The Innovative University

Korok Ray

Winter 2021

If there's one thing economists can agree on, it's the importance of technology in enabling economic growth, raising living standards, and driving human progress. While some such advancement can be attributed to increases in physical and human capital, a large share comes from innovation. In fact, innovation is not just one factor, but a decisive factor in the prosperity equation.

Where does innovation come from? It's certainly true that much innovation comes from industry. It's even true that some comes from government. But in American society — perhaps the most intensely innovative major power in world history — the answer to this question has always had much to do with education.

As Americans, we expect our institutions of higher education to be focal points of innovation — epicenters of expertise, creativity, and talent. An enormous amount of our society's public investment in research and development flows through the academy, and a large portion of the talent pool for innovative industries is filled by those same elite campuses.

Innovation is not all these institutions do, of course; they also have a countervailing role in preserving and transmitting traditions of knowledge. They are similarly charged with training the rising generation in the skills required to succeed. But in America, perhaps more than anywhere else, we expect to find a close relationship between the innovative potential of our economy and academia.

Unfortunately, it's difficult to avoid the impression that this relationship is fraying. For decades, rumors that technology will displace higher education have abounded. First, there was the rise of online classes, then the promise of dynamic adaptive learning, and now the temptation of the flipped classroom. Most recently, the Covid-19 pandemic has forced an unprecedented number of institutions into virtual settings. Yet through it all, colleges and universities have retained prestige, a high number of applicants, and a dominant share of federal research dollars. There is no reason to think technology or the pandemic will decisively transform that landscape. The real trouble lies elsewhere.

The crisis that higher education is facing today is a crisis of relevance. This is particularly the case with respect to the relationship between education and careers. While some disconnect between the two has always existed, the pace of technological change, combined with the high returns innovators can command in the market, has increased pressure on students to exit or forgo college altogether. Higher education thus stands to become less relevant if innovation is not part of its core focus. Whether young people will continue to attend these institutions in the future is a question of how much higher education is willing to change to account for these new realities.

Higher education's capacity to keep our economy innovative depends on its ability to sustain some alignment between the needs of the economy and the incentives that confront students, professors, and administrators. This requires a clearer understanding of what it is about the modern university that might help advance innovation, and just how that could happen.


Broadly speaking, higher education in America comprises two modes: liberal education and technical education. Both serve many important purposes, and both play a key role in enabling innovation.

Liberal education seeks to form the student through exposure to excellence and habitation in rational thought. It has its roots in classical philosophy, the European Renaissance, and Enlightenment movements, and was first instituted in something akin to its modern Anglo-American form by universities like Oxford and Cambridge. Liberal education is the original mode of American higher education: Harvard College, America's first university, sought to train broad-minded clergymen through liberal learning grounded in theology.

The tradition of engaging with the classical texts of Western philosophers forms the foundation of liberal-arts education. The curriculum is often rooted in the humanities, the classical languages of Latin and Greek, and what we now think of as the qualitative social sciences. Professors who practice this tradition apply tools of careful reasoning and group discussion to deduce truths by engaging with the written word.

On its face, this does not seem like an approach committed to the pursuit of innovation; it's more concerned with preserving an inheritance than experimenting with novel ideas. It also tends to emphasize an ideal of human flourishing that does not put economic prosperity at its center. But liberal education has been essential to the innovative character of American economic life in at least two ways.

First, any progress in thought, theory, or practice requires careful analysis of the world as it is today and how it could be better tomorrow. This mental journey requires the ability to reason cogently and carefully as an elemental prerequisite. Not all such reasoning leads to innovation, of course, but all innovation requires this kind of reasoning. In other words, strong intellectual habits are necessary, but not sufficient, for innovation.

Second, a liberal-arts education shapes students' abilities and inclinations in ways that make them uniquely capable of propelling innovation. People educated in the liberal-arts tradition often have what it takes to approach problems with fresh eyes, yielding ideas and solutions no one else has contemplated. Smart employers recognize the value of liberal-arts education less because of the knowledge it affords and more because of the mental habits it tends to form.

In fact, the greatest rents in the tech economy do not accrue only to engineers. Steve Jobs, the late co-founder of Apple, is a clear example. Jobs's fundamental contribution to Apple was not technical, but aesthetic. He portrayed Apple as combining the best of engineering and the humanities. In a commencement speech at Stanford University, Jobs emphasized the importance of design and art for its own sake. He cited his taste for calligraphy, which inspired the pleasing graphical user interface of the Macintosh over the ugly text interface of the Microsoft Disk Operating System. Such design principles are often key to what innovators do, as are other sorts of strengths that liberal studies can cultivate — from philosophical commitments to the capacity to make a persuasive case.

Technical education seems at first to partake of a different ethic altogether. Though there has always been some element of skills training and scientific investigation in the mix of higher education, what we now think of as technical education at the elite level is a more recent phenomenon. It began in some respects in the late 19th century, when new American universities (perhaps most notably Johns Hopkins University) adopted the model of German higher education and emphasized scientific inquiry. But it took on its most modern form during and after World War II, following a conceptual framework advanced most significantly by Vannevar Bush.

Bush was the first dean of the School of Engineering at the Massachusetts Institute of Technology, as well as the co-founder of Raytheon and the intellectual mastermind behind the National Science Foundation (NSF). He directed the Office of Scientific Research and Development during World War II, which oversaw development of much of the basic and applied technology that assisted the U.S. military in that effort. As dean, Bush envisioned a new technical curriculum oriented around basic science that could capture large amounts of public funding for research and development (R&D) and create prototypes for next-generation technologies.

The technical education Bush pioneered holds science and engineering unapologetically at its core. In technical universities today, scientists, engineers, and professors compete for grants from public sources, which fund graduate students, labs, and equipment. The information-technology revolution of the last 50 years came mostly from innovations that first ran through technical universities — including the early internet breakthroughs at Stanford and several University of California campuses, to name just one example. Though Bush justified the creation of the NSF on the need for public funding of basic science, the reality is that modern technical education is in the business of applied science.

This product orientation of technical education has been successful, but it plainly conflicts with the norms of the liberal arts. The two styles of learning embody different attitudes and environments — in contrast to the lofty conversations one might encounter in a philosophy seminar, for instance, the physical environment of machines, labs, equipment, and tools imbue technical education with the trappings of a factory or production plant. Liberal and technical education also use vastly different curricula; are grounded in different disciplines, intellectual frameworks, and languages; empower different people within institutions; and have markedly different effects on society. Overall, technical education focuses less on the Keynesian "beauty contest" of identifying subjective preferences and more on testing for objective truth through empirical experimentation.

When we think about innovation, we often focus on the technological research that a technical education produces. And indeed, this sort of research produces the practical, material improvements that tend to come to mind when we hear the word "innovation." Advances in ultralight materials, precision agriculture, nanotechnologies, embedded artificial-intelligence algorithms, non-invasive biomedical devices, and manufacturing miniaturization are just a few examples of the myriad fruits of scientific research. In this sense, a technical education provides the raw materials for innovation writ large.

A liberal education, meanwhile, emphasizes the logical reasoning and careful thinking necessary for the kinds of innovation that can truly benefit society. It imbues students with an understanding of economic and technological trends, a knowledge of consumer cultures and attitudes, the creativity to develop a vision, the rhetorical skills to persuade investors and employees to pursue that vision, the ability to place innovation within the longer arc of scientific or corporate history, the wherewithal to foresee how innovation may affect society, and the prudence to distinguish beneficial innovations from those that might do harm. Because the formation of the student is the essence of the liberal-arts project, a liberal education can be thought of as molding the people who direct and drive innovation forward.

At root, innovation is the product of a culture. Any culture that facilitates innovation must rely on a technical philosophy that champions objective truths, hard skills, and material technology. But for such a culture to thrive, it must develop people's skills and capacities beyond mere technical prowess; it must also recognize the value of experimentation, ethics, and choice. This means the culture must be aware of itself not just in technical terms, but in terms derived from the liberal arts. It needs to provide potential innovators with both the technical skills to innovate as well as the conditions necessary for people to take risks and to gain from choices that benefit society. This requires norms and ideals not grounded solely in the technical sciences.


Recognizing the distinction between liberal and technical education can help us grasp how important both elements are to innovation. Unfortunately, the digital revolution has tilted the playing field heavily toward technical education.

Part of the difference can be attributed to public-funding levels. According to the National Conference of State Legislatures, as of January 2016, at least 15 states offered funding incentives for certain higher-education degrees — none of which included degrees in the liberal arts. Federal funding, too, is slanted toward technical education. A January 2020 report from the NSF's National Center for Science and Engineering Statistics states that in 2017 alone, $71 billion total R&D expenditures took place at institutions of higher education.

Students themselves are voting with their feet — and they are showing an overwhelming preference for technical education. In 2009-10, 388,000 undergraduate and graduate students earned science, technology, engineering, and math (STEM) degrees; by 2015-16, that number had risen to 550,000 — an increase of 43%. Meanwhile, the number of students pursuing liberal-arts degrees dropped 0.4% over the same period. Many colleges have had to eliminate courses or whole degrees in certain liberal-arts subjects in response. And in recent years, several liberal-arts colleges have been forced to shut down completely.

Thanks to skyrocketing tuition rates and the fact that this latest generation came of age during the Great Recession, it should come as no surprise that so many students are opting for degrees they view as most likely to result in gainful employment. And there's no escaping the fact that graduates with technical skills command some of the highest wages on the market. Georgetown University's Center on Education and the Workforce found that STEM graduates earn median annual wages of $76,000, compared to $51,000 for liberal-arts graduates. Similarly, a Pew Research study published in 2018 found that even STEM graduates who end up in non-STEM careers earn 17% more than graduates who did not earn a STEM degree. Given the growing importance of algorithms, artificial intelligence, and cybersecurity in our increasingly digital world, substantial rents will likely continue to accrue to our technical elite for the foreseeable future.

Yet despite these discrepancies, universities harbor deep skills across campus in both technical and liberal-arts education traditions. And, as explained above, both are necessary ingredients for successful innovation. To fully unlock the potential of each tradition, institutions of higher education must move toward a more balanced mix of the two. An approach I call "blended innovation" would merge these disparate worlds to connect knowledge, skills, and people in novel ways that incorporate the strengths of each.

Under this approach, students and faculty from the technical disciplines would continue to focus on R&D, which provides the foundation for innovation through the discovery of both new technologies and new applications of existing technologies. But rather than forcing technical innovators to solve problems without direction, blended innovation would implement a team-based, cross-disciplinary strategy of innovation in which students and faculty from a variety of liberal-arts disciplines — including psychology, law, political science, economics, and business — would guide those on the technical side in generating new ideas, predicting how future industries might evolve, and foreseeing the human impact of potential innovations. Responsibility for strategy and operations, too, would spread beyond the technical disciplines and into the humanities.

Several barriers to this kind of cross-disciplinary collaboration within universities exist. One is that universities are comprised largely of isolated knowledge corridors. This is not by accident — such isolation is often necessary for the development of deep knowledge in particular fields. Yet much innovation occurs at the boundaries of the disciplines — when a tool from one field applies to a problem in another, or the methods from two different fields combine in unpredictable ways. Overcoming the knowledge silos within universities will not be easy, especially since all incentives and curricula follow these silos. But the returns could be great.

Another barrier comes from the kind of work faculty are expected to perform. Faculty at major research universities typically spend their time obtaining large grants for research that serve as the corpus of their intellectual contribution. Once that research is complete, they often neglect the possible offshoots of that research that could further contribute to human progress. To remain not only viable, but relevant as the digital age marches on, faculty will need to adapt to these circumstances by aligning their work with the changing needs of the outside world.


Technical and liberal education can exist without much contact with the market. But it's difficult to contribute to innovation more generally without engaging with real-world problems. In this sense, higher education (whether liberal or technical) can only truly develop and advance a culture of innovation if it descends from its ivory towers into the practical world. This is why blended innovation incorporates another element, one that connects the dots between academic research and commercial objectives that point to the social good: industry contact.

Given their emphasis on practical research, technical disciplines have an edge over liberal-arts disciplines in bringing industry knowledge and contacts to campus. But there are problems with the current model, even on the technical side.

For starters, little industry knowledge actually reaches the curricula, even in universities that emphasize technical education. Instead, it is locked inside the research agendas of individual faculty members and their graduate students. When industry experience does make its way into curricula, it is often through "professors of practice" — non-tenured adjunct faculty who teach specific courses based on their experience in the industry.

Higher education uses adjunct faculty to varying degrees, with the largest use occurring in professional schools of business, law, and medicine. While these faculty may teach alongside the tenured and tenure-track faculty at their institutions — often times within the same building — the two groups rarely have professional contact with one another. Adjunct professors also largely stand apart from their respective institutions — they are insulated from faculty governance, have no say in the long-term life of the university, and cannot influence recruiting or curriculum decisions.

Students, meanwhile, are frequently forced to seek industry contacts outside the university without much institutional guidance. Many acquire experience with industry through internships. Those pursuing degrees in technical fields are likely to find themselves spending their fall semesters in a mad scramble to apply to dozens of firms that recruit on campus or have some other connection to the university. Students usually know little about the firms, and the firms themselves have little information on the students beyond their one-page resumes. Internship offers are made based on input measures like grades, test scores, and letters of recommendation — the few observable characteristics in this arms-length market transaction — rather than output measures like specific projects completed.

Bringing industry knowledge and experience onto campus is difficult enough; getting the products of university research to industry poses even greater challenges. Universities require specific decisions, infrastructures, and institutional arrangements for commercialization. Any industry-relevant intellectual property a faculty member's research generates is handled largely on an ad hoc basis. In some cases, corporations that fund the research demand ownership of all relevant intellectual property; in others, university technology-transfer offices negotiate case-by-case rules. There is little consistency within universities on how to structure such arrangements.

Enabling more direct engagement between the academy and industry would benefit academic institutions in several ways. It would improve the transfer of student talent from universities to the market, thereby improving institutions' graduate-employment numbers. It would make academic research more relevant to the real world, since contact with industry helps focus research on real-world problems. It would also give institutions some leverage in aligning corporate goals with the social good.

What's more, higher education already subsidizes private innovation — through faculty-conducted research and by training the next generation of scientists, engineers, and business professionals. If universities were to build more, and more relevant, incubators; structure their tech-transfer offices around a business mindset; reconfigure promotion and tenure criteria to include business creation; and generally arrange more structured, long-term relationships with industry in ways that align the different incentives the two arenas confront, they could seek to be better compensated for the products that result.

In fact, depending on the profit potential of a given idea, private firms might be willing to pay handsomely for these research projects. Firms would be encouraged to align with academic needs and assist faculty where necessary. They might be willing to share access to their staff, provide necessary data, and publish any findings. Companies like Microsoft and Google already conduct extensive research projects through academic faculty; if institutions begin focusing more heavily on innovation and structuring themselves accordingly, firms that have historically had limited engagement with universities, like Amazon, may be more willing to follow suit.

There are those who balk at the notion that higher-education institutions should be in the business of commercialization at all, advocating only the purest forms of learning. According to this critique, direct engagement between industry and the academy corrupts academic life by imposing material incentives and concerns onto the strictly contemplative work of authentic research. While this view is intellectually convenient, it jars with reality: Of the $121 billion of publicly funded R&D that took place in 2017, nearly 30%, or $36 billion, flowed through institutions of higher education.

Such a view is also naive in a global order where nations compete based on investments in research. China, for instance, has already made a national commitment to artificial intelligence, prompting the Trump administration to counter with a similar initiative. While the private sector will always be the best vehicle for discovering the most effective business models, allocating capital, and paying for top talent, basic science creates foundational knowledge that can be essential for future innovation — and basic-science research with the highest risk will always occur in academia. Thus, increasing the translation rate of this research to commercial value should remain a national aim.


Universities' disconnect from industry and lack of emphasis on innovation have undoubtedly prevented them from gaining industry knowledge, wielding influence over private firms, and tapping into potentially lucrative revenue streams. But this separation has also resulted in missed opportunities for one of the key populations colleges and universities are designed to serve: their students.

Consider one example, which describes not a tragedy or even a failure, but a missed opportunity. Tyler Marr was a mechanical-engineering student at Texas A&M University, the largest and fastest-growing research university in the Southwest, where he earned a 4.0 GPA. To pay for his expenses, he took a job as a research assistant in the lab of a mechanical-engineering professor who was developing a new concept called Infrastructure Enabled Autonomy (IEA). The idea was to navigate autonomous vehicles through roadside units that sit alongside the infrastructure rather than embedding all the intelligence in the vehicle itself through expensive Light Detection and Ranging, or LiDaR, sensors (as is the case with Google's self-driving cars).

The professor provided some high-level guidance to a team of undergraduates, including Tyler, to develop this new technology. Tyler then spent a year in the lab writing the localization algorithms that would allow cameras on the roadside units to relay images to an autonomous vehicle through dedicated short-range communication. By the year's end, the team had managed to successfully navigate the vehicle via roadside sensors.

When it came time for Tyler to graduate, he accepted a job at the Southwest Research Institute, a major research lab outside of San Antonio. The firm was impressed by Tyler's high GPA and noticed that his work on autonomous vehicles meant he had experience with the Robot Operating System computer language. Once he arrived, Tyler was assigned to several projects conducting research for the government.

Though Tyler's story may seem like a success, the problem is that Tyler was hired for his skills, not for his actual work. With his experience, Tyler could have joined a start-up that was commercializing the very IEA technology he had helped develop as a student. Such a start-up would employ more than Tyler's generic skills; it would put his actual experience to use. Tyler himself would not have had to restart his career once he graduated. And, perhaps most importantly, a start-up career would have unlocked Tyler's highest potential. Though he may not have seen himself as an entrepreneur initially, under the right conditions, Tyler could have turned this technology into a successful business that benefited society.

Higher-education institutions should provide such opportunities to students. To do so, they should begin by thinking about the students who could benefit most from a greater emphasis on innovation. The student body can be thought of as divided into three groups. The first represents the fundamental innovators who can do nothing other than innovate. The second includes students who, because of risk aversion and a taste for order and structure, would likely never become innovators. The third consists of those who would pursue innovation, but only under the right conditions.

Universities should target this third group by creating the environment necessary to develop promising students into professional innovators. This would involve a mix of interventions — connecting students and faculty across liberal-arts and technical disciplines, offering project-based learning, building mentor networks, offering social- and business-support services, and so on.

To picture what this might look like, it helps to imagine the experience of a student — call her Jane. Starting as a freshman, Jane considers the possibility of becoming an entrepreneur or innovator when she graduates. When she visits campus, she sees other students working in teams that bring together multiple disciplines at the undergraduate, graduate, and faculty levels. Some of these teams are working on basic-research projects funded by the NSF. Others are helping to build a business that a professor dreamed up. Still others are helping another faculty member solve a major problem that a sponsoring firm has encountered. Whatever their origin, the projects she sees require people with both technical and liberal-arts backgrounds, and they engage students and faculty over their entire lifecycle. From entering freshmen to rising seniors, first-year master's students to late-stage Ph.D. candidates, students work on such projects within the curriculum under the guidance of a professor of practice. This professor integrates the research project into a course that is team-taught with research faculty. Students are exposed to real problems that industry encounters directly in the classroom.

Jane's chosen project, which begins early in the fall semester of her freshman year, makes real progress by the beginning of the following summer. The sponsoring firm skips the traditional means of recruiting interns and instead selects Jane, who has deep knowledge of the problem the firm seeks to solve. Once Jane returns to campus the following fall, she brings knowledge from the firm back to campus and the lab, making her even more equipped to continue stage two of the research project. This amplifies the productivity of both the university lab and the sponsoring firm.

During her senior year, Jane develops her own idea. In concert with her industrial-engineering and finance professors, she launches a university-incubated start-up. She participates in the demo day at the end of the summer and secures funding for her project. She runs the start-up for a decade before it is acquired by the very firm that sponsored her research as an undergraduate.

This is clearly a stylized portrait. And it describes a success, while most experiments in business formation will be failures. But this vision is not impossible; it has occurred in fits and starts in places across the country, and it can happen on a greater scale and with greater frequency throughout higher education. Such efforts may begin as undergraduate capstone projects, then become master's theses and, eventually, doctoral dissertations. They may occupy physical space at an on-campus lab, then move to an off-campus incubator, and finally relocate to a private-sector accelerator where external investors mentor students and provide capital as needed. The transition to online classes due to Covid-19 makes this vision even more feasible; rather than living near classrooms, students can reside near their incubators or accelerators, which could be located wherever best suits the project. Such a model could scale across our nation.


The kind of emphasis on innovation described above could never become the essence of higher education; after all, enabling innovation is only one of several roles the academy plays in our society. But it is a purpose that higher education is not serving as well as it could. Given the crisis of relevance institutions have encountered in recent years, American universities need to think anew about the part they might play in enabling innovation.

Addressing the innovation question will require universities to harness the power of both technical and liberal-arts traditions, teach relevant industry skills, encourage students to pursue entrepreneurial endeavors, and, above all, embrace risk. This will engage a broader community of scholars in the work of innovation, from idea development, to experimentation, to iteration, to prototyping, to market validation, to fundraising, to growth. Given how crucial innovation is to our nation and to human progress, such retooling could hardly matter more.

Korok Ray is director of the Mays Innovation Research Center and associate professor of accounting at Texas A&M University’s Mays Business School.


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