12/11/2003
Speakers: Peter Erskine, CEO, mmO2 plc
I am full of admiration for the work that is being done here at Reading University Business School, and so when I was invited to sit on the Advisory Board it was an invitation I was only too pleased to accept.
I plan today to talk briefly about why I believe partnerships like this - between business and higher education - are so important, and the benefits they bring to companies and the economy as a whole.
But first, let me go back in time a little - to the seventies, when I was at university.
Back then I was one of a relatively elite number of people lucky enough to go on to higher education. I spent three years studying psychology. I learnt a lot and made lifelong friends.
The one thing university didn't prepare me for, however, was the realities of business life. So, when I arrived for my first job at Polycell it was a culture shock - probably as much for my boss as it was for me! Profit and loss accounts and customer service meant nothing to me. I was more used to debating Pavlov's theories on animal behaviour or Freud's views on personality.
In those days there was the world of academia - and the world of business. The two seldom talked to each other, let alone worked alongside each other.
But things have moved on and the world has changed.
From a business perspective, competition has got tougher. We now operate in a global market place with a knowledge-based economy. Price isn't the only driving force. Success depends on the people you employ - their knowledge, skills and creativity.
And where do companies turn to find good people? To universities and colleges.
Never before have universities and colleges been so important to business. More than ever, we need a thriving and expanding higher education sector. We also need one which is more relevant to our specific - and changing - business needs.
So, there is an enormous opportunity and need for closer collaboration - and this has started to happen.
There are an increasing number of higher education institutions helping companies be more innovative and professional in their approach.
But more still needs to be done.
Today higher education in the UK generates over £34 billion for our economy and supports more than half a million jobs. But despite this, a surprisingly few number of businesses - less than one in five - make any use of what universities can offer in terms of skills and knowledge.
Universities. Businesses. The economy as a whole is losing out.
To me the benefits for business of a closer partnership with higher education are numerous, but there are two in particular that I want to highlight.
The first one is knowledge.
Knowledge is power. That's certainly true in today's business world - particularly in the field of technology.
Technology is developing so fast that it is often difficult for companies to keep up with the change - let alone lead it. But if you don't stay ahead of the game you can lose your position in the marketplace overnight. Customers want and expect companies to be constantly innovating and developing their products - this is particularly true in the world of mobile communications.
Universities are sitting on a mine of valuable information and potential.
In the past we haven't always been as smart as we could have been at making the most of our great British inventions. How many inventions can you think of, for example, which were made in Britain only to be commercially exploited abroad?
While the research output of British universities compares favorably with that of many developed countries, relatively few companies in Britain are research-led.
UK businesses carry out less that half the R&D per worker than that of our counterparts in the US, Japan and Germany. Indeed, it is estimated that around a quarter of the UK's productivity gap with the US and a sixth of the gap with France can be attributed to differences in expenditure on R&D.
Companies around the world are outsourcing their R&D activities more and more so that the importance of universities overseas, in economic development, is growing.
In the UK the proportion of academic research income funded by companies has increased in recent years, however, we need to work closer with universities so that we can not only capitalize on ground-breaking research, but also have a say in the type of research undertaken and priorities given.This means exploring new ways of working with universities - getting involved in research at an early stage and exploring the practical use and commercial potential together.
This is exactly what we are currently doing at O2 with Oxford University on a pioneering medical project. We are providing the technology, and sponsoring the trial, of an asthma monitoring system which we hope will improve the management of the condition across the UK.
If the trial is successful asthma sufferers will be able to lead more mobile and less restricted lives, and the number of emergency cases will be reduced because detection of critical conditions will happen at an earlier stage. This is groundbreaking stuff and asthma is only the beginning - there's no reason why illnesses like cystic fibrosis, for instance, can't be helped in the same way and we commence trials in this area next year.
From an O2 perspective it's exciting to be able to exploit our mobile technology in a whole new area which will benefit the community at large. And the only reason that we are being able to do this is because we are working closely with the university and their experts in this field.
The second major benefit is people.
The demand for graduates across all sectors of business has never been stronger.
In the UK we fall behind the US in terms of qualified workforce - 17% of the workforce here are educated to degree level, compared to 28% in the US. It's a significant difference which naturally puts us at a competitive disadvantage.
And by the end of the decade it is estimated that 80% of the 1.7 million new jobs expected to be created in the UK will be in occupations which normally recruit those with higher education qualifications.
The higher education sector needs to expand to meet our rising skills needs.
This is already happening.
As I have said, I was one of an elite few back in the 70's - only 6% of under 21's went to university. Today around 43% of 18-30 year olds in England enter higher education. The Government's aim is to raise this figure to 50%.
But it's not just about having more qualified people. It's about having better qualified people.
The bulk of the Government's expansion programme for the higher education sector is to come from new types of qualifications which are better tailored to the needs of the economy.
This is a great news for business.
We have a real opportunity to create our ideal workforce. Together with educational and skills experts we can develop courses and training programmes which equip students with the skills and knowledge needed to compete in today's marketplace.
But we can only do this by working in partnership.We need to get more closely involved with universities, so we can define the type of graduate profile we're looking for. We can then help create vocational degree course content and development that are relevant to business needs.
And in a world where change is happening so fast - and where our workforce is getting older - we need a system of lifelong learning.
Today's generation of graduates will need to return to learning - to refresh their knowledge and upgrade their skills. We therefore need an educational programme which offers a continuous personal and professional development. Inevitably a more flexible approach both to learning and work is the answer. Again close collaboration is essential.
The other obvious people benefit of working closely with universities is that companies can engage early with the graduate recruitment process. By coming in contact with students through consultancy or sponsorship, companies can get to know individual students. Equally, students can learn more about business and are in a better position to make the right career move.
So, if the benefits of working more closely together with universities are so great - why then are not more companies doing it?
In a CBI survey of its largest companies, 50% of respondents quoted poor customer service as the biggest barrier to working with universities. They complained that it was often difficult to identify the best contact in a university; that managing the relationship was tricky and that keeping to timetables and deadlines was also an issue.
One in seven respondents also complained that universities' attitudes to intellectual property rights are hardening, making it more difficult to come to a commercial agreement.
But I think there is another important reason why there isn't more business involvement: companies simply don't recognize the true value and contribution that a university can bring to the boardroom table.
Universities have started to understand their true value. As they come under pressure from increased competition, a growing number of them have already become dynamic forces in the economy. This has meant changing the way they work and how they interact with business - while still maintaining their integrity and independence as academic institutions.
I think this is an important and crucial development - particularly in light of future funding for the higher education sector.
As the burden of costs increasingly falls on students, going to university will become an important investment decision. Most students will want to be sure that they're getting a good return on their investment - and that means knowing that when they leave university they'll have the right skills and experience to get the job of their choice.
Universities which can offer this security will have an obvious advantage.
So, to conclude.
Higher education needs business. And business desperately needs the world class people, ideas, research and technology that universities can offer.
But we can only help each other by working with each other - in genuine partnership.
That's exactly what's happening here in Reading and why it's so exciting.
Leading educationalists and business leaders have come together to build what, we hope and believe, will be a better future for both business and the university.
And if I can leave you with just one last thought.
Your location is a huge advantage - make the most of it.
The fact that you are situated here in Reading was one of the reasons why I wanted to get involved - O2 is based just down the road in Slough.
Your situation here - in the middle of the Thames Valley surrounded by industry - means there are hundreds of business partnership opportunities sitting on your doorstep. As a team we need to go out and find them.
I am delighted and proud to be part of this venture and am very much looking forward to the work ahead
