Select Committee on European Union Minutes of Evidence

Examination of Witness (Questions 20-29)



Lord Howie of Troon

  20. MIT is of course very famous—renowned is probably the word. What do you think is MIT's main contribution to the US economy? Does it come through the education of your students, who then go into various bits of industry? Does it come from new start-ups by your fairly recent graduates? Or, is it via businesses founded by staff?

  A. Good question. It is certainly all of those, but without question the first. It is the education, it is the devolvement of the human capital. So many of these companies are founded by alumni who have simply gone out after they have left MIT and used their expertise. When we think of entrepreneurship and we think of it from a management point of view, there is a full range of new types of individuals who need to be educated in terms of people who can do strategic marketing as these new start-ups develop, people who understand both the technology and management and that is the sort of human capital we are focusing on. Without question that is the primary benefit we have. Let me mention one thing also, which is that I do not consider myself an expert, but to the extent that I am knowledgeable, I think the UK has an enormous resource in its university system. It is far superior to the other countries in Europe. You have a real strategic advantage here which could and should be exploited. One concern I have is looking at the salaries which are being paid to faculty members in science and technology. There is a real danger of losing a lot of the super stars and that would be a real tragedy.

  21. We are kind of used to that. In your paper, you lay out some of your triumphs in your first page; a large number of firms and so on which have been established. I am wondering two things: firstly, over how long a period do your paragraphs 3 and 4 apply. Secondly, how long lasting were these innovative, entrepreneurial establishments.

  A. Almost all of them are post World War II. This is primarily from a 20-year period from the 1950s and 1970s and in fact certainly in the United States the whole concept of the research university was Vannevar Bush writing a very famous paper after World War II and that was when the government started to fund not only MIT but other universities. Most of this is all post World War II phenomena, in fact up until World War II MIT was primarily a commuter school, just serving students in the Boston area. It has been transformed since then.

  22. Have many of these firms gone bust? Do you know?

  A. No, I do not know. I assume probably a fair percentage, which is probably good. It means you are taking the right sort of risks. There are many which have developed into huge enterprises.

  23. You could not subtract them from some of the figures you have given us.

  A. No, I could not do that.

  24. One last question which is rather oblique. Quite a number of years ago I had an oblique relationship with the motor industry which you have mentioned once or twice. You might not be the man to ask this but I was wondering whether you have any views on an organisation like the General Motors university in Flint near Detroit which is different from your kind of organisation.

  A. Yes and I think that there is an important role for that sort of an organisation and there is an important role for regional colleges which do not do fundamental research. Any nation should have a whole range of different institutions and one of the things we have often done is partner these other universities. I mentioned Ford before. We have a programme on systems design and management and the Head of Product Development at Ford said that it was a great programme, they send 10 of their best people every year but he has to re-educate 5,000 engineers. So we said that MIT could not do the job, but there is a school—as a matter of fact it was a Catholic school—called the University of Detroit. What we have done is taken our curriculum and given it to the University of Detroit so the University of Detroit is able to educate hundreds every year. In a sense that is really the idea behind this national competitiveness network, the same sorts of things. Ideally, if you are going to do well in entrepreneurship, it is not just at the CEO level, it is throughout the organisation; particularly middle management and at the working level one has to go to universities other than MIT or Cambridge.

  25. The General Motors university is different in the sense that it is extremely specific and aimed at educating the employees of General Motors. I think it is true to say that every director of General Motors goes through the school in Flint.

  A. There are two aspects to it. In fact the General Motors university took people in from outside General Motors it became so successful. A number of companies do in a sense have these on campus universities. That was one of the primary things Jack Welsh did in his time at General Electric: he set up one up. It is not just General Motors, but that is a trend.

  26. Philips does it.

  A. Yes; many companies.

Baroness Cohen of Pimlico

  27. I have the wrap-up question which in a way asks you to reiterate much of what you have said to us. What do you think are perhaps the two most important things European policy makers can learn from MIT, if you are seeking to promote entrepreneurship both in large and small firms? What first two things would you do, or three, or whatever?

  A. Let me frame it first of all and say that what I described at MIT is not something which happened spontaneously, it takes a lot of time to develop the sort of culture one needs. The first thing I would say is that I cannot think of anything more fundamental, more important, than the role of the research university with respect to entrepreneurial excellence. Out of that falls a lot of other things. It means one has to provide the right sort of support for the university. Secondly, it is absolutely critical to be able to foster good university/industry relations. My sense is—and I say this with a certain amount of regret—that in many cases there is a fair amount of distrust and lack of understanding on both sides, that industry views university professors as aloof and never having met a payroll, having no idea what it is like to run a company. In the university people feel industry people are very short sighted. All they care about is profitability in the next quarter. They have no ability to think deeply. Both of those are totally incorrect and I think the government, in its role as an enabler, to the extent that it can make partnership relationships between university and industry, is going to be enormously beneficial in terms of the results, not only from an entrepreneurial point of view, but broadly based from the competitiveness point of view. I think those are the two broad points I would make.


  28. May I ask one or two quick questions for just a short response? You said that you felt that the UK was sitting on a competitive advantage in European terms with strong research universities compared with the rest of Europe, if I understood you.

  A. Yes.

  29. Could you expand on that a little? Secondly, do you think we have too many relatively small research universities? I see that it was reported in today's university that an expert thought there was a need to consolidate some of our universities and have a smaller number of research excellent universities.

  A. First of all I should like to add a third point, which is that human capital and education are without question the most fundamental, important role that the universities are playing. Let me answer your question by example. I will not mention the countries, but several countries have approached MIT basically saying "Please help; our universities are broke and they just do not work. We cannot turn out PhDs". They have lost their ability to serve industry from the point of view of educating the right sorts of individuals to do the cutting edge research. Unfortunately a number of universities are very politicised and a lot of them operate with part-time faculties and lack a degree of uniform excellence, which one finds across the UK. To answer your second question, I think there is a danger of trying to upgrade too many universities, the result of which is the lowest common denominator. I should also mention that there are unfortunately a lot of failed government programmes. Communities, states, look at what has happened in Silicon Valley and Route 128 and say they will do the same thing at East Oshkosh University and a lot of money gets put in and nothing happens because the research base is not there. There is no knowledge to build upon. One has to be very careful to pick and choose and to go with excellence. As I said before, if you go with excellence, it can be bringing in a lot of these other institutions who have a terribly important role to play as well. I think you need both.

  Chairman: Professor Roos, thank you for your wise counsel, your good advice. We have listened with great care and we could go on for a long time. I certainly have a number of questions I should like to have asked and I shall take advantage of you and write to you. If you can spare a moment to respond before you return to the States we should be very grateful. Thank you again; we are most grateful to you for your time.

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