooms

Ongoing dissolutionof learning borders

Increasing capability of digital delivery & remotecollaboration tools erodes traditional nationalboundaries for education, expanding accessContinuing expansionof lifelong learning

Institutions are engaging more with older students
and professionals through short courses, microcertifications & online offerings

Rise of experiential &personalized learning

Teaching modes are becoming more student-centric(e.g., simulations, discussions, practicals & individual
learning plans)

Growing influence of AI
on learning experience

AI is shaking up student experience & poses
plagiarism threat but also shows promise in new
ways to deliver experiential, personal learning

Research funding focusing
on elite institutions

Success begets success in research funding, making
it harder for smaller, newer, or focused institutions
to compete against global elites

Overall funding situationis challenging to navigate

Faltering economies due to pandemic and otherchallenges have scaled back research funding& sectoral reforms

Future research
environments
Professors are driving

entrepreneurial initiatives
Universities investing
in infrastructure forentrepreneurship

Source: Arthur D. Little

Source: Arthur D. Little

4

Academics are increasingly taking on independent
contracts (or other work) to boost personal income& drive better research outcomes throughcollaboration
Universities are increasingly moving beyond
traditional technology transfer organizations tocreate hubs or districts to stimulate ecosystems
of innovators

ARTHUR D. LITTLE

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1. DEFINING THE FUTURE
OF LEARNING ENVIRONMENTS

While the pandemic forced an overnight

As costs rise and students continue to questionchange in the delivery of university teaching,

the economic value of a university education,in many ways it simply turbocharged an existing

there will be a much greater focus on teaching

shift toward digital learning, which caused

quality and the amount of in-person learning

many students and institutions to question

and its ability to affect future job prospects

how and where learning should take place.

and build transferable skills.

This rebalancing is still playing out, driving
innovation in course delivery against a backdrop
of a greater focus on improving the qualityof in-person learning, lifelong learning, andnontraditional teaching options. What will theteaching mission of universities look like in the
future?

BORDERLESS DE LIVERY& DISTANCE LEARNING
The ongoing digital transformation of
education provides significant opportunities
for universities. It enables students from around

Q UALI T Y CON TACT T IME VS.
C O M M O D I T I ZED LEARNING
E NV I RO N M EN T
Since the pandemic required universities to godigital for lectures, seminars, and other learning
experiences, there has been a reluctance to fully
return to in-person instruction. This comes fromboth academic and student perspectives todiffering degrees and links to changing student
needs and a desire to maximize contact time.
While delivering university courses digitallyenables institutions to scale up the number ofstudents they can teach (thereby increasing
revenue), virtual learning also brings challenges.
It increases competition from universities athome and abroad and can lead to a degradation ofteaching quality when there’s little to no upgradein value of in-person time. Teaching institutions
must ensure that even brief amounts of contact
time with students maximizes the value of theirlearning. This may lead to “flipped” classrooms:
lecture content delivered online but with greater

the globe to effectively participate in learning
activities, while removing constraints on scale
in areas such as teaching facilities and student
accommodations.
The last few years have shown that most
lecture-based teaching can be delivered
online. From that perspective, there’s little
difference between a student’s bedroom in
Cambridge or Santiago. The pandemic’s impact
cannot be overstated. In the US, the number ofundergraduate students exclusively enrolled in
distance education courses was 186% higher in2020 than 2019 due to the impact of COVID-19.1
Importantly, those numbers have not changed
much in the semesters since.
On the positive side, online learning has thepotential to democratize access to someelite universities that have previously been
unattainable due to high fees, travel costs,
visa or residency restrictions, or living expenses
in university towns such as Oxford. If universities
wish to democratize learning, then borderless,digital delivery seems like an obvious enabler.

efforts placed on highly interactive tutorials
delivered to small groups.
1

6“Fast Facts: Distance Learning.” Institute of Education Sciences (IES), National Center for Education Statistics (NCES), accessed October 2023.

ARTHUR D. LITTLE

Distance learning is not new; the UK’s OpenIn parallel, universities have gradually expanded

University began its primarily distance-learning

the availability of massive open online courses

programs in 1969. However, the continued(MOOCs), with educators from elite institutions

growth of Web collaboration tools — video

adding more and more courses to platforms

calls, virtual whiteboards, simultaneous-

like edX and Coursera. In many cases, these

editing software, and potentially aspects ofcourses are provided gratis or funded by modest

the Metaverse — further erodes the perceived

accreditation fees from successful students.

barriers to educational delivery from afar. How

However, even within the academic field, theinstitutions manage this shift and balance

focus of course content has traditionally been

the physical and digital sides of their teachingaround specific, job-related skills like businessmission will have fundamental impacts on their

management and digital technology specialties

student numbers, revenues, and their ability tosuch as data science. Relatively few rigorous

recruit potential researchers and academics inoptions exist for ongoing and lifelong learning

the future.

in core academic subjects — pure sciences,
history, philosophy, literature — whether the

L I F E LO NG L EAR N I N G
Today, people studying for a first degree aregoal is to build degree-equivalent knowledge or
explore a new interest with the goal of becoming
a more well-rounded individual.

expected to change careers three to five times

Despite the boom in distance-learning, few

during their working life. One impact of this is a

options are available for professional or lifelong

renewed drive for lifelong learning and upskilling

learning that fit around work schedules in thein the professional workplace: applications tosame way as an executive MBA, which combines

both online and in-person MBAs were up overintense, residential courses interspersed

20% in 2021. 2 Global workplaces recognizewith distance learning over a multiyearthat training and continuing professional

period. This blueprint shows a way forward fordevelopment are key to attracting and retaining

universities and could even be enhanced throughtalent. Employers generally see this as a win-

collaboration across institutions, allowing morewin; their employees gain skills, perform better,

open access to learning environments andand have more reasons to remain with theirproviding micro-credentialed courses that over

employer. As technological inventions continue

time may result in a degree. In this paradigm, ato change the modern workplace (witness thecompleted degree is not always necessary for

ongoing AI revolution), all employees will need

lifelong learners, whose needs and interests may

to regularly learn new skills.

change depending on their current job, projects,

To meet their learning and development goals,
many businesses have established partnerships
with online educational content providers suchas LinkedIn Learning, Kubicle, and Udemy. Theseand capability gaps. It is therefore important toallow for short or extended breaks, with flexible
commitment and options to transfer credits
gained into a foundation degree or other diploma.

courses range from basic topics, such as how

All this means that universities need to innovate

to get the most out of spreadsheet software to

by offering options for shorter courses tomore complex courses that delve into project

capture interest and tuition dollars from the

management, sales, and business leadership.

growing number of lifelong learners. Failure to

However, while the vast range of available

do so will potentially undermine access to a

options rewards the curious, these courses

lucrative, long-term teaching opportunity, which

provide a relatively passive learning process

other international institutions or online-firstthat culminates in a quick test at the end of aplayers like LinkedIn Learning could capture.

video module. The student may engage with

The sidebar “University MOOCs” lists somethe course, but the actual learning reward is low.

nonacademic content partners and the coursesthat generated the most interest.

2

Conboye, Janina, and Lucy Warwick-Chin. “‘I Feel Left Behind’: Graduates Struggle to Secure Good Jobs.” Financial Times, 27 June 2021.

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R E P O R T: T H E F U T U R E O F H I G H E R E D U C AT I O N , PA R T I

University MOOCs
MOOCs increase access to education throughThe preceding list shows content largely skewed

skills-based courses that enable individuals totoward job-based skills, with courses focused on

educate themselves in specific areas and receive

outcomes that will aid employability. In addition,

an associated accreditation. To meet this need,Amazon hosts its own learning platform

universities design educational programs,with tracks for specific roles, such as cloud

produce their own content, and either host it on

computing training for its cloud practitioner

their own sites or partner with MOOCs such as

role. Students are obligated to learn about

Coursera and edX to reach larger audiences. In

Amazon, and the course ensures technical skills

2022, the top five MOOCs had over 250 million

are in place, but it does not necessarily driveusers. Coursera alone saw 100 million users. The

critical thinking or lifelong learning skills.

list below shows its most popular courses andthe content-provider partners behind them:Ten years ago, online learning had little- Google — Foundations: Data, Data, Everywhere

platforms have partnered and integrated withand Foundations of Project Management- Yale University — The Science of Well-Being
and Financial Markets

relevance to the education sector. Now, online
universities and companies, providing instantglobal access to a much wider range of courses.
Universities must therefore align themselves- University of Pennsylvania — English

with this trend, providing dual offerings and- University of Michigan — Programming

the world of lifelong learning.

for Career Development

ensuring that their traditional offering ofdegrees and teaching remains relevant infor Everybody- Deep Teaching Solutions — Learning
How to Learn

E X P ER I EN T I AL LEAR NING

Experimental practicals have been part ofExperiential learning, which puts theory into

Law students hold moot courts and mock trials

practice, continues to grow. Rather thansitting in a lecture room or checking in online
to passively absorb information, students areactively involved in learning and given the
chance to explore and reflect on topics in avariety of situations: group discussions andprojects, simulations and practicals, field
exercises, and independent research, among
others. Experiential learning has been shown to
improve student satisfaction and understandingof key course materials, 3 as well as increasing
the quality of in-person classes and improving
students’ perceived value for the money.

science subjects and medicine since antiquity.
to learn the art of argument and understandthe reality of interpreting statutes. These
opportunities help students apply theirknowledge far beyond their theoreticalunderstanding of course materials.
There are a multitude of ways to increase theuse of experiential learning in the classroom,with different, potentially competing,pedagogies, such as problem-based learning,action learning, and simulation learning. Eachapproach focuses on a set of tools the educator
can use to empower their students and help
them learn more effectively.

The experiential approach is already common
in certain settings, such as business schools,
where case discussions, simulations, and projectwork (often examining real problems from realbusinesses) are the norm.
3

8

Slavich, George M., and Philip G. Zimbardo. “Transformational Teaching: Theoretical Underpinnings, Basic Principles, and Core Methods.”
Educational Psychology Review, Vol. 24, No. 4, December 2012.

ARTHUR D. LITTLE

There is a clear and growing trend to extend

While future Metaverse environments may solve

experiential learning to other settings. For

issues of fidelity, providing remote interactions

instance, history students at Queen’s University

with the same levels of quality and immersivity

in Kingston, Ontario, Canada, are offered theas in-person groups, this currently seems a longopportunity to gain degree credits throughway off.

internships as archival and research assistants

However, to increase its adoption, experiential

within the university or with a variety of partner

learning may need to overcome challenges

museums. Similar programs at other universities

in how people perceive it. For many, the key

may focus on capturing oral histories or curation.

benefits of experiential learning are that it

Universities, and more importantly, employers,builds transferable skills that make students

are encouraging students to engage in internshipmore employable, a concept that is challenging

programs, with employers expecting to offer 9.1%

for many academics. These educators need tomore internships in 2023 following an already-understand that experiential learning is also

substantial increase of 22.6% in 2022 (see Figure

a powerful method for reinforcing, exploring,

1).4 These programs act as differentiators forand testing subject-specific knowledge, andcourses, drawing in a wider set of students andit well prepares students to become effective

also, in theory at least, hitting that key modern
KPI for universities: graduate employment rate.

researchers, should they choose that pathway

At least to some degree, the growing rise ofEngineering”).

(see sidebar “Case study — Olin College ofexperiential learning is in opposition to theStudents who take a paid internship are moretrend of increased digitalization. In its mostthan twice as likely to land full-time job offers

common form, structured classroom discussions,after graduation (see Figure 2). Even those who

experiential learning puts face-to-face student
interactions at the forefront of teaching. This

accept unpaid internships still benefit from thethe pandemic-enforced switch to digital-

offers received. 5

experiential learning, with a 1.2x increase in job
igure type1. Employer
of interaction wasinternshipmost challenged bygrowth
first teaching and shows the need for balance
between the physical and the virtual worlds.

Internship offered index (2013=100)

Figure 1. Employer internship growth
160
155
150
145
140
135
130
125
120
115
110
105
100
95

Internships offered(2013 as base year)147+10.0%
134

104

104

100

99

103

105

110

107

110

igure 2. Impact of internships on job offers
2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Source: Arthur D. Little, National Association of Colleges and Employers (NACE)

Figure 2. Impact of internships on job offers

Job offers received
per student

WITHOUT AN
INTERNSHIP

WITH AN UNPAID
INTERNSHIP

WITH A PAID
INTERNSHIP

0.77

0.95

1.61

rce: Arthur D. Little, National Association of Colleges and Employers (NACE)

Likelihood ofa full-time job
after graduation

1.23x

2.09x

Source: Arthur D. Little, NACE

45“2023 NACE Internship & Co-op Report & Dashboard.” National Association of Colleges and Employers (NACE), accessed October 2023.
Ibid.

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Case study — Olin College of Engineering
Olin College of Engineering is a private college in

two real-world engineering capstone projects.

Needham, Massachusetts, USA. It is considered

These endeavors prepare students for the job

one of the world’s top engineering universities, amarket and could potentially lead directly

status achieved through its innovative approachto employment.

to teaching a traditional, theoretical discipline.
Unlike other engineering schools, Olin does nothave distinct teaching departments, instead
providing students with the opportunity to workin teams across fields through project-based
assignments. The focus is on practical education
to develop skills through application, supported
by a multidisciplinary approach.

At Olin, students play a significant role in the
curriculum; its first founding class helped develop
the initial curriculum alongside faculty members.
Additionally, students and faculty teach and learn
from each other through approaches including
sprints, retrospectives, and student-facultycollaboration. This has ensured the curriculum
orients itself toward the needs of students, which

The learning journey begins with a holistic

is unique to the institution. Additionally, Olincore curriculum where students explore thecollaborates with neighboring Babson College

arts, humanities, and entrepreneurship. In theirand Wellesley College — respectively, specialist

second year, students are introduced to practicalbusiness and liberal arts colleges. Students canengineering coursework. The four-year degree

cross-enroll to benefit from classes and student

concludes by working closely with industry

communities outside of engineering in these

professionals (from entrepreneurial ventures,

differentiated fields.

large corporations, or nonprofit organizations) on

PE RSO N ALI ZED LEARNING

discussion groups commonly comprised of two

Students want a personalized learning

allows for a high degree of personalization andexperience. Currently, most students can selectmodules within degree programs or come touniversity undeclared and gradually specialize,
but these are examples of modularity — nottrue personalization. Within each block of thelearning journey, students are expected to
do the same problem sets, attend the samea focus on topics and challenges individual toeach student. Though this approach to teachingis consistently perceived as powerful, it places alarge time burden on academics and is expensive
to deliver. However, even this framework does
not necessarily represent truly personalizedteaching; students are expected to follow

lectures, and examine the same concepts.

the same reading list and listen to the same

By contrast, personalized learning recognizes

the same questions to explore themes at thethat students bring their own context, ways ofsame time.

working, and personal goals to the classroom
environment. The learning journey therefore
needs to be customized, at least somewhat,

lectures as the rest of their cohort and answer

In general, project work can provide more
fruitful opportunities for personalization,

to meet these needs.

whether in a group or independently, which

Personalized learning thrives on direct,

set assessment framework, not all projects

individual contact between teacher and student.

will focus on the same topic, or be completed

Without this connection, it is difficult to truly

following the same process, as long as students

adapt teaching materials to the needs of theare given opportunities to develop and show key

student.

skills that are relevant to the course. Project

The Universities of Cambridge and Oxford in the
UK offer examples of undergraduate teachingutilizing an approach that relies on small

10

students and one supervisor. This configurationties in with experiential learning. Within ateams can be structured to allow each student
to focus on a particular topic or skill that theywish to develop further.

ARTHUR D. LITTLE

Delivering personalization at scale is a key
challenge recognized by educators. The role oftechnology in supporting personalization remains
unclear, with many believing it simply increases
choice, rather than encouraging students’ drive
to learn and seek out knowledge on their own. If

C O R P O R AT E T R A I N I N G
A N D C E R T I F I C AT I O N
PROGR AMS ARE GAINING
POPULARITY

it can be delivered cost-effectively and at scale,personalized teaching, delivered in person or
virtually, provides a key path for universities tomeet changing student needs and differentiatethemselves from their peers.

There is a positive side here: any student with
Internet access has multiple options to learn
vocational skills that are vital across different
industries and working environments. Often,

C O R PO RAT E- LED
REC R U I T MEN T &T RAI NI NG P RO GR AM S
Within certain industries, particularly thetechnology sector, students are increasingly
looking toward nontraditional teaching
options. For example, bootcamp-style courses— intensive, immersive, and experiential —promise to teach the fundamentals of a skill in
an incredibly compressed time frame. Crucially,
many of these systems do not take an up-front
fee but instead request payment based on
results (e.g., getting a job in a new sector or asignificant pay and/or responsibility increase).
This is an ideal approach for many students.

learning opportunities are tightly tied to anindustry (or company) and administered throughindustry-sponsored courses at universities,
online bootcamps, and other learning
environments.
However, there is a risk that such courses
teach students specific ways of working andthinking that most benefit the corporation of
employment, not the student.
While many academics wouldn’t consider
corporate-led education the democratizationof learning, it does provide students with agreater range of options. However, it may
result in students forgoing traditional university
programs and courses, which would pose achallenge to some institutions.

Courses are short; minimizing up-front
investment in time and opportunity cost,widening the potential applicant pool tocandidates with nontraditional backgrounds.
The connection to industry is particularly
appealing, as for many the aim is to retrain
and upskill to earn higher wages and more

AI’S IMPACT ON STUDENTE X P E RIENCE & LEARNING
Educators clearly cannot ignore the AI-sized
elephant in the room. Students have morestable career options.

capability at their fingertips than ever before,

Corporate training and certification programs

through access to generative AI technologies

are also gaining popularity. For instance, manysuch as ChatGPT and the underlying technology

technology companies provide online platformsof large language models (LLMs). This willthat offer employees the chance to become

continue to develop at a pace that will inevitably

certified in their technology, with learners

feel unpredictable and difficult for institutions

working toward gaining levels or badges andto manage. As in many sectors, adapting toincreasing their employability options.

new AI tools in education will take time, andnot just around access to information, but

appropriate ethics guidance is needed todeal with challenges such as underlying dataand idea ownership for LLMs, which makediscussions on plagiarism and accusationsof cheating even more charged.

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This changing, AI-driven world requires

The new reality of LLMs actually increases theinstitutions to build critical thinking skills inneed for universities to provide personalized andall students: traditional undergraduates andexperiential learning, with the student at thegraduates, working students, and lifelong

center of the learning environment, developing

learners and teach them ethical ways of working

skills and knowledge in ways that (currently, atthat set sensible boundaries for utilizing AI inleast) can’t be outsourced to AI. An experiential

the classroom. As Will Douglas Heaven wrote

learning environment leaves little room to hidein the MIT Technology Review earlier thisfor a student who is overly reliant on hands-

year, cheating is not a new phenomenon in

off tools to research and make decisions.

higher education, and “schools have survived

Some educators are even using ChatGPT in an

calculators, Google, Wikipedia, essays-for-experiential learning setting: using the AI-driven

pay websites, and more.” Outright bans on

tools as a collaborator in roleplay scenarios andusing such technology are counterproductive,

debates or using (flawed) outputs from the LLM

as generative AI technologies will become

to trigger class discussions on reliability andfolded into the workplace across creative

accuracy of sources.

6

and knowledge industries, and are likely to bequickly circumvented by technology developers
and students. Working with AI tools will be an
expected skillset of graduates, much like data
analysis in spreadsheet software or researchskills beyond googling.

As the power of LLM technologies improves,
the applications may become more and more
focused on personalization of materials andassignments. Academics who test the waters
with these general techniques will now beable to better leverage the next generation of
education-specific tools and ultimately drive
better student-centric outcomes.

6

12

Heaven, Will Douglas. “ChatGPT Is Going to Change Education, Not Destroy It.” MIT Technology Review, Vol. 126, No. 3, May/June 2023.

ARTHUR D. LITTLE

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2 . W H AT S E T S E L I T E
UNIV ERS ITIE S A PA R T ?

Popular culture often espouses the view ofeffective innovation centers for industry, will

universities as ivory towers, with academics

determine the winners and losers for the next

walking the dusty halls of venerable institutions,

phase of university development.

conducting brilliant research and making
breakthroughs in relative isolation.

Research plays a fundamental role in university

The reality is undoubtedly different: the modern

source and a means of bringing prestige toacademic is engaged and entrepreneurial,

the institution. Educators and universities are

well-networked, and works with partners,

becoming more entrepreneurial as they build

all the while conducting research. While thiswider innovation ecosystems around theirhas always been true to a degree, research isresearch strengths.

life, and it is growing in importance as a revenue

constantly adapting to the changing pressuresof the modern world, and the ecosystems built
around university research and researchers are
becoming ever more complex as a consequence.
The source of tension in university researchcomes from the drive toward applying research(research impact, in the language of funding
bodies) and genuine blue-sky thinking. With
funding and institutional war chests even morestretched, openings for truly revolutionary
investigations seem tighter than at any point
since World War II. How institutions maintaintheir identity and raison d’etre or redefine

RE SEARCH FUNDING
FOCUSE S ON E LITEINSTITUTIONS
Across the globe, R&D excellence is a key criterion
for accessing any form of research funding,especially public grants. In 2022, for example, 80%of the UK’s research councils’ funding went to just
10% of higher education institutions (of about 200
total institutions) as shown in Figure 3. To succeed
and attract grant funding, universities must beable to prove the efficacy, relevancy, and impact
gure 3. Grant researchfunding
for higher
education,UKthemselves without
simply becoming
costof their research programs.

Grant research funding (£)

Figure 3. Grant research funding for higher education, UK
700,000 University of Oxford
650,000
600,000 University of Cambridge
550,000
500,000 University College London
450,000
400,000
350,000
300,000
10% of universities
250,000
comprise 80% of grant
200,000
research funding
150,000
100,000
50,000
0

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Individual universities in the UK
Cumulative funding
Source: Arthur D. Little, UK research councils

14

Research grant funding

Universities totaling
80% of grant funding

ARTHUR D. LITTLE

Universities often have to comply with a complex

seems destined to lead to complications in

mix of KPIs when verifying their research success.

the short and medium term, as KPIs can shift

These include research-related indicators suchrapidly. If states move away from direct funding

as successful patent applications and directmodels or focus their funding on a handful

research-evaluation mechanisms.

of prestigious, highly effective, and focused

High-quality research benefits a university inways beyond the grant. It helps attract talented
academic staff and facilitates international
collaborations. In turn, these outcomes allow
the university to compete for global students
by trading on the prestige associated with its
reputation (see Figure 4).

A C HA LLE N GI N G PI CT UR E
FOR OV E RA L L F UN D I N G
Public funding for higher education continues
to be challenging in many countries. In Europe,
reforms to public funding were put on holdduring the academic years 2019–2020 and
2020–2021 due to the impacts of the pandemic,
and tuition costs are expected to remain
largely static, despite inflationary factors.
These conditions increase the pressure on
universities to maximize their research income.
On the positive side, many governments (e.g.,
Saudi Arabia, Singapore, and Malaysia) haveincreased funding in both relative and absoluteterms, wanting to realize the potential their
universities have to gain national prestige.
Funding challenges mean that research remains
a critical driver for university revenue in termsof direct public funding, whether in the form of
research grants or through funding formulas.

research institutions, questions will arise on thefunding model for the majority of non-researchintensive institutions in the landscape.

E NTRE P RE NEURIAL
P ROFESSORS DRIVE
TH E IR OWN DE STINY
Leading academics have long been multitaskers:
overseeing research initiatives, raising funds,
mentoring postgraduate students, and lecturing
undergraduates. Senior academics shoulder the
additional weight of facilitating public outreachand wooing alumni and businesses for donations;
their role is clearly complex and multifaceted.
Despite their already significant workloads,
there is an increasing trend for professors tosecure their own incomes outside the university
system: whether through collaborations withpublishers to write textbooks (often taking asabbatical) or via freelance engagements, suchas working with governments, nongovernmentalorganizations, nonprofits, businesses, mediagroups, and consultancies as advisors withexpertise in particular topics.
A professor’s professional network is key toentrepreneurship, as shown in Figure 5. Theirability to leverage global contacts (built throughconference attendance, research collaborations,However,4.
basinga universityquality
business plansolelyFigureResearch
multipliereffectand industry
partnerships) to form a sustainable
on public funding for research and teachingpipeline of extracurricular activities is vital.

Figure 4. Research quality multiplier effect

Attracts leading
academic staff & facilitatesinternational collaborations

In turn provides acompetitive edge for
attracting the mosttalented students globally

High-quality
research

Improved researchquality output
Attracts grant
research funding
from the government

Enables research in
new areas & strengthens
research capabilities
in current areas

Source: Arthur D. Little

15

R E P O R T: T H E F U T U R E O F H I G H E R E D U C AT I O N , PA R T I

Figure 5. The reach of a professor’s network
Figure 5. The reach of a professor’s network

Conference
attendance

Research
collabs

Globalcontacts

Industry
partnerships

Media
professionals

Local
communities

Entrepreneurs
Current
student
body

Working
professionals

Taughtalumni

PROFESSOR’SNETWORK

Faculty& staff

Professional
engagement

Public &government
personnel

Personal
network

Source: Arthur D. Little

Source: Arthur D. Little

The student body also should be seen as

accessed independently. In this regard, professors

part of the professor’s network; early career

are not always well served by their understanding

entrepreneurs frequently look to their professors

of contracts, business operations, or the value

for mentorship and advice, which may bethey add and would benefit from professional

converted into lucrative positions on boards

training from their institution or, if applicable,or advisory committees.

their union. Courses in entrepreneurship can

While some advisory positions might be organizedthrough the university, most external roles areprovide the knowledge they need to consider
entrepreneurship (see sidebar “Case study —Teaching researchers to be entrepreneurial”).

Case study — Teaching researchers to be entrepreneurial
Universities in Scandinavia have prioritizedexperiential learning, such as business pitchingteaching entrepreneurship to researchers,

and presenting, and ideation around their research

including PhD students and the professors

with the aim of sharing to larger audiences.

teaching them. Entrepreneurship enables

Students are taught that they can become

students to expand their career avenues beyond

venture creators, collaborate with governments,

academia by developing an understanding

innovate within corporations, and use their ideasof the problems and opportunities that exist

to innovate existing processes in hospitals,

within their fields. PhD students generally havepharmacies, and manufacturing.

strong academic credentials and intellectual
capital, but they may lack the skills to adapt their
qualifications for industry. Entrepreneurshipeducation addresses this gap. The University ofOslo (UiO) in Norway hosts the School of HealthInnovation (SHI), a collaboration with three other
Scandinavian universities: Sweden’s Karolinska
Institute, Denmark’s University of Copenhagen,and the Norwegian University of Science andTechnology.

16

However, entrepreneurial experience is aprerequisite to developing entrepreneurship,
and SHI relies on its professors to provide thosecapabilities. Therefore, most professors involved in
the school have founded ventures and some havethe experience of failing — an essential skill to passonto researchers, many of whom are risk adverse.
At UiO, a short course prepares these professors
to teach the entrepreneurial mindset with anemphasis on cultural change and encouraging

Each university sends PhD students, early-

entrepreneurship within academia. Furthermore,stage researchers, and professors from acrossprofessors are encouraged to pursue their own

healthcare fields to SHI, which brings them

entrepreneurial opportunities alongside teaching.

together and teaches them to collaborate andEntrepreneurship education provides these students

innovate, regardless of career path. The students

with greater possibilities to become successful inare exposed to entrepreneurial skills throughtheir fields and the ability to put their IP to work.

ARTHUR D. LITTLE

Innovation districts go beyond traditional TTO
Universities are increasingly seeking to diversify

ADL worked for an innovation district embedded

their income through the “third mission,” which

within the UK’s Manchester University campus.

commercializes their IP by seeking strategic

We identified and recommended models

research partnerships. An innovation district

where the physical site could be “activated.”

is a physical, concentrated location where

Researchers, large and small businesses, andbusinesses and universities can colocate toserial entrepreneurs had a physical setting

facilitate mutually beneficial relationships.

where they could “collide” at networking events

Some of the world’s leading universities areor targeted focus sessions on specific topics;

developing innovation districts (see ADL’s Prism

this was similar to plans used by the Centerarticle “The Future of Innovation Districts”).

of Research, Technology and Entrepreneurial

These districts serve as places to live, work, andExchange (CORTEX) at the University of Missouri-

play, providing sources of entertainment such

St. Louis in St. Louis, Missouri, USA. These models

as concerts, theaters, and galleries, sometimes

can take the form of university-sponsoredlinked to the university themselves. As such,innovation accelerators, where academics who

the districts become destinations in their own

have entrepreneurial ambitions and commerciallyright. Businesses may choose to be located in

viable ideas are invited into structured training

innovation districts chiefly due to the proximity

and networking programs. The educatorsof high-quality academic talent that wants tosometimes share seed funding in exchangeremain close to the university.

for an equity position for the university.

I N F RAST R U CT UR E
I N VE ST M E N TS S UPPO RT
U N I VE RS IT Y I N N OVAT I O N

to collaborate with, creating an open-door

Because of the challenges around researchfunding, universities increasingly look to leverage
existing assets and capabilities to create revenue
streams that go beyond a pure intellectual
property (IP) offer. The trend for creation of
innovation districts, technology valleys, oradvanced research parks is growing. Thisencourages spinouts, noninstitutional start-ups,
and large flagship businesses with locations in theheart of the university campus, with ready accessto students, recent graduates, and facilities.
Innovation districts (see sidebar “Innovation
districts go beyond traditional TTO”) are notsimply operating a technology transfer office(TTO), which focuses on maintaining and directly
utilizing the institution’s IP. Instead, these
entities aim to create a cooperative ecosystemof public and private research, in which (fromthe university’s perspective) spinouts are
created regularly and have a higher chanceof succeeding. This will ideally benefit theuniversity’s revenue stream in the long term.
However, an innovative ecosystem alsodelivers wider benefits. It provides a diverse

policy between the public and private sector.
Ultimately, this should result in a more vibrant,
more collaborative, and more varied university
campuses, with research activities happening
daily to benefit both the long-term prospects ofstudents and the university’s daily teaching andlearning.
Universities at the beginning of their innovation
district journey should ensure these programs do
not focus solely on STEM (science, technology,
engineering, math) subjects and that students
and faculty members from arts, humanities,
social sciences, and business are welcomed
and integrated into the ecosystem, not justas employees of innovative businesses (e.g.,marketers, finance experts, lawyers), but
fundamentally as cocreators and collaborators.
Diverse skill sets and personal experiences will
drive higher chances of success, and an innovation
district should ultimately aim to become acollision space for interdisciplinary working.
It is critical for a university to consider how tocreate a careful balance between commercially
focused research that could deliver venture
capital or licensing returns and the type offundamental research projects that are central
to a university mission.

pool of engaged resources for the university

17

R E P O R T: T H E F U T U R E O F H I G H E R E D U C AT I O N , PA R T I

3. ADAPTING TO A
CHANGING WORLD

The needs of students, governments, and the

They therefore face a growing challenge to define

wider community are changing. This calls into

their purpose and mission: is their university of thequestion the overall mission of universities at an

future a place for learning or a place for research?

individual, institutional level. What value do they

Traditionally, many have done both. After all, thebring, and how do they justify their funding in a

two are intertwined; students benefit significantly

transforming world? How should they structurefrom academics who are world-renowned experts

themselves to differentiate and add value? The

in their field, and excellence in teaching creates aanswer requires them to understand and act oncohort of engaged researchers.

a number of challenges.

However, the skills required to be an academic
expert and those of an engaging teacher are very

R E L I EV I N G T HE T EN SIONB E TWEEN R ESEARCH& T EACHI N G

different. The stereotype of the professor who isreluctant to leave the lab to teach or simply reads
from their latest work still holds a grain of truth. In
many parts of the world, students pay significant

Universities are under pressure from a globally
mobile, demanding, and financially literatesums of money to universities, incurring lifelong
debt in the process, so they increasingly seemrights to expect and demand highbase anda narrowing of needresearch funding
6. Number ofstudent
years
students
to paywithin
offtheirone
year
quality teaching (see Figure 6).
to a small group of institutions.
versity tuition
7

Figure 6. Number of years students need to pay off one year of university tuition
Jamaica
US
RussiaIndia
UAE
IsraelBrazilChile
UK
Singapore
MexicoMalaysia
Japan
Indonesia
UkraineSouth Africa
CanadaSouth Korea
New ZealandAustralia
Hong Kong
EU average
Argentina
Switzerland
Nigeria
IcelandChina
Turkey 0
Saudi Arabia 0

1
1
1
1

2
2

0

4

5
5
5

8
8
8

9
9

11
10
10
10
10

5
10
Average = 6 years

13

14
14

15

16

17

28

19

20

25

Source: Arthur D. Little, N26

7

D. Little, N26

18“The Education Price Index 2022: A Study by N26.” N26, accessed October 2023.

30

ARTHUR D. LITTLE

THE SKILLS REQUIREDTO BE AN ACADEMIC
EXPERT AND THOSE OF
AN ENGAGING TE ACHER
ARE VERY DIFFERENTTH E UNIVE RSITY’S ROLE IN
NATIONAL DEVELOP MENTP LANS
Universities have long been an extension of anation’s soft power, building a pipeline of future
leaders and driving international perceptions of
the national intellectual ecosystem’s quality.
This has enabled successful and prestigious

This causes tension as balance is sought between

institutions to attract talent from across thethe two potential extremes in mission: a purely

world, leading to a brain drain from developing

research-focused institution versus one dedicatedcountries.

purely to teaching. Universities need to be clear
on their role against a backdrop of a globally
increasing population, longer lifespans in thedeveloped world, and a need to meet grandchallenges around climate change, poverty,
inequality, and inequity. Where do they sit on
the line between teaching and research, andhow will they be able to differentiate themselvesin a global market? Only then will they be able
to guarantee their long-term sustainability
and survival.

Previously, national plans in developing countries
have focused on strengthening access to primaryand secondary education, ensuring that all
citizens are literate and have the skills needed
to contribute to society. As this goal nears
achievement, a growing number are now turning
their attention to building comprehensive higher
education systems to prevent a brain drain andincrease national competitiveness (see sidebar“Entrepreneurship studies in national contexts”
for one aspect of this transition).

Entrepreneurship studies in national contexts
National education strategy has a role to play

Entrepreneurship continues to be an importantin driving entrepreneurship education, as

watchword for nations, and recently, Saudi

both a standalone discipline and integrated

Arabia’s Ministry of Education took on awithin other subjects. Previously, many viewed

cultural overhaul of higher education systems

entrepreneurship as a subtopic in a businessto include more substantial elements ofcourse or as a standalone graduate degree.

entrepreneurship education embedded in core

But there is a growing trend to integrate thetechnical disciplines. The ministry designed

lessons of entrepreneurship into all courses;

and launched the country’s first entrepreneurial

for example, as modules in research methods or

education curriculum for the public sector,

computing skills. At Mexico’s Tec de Monterrey,

applying input from over 30 local universities

all students participate in entrepreneurialand several leading global institutions known

studies in their first year. This is part of afor entrepreneurship education.

reinvented teaching approach called “Tec21,”
which aligns with the Mexican government’s
strategy to build an entrepreneurial ecosystemin the country. Tec21 aims to not only to develop
venture builders, but also to encourage anentrepreneurial mindset in all of Mexico’s
successful organizations, whether corporations,family businesses, or academic institutions.

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R E P O R T: T H E F U T U R E O F H I G H E R E D U C AT I O N , PA R T I

The focus on higher education is driving a

Universities with strong teaching offerings

specific emphasis on building a system ofare better able to justify high tuition in a

research-oriented universities that can compete

global marketplace. Through nurturing high-at an elite level. According to some analysis,

quality graduates, they will build substantial

this has worked in nations like Singapore, whereendowments when those graduates are

the National University of Singapore is leading

successful. Moreover, strong teaching

technology developments in many fields andinstitutions are well placed to attract lifelong

training future leaders. Programs in the Middle

and professional students who are willing toEast are replicating this model, with countries

pay substantial fees for short courses that fit

like Saudi Arabia and the United Arab Emirates

around their work commitments (see sidebar

spending significant portions of their budgets to“University rankings”).

build national ecosystems for higher education.

However, when deciding on their balance

However, the degree to which a national

between the two missions, universities need toecosystem can be planned and strategicallybe careful that these drivers remain virtuous

deployed from the central government is notand not to the total detriment of otheralways high, due to institutional independence

considerations. Essentially, all universities mustor the presence of private university

target excellence in both teaching and research

institutions. National governments may need to

but recognize their own specific role, function,use indirect means, such as funding and quality

and strengths.

assurance measures, to tweak the national
education landscape. Note that not all national
objectives are achievable through focusing on
elite research universities; the vast majority ofstudents will not go on to research or undertakea PhD, so quality and excellence in teachingmust be guaranteed at all institutions at theundergraduate level.

E X P LORING NEW
BUSINE SS MODELS
With the rise of borderless, lifelong learning,
universities need to explore options for new
revenue streams. This may be in the form ofsubscriptions to learning groups (focused

BA L AN CI N G F UN D I N GS O URCES & T HE N EEDFO R QUALI T Y T EACHING
When considering their overall mission andvision, higher education institutions must
consider the impact of their sources of funding
and how best to guarantee their long-term
financial sustainability. This will influence
the approach that individual universities taketo balancing their research and teachingcommitments.
Universities (or more realistically, specificdepartments) that specialize in, and are goodat, research are able to secure more researchrelated funding from public and private coffers
through competitive grants. As a result, they
will be able to build state-of-the-art facilities,
drawing in more elite researchers and building
an ever-stronger reputation for academic
excellence. Essentially, success begets success.

20

on core subjects) but should include proper
distance-learning education components
beyond a simple, commoditized MOOC.
Subscriptions could be offered to businesses
and individual learners alike, allowing learners
to dip in and out of education throughout the
many years they will spend in the workforce.
Alternatively, universities could collaborate insmall networks to offer nontraditional routes
to formal qualifications: foundation degrees,
diplomas, or even full bachelor’s and master’s
degrees delivered by the accumulation of
distance-learned credits. In a borderlesslearning context, there is no significant benefit
to the learner or the university in enforcing
a time limit of around four years to acquire aqualification.

ARTHUR D. LITTLEA DA P T IN G CO UR SES TO
T HE MO DE RN WO R KPLACE

At a minimum, universities need to focus on

Academic programs must provide opportunities

core content, aiming to create lifelong learners.

for students to develop transferable skills
that will prepare them for life beyond theirundergraduate degree. To continue justifying
high student costs in the face of alternative
learning options with low or no up-front cost,
university education must ensure graduatesways to increase the level of experiential andpersonalized learning modes used to deliver
The skills developed and the complementary
mindset will benefit the students throughout
their life, and as a side benefit, will improve
the local ecosystem and the university itself
by producing better researchers and a moreengaged alumni body.

exit institutions ready to be skillful employees.
In a growing number of institutions, this meansbuilding business skills or entrepreneurshipstudies into undergraduate degrees outsideof the boundaries of the business school.

University rankings
As shown in Figure A, the leading international

From a national planning perspective, this poses

university rankings focus heavily on researcha distinct problem. The “best” universities in thequality, both directly and through a number

country, according to the international rankingof metrics that are indirect indicators of thesystems, may not be the best universities atinstitution’s research focus, such as staff toteaching students and preparing the country’s

student ratios. Teaching quality is notoriously

future workforce. Universities are incentivized bydifficult to measure, especially in tertiary

global ranking systems to focus their budgets andeducation, where there are minimal standardized

resources on increasing research outputs; national

assessments, and student satisfaction surveys dogovernments must find ways to measure, monitor,

not necessarily produce rigorous, usable data. Thisand reward educators who successfully teachmeans that elite universities that feature in top

students and prepare them for life outside the

10 rankings year after year may have significant

academic sphere.

prestige attached to their degrees, but there is
not necessarily a direct correlation with better

teaching. And as these institutions have benefited
gure A.
Criteria for ranking universities
from selecting the (perceived) best students, thevalue add of their teaching is difficult to quantify.

Figure A. Criteria for ranking universities

Ranking attributed
to research (direct& indirect metrics)
Student-faculty ratio
Research/academic
Citations/publications

THE

QS

ARWU

60%<

80%

100%

✓

✓

✓

✓

✓

✓

✓

✓

✓

Source: Arthur D. Little, Times Higher Education (THE), QS World University Rankings, Academic Ranking of World Universities (ARWU)

21

R E P O R T: T H E F U T U R E O F H I G H E R E D U C AT I O N , PA R T I

CONCLUSION

N AV I GAT I N G AN
U N CERTAI N F UT UR E
Universities are at a crossroads. The traditionalbalanced higher education model of face-toface teaching and research across a range ofsubjects is under threat from digitization, grant-

UNIVERSITIES WILL NEEDTO FOCUS ON THEIRSENSE OF PURPOSE
AND ADD TO THEIRORIGINAL MISSIONS

funding concentration, global competition froma wider range of learning options, and changing
student demands.
Ironically, universities have never been morenecessary — both to foster the innovation
required to solve complex and pressing global
challenges like climate and sustainability andto provide students of all ages with the lifelong
learning skills they need to succeed in a world
increasingly disrupted by AI.

22

As they look forward, universities will need tofocus on their sense of purpose and add to their
original missions of teaching and research todevelop new funding streams that safeguard
their futures. Not every institution will survive,
and many will be radically reshaped, but thosethat can differentiate will thrive in a growing,
global market where universities add value toall of humanity.

ARTHUR D. LITTLE

23

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