The future's bright for universities ... if they reinvent themselves

Universities face turbulent times that will fundamentally change their world and may threaten the future of some - even without the credit crunch.

On the positive side, these changes offer great opportunities for institutions to reinvent themselves as leaders in a global ecology of learning. But the higher education sector must first acknowledge that past certainties are becoming tomorrow's uncomfortable myths.

Myth 1: "Higher education is about what universities do"

We have grown used to defining higher education as "what universities do": teaching degree courses, undertaking research and transferring knowledge to industry and government. However, they provide a shrinking proportion of these activities in the national economy. For example, UK universities provide only 33 per cent of government-funded research and less than 10 per cent of postgraduate professional qualifications and development.

Even in undergraduate teaching, our public universities are rapidly becoming just one option among many. Private providers such as Kaplan, BPP and Phoenix, further education colleges, and newcomers from overseas are offering direct and online alternatives to conventional degree courses, while Google, iTunes and academicearth.org (not to mention The Open University) are making free world-class teaching materials available on demand.

Cherry-pickers all, perhaps, and doubtless inferior in many ways to the traditional university experience, but their importance and future ambitions should not be underestimated.

Forward-thinking universities will adopt an outsider's perspective, considering what individuals, businesses and the Government need from the system and identifying what will maintain their distinctiveness.

Myth 2: "Higher education is all about knowledge and skills"

Our images of universities are rooted in the idea of expert knowledge - communities of academics who know important things about the world and transfer their knowledge to the rest of society. But in an open-source world that offers many sources of expert knowledge - from DIY web services to think-tanks, consultancies and commercial-research services - the professor-as-guru no longer commands the authority it once had.

Equally contestable is the Government's recent position that universities should impart the skills that employers seek in the workforce. Apart from allowing businesses to abrogate their own responsibilities for developing their staff, this view overlooks the irony that most of the academics expected to inculcate employment skills have themselves consciously eschewed the business lifestyle.

It will be said, quite rightly, that universities are not simply fonts of knowledge and skills, but are really about learning and that this is their special role. But even this statement must be updated. In tomorrow's world, knowledge will be a communal commodity and learning a social process by which scholars, practitioners and students come together to share, extend and apply their understanding of the world. This will have profound implications for universities as the places where this kind of learning happens - but only for those willing and able to adapt.

Myth 3: "Higher education depends on government"

Who will pay for this brave new world? The debate about the future of higher education is mired in assumptions that sustainability depends on the level and distribution of public funding. This was undoubtedly true in the past, is probably still true today for some universities, but will not and cannot be true in the future.

Already, government grants for teaching and research represent just one of many sources of university revenue, alongside private teaching and research contracts, student tuition fees, knowledge transfer and other services. The "entrepreneurial" university is already the established norm, with every institution having to juggle a complex portfolio.

Within this, the best that anyone can expect of government funding is that it might be maintained at current levels. This means that either universities will need to reduce their costs to live within their means, or they will have to increase their revenue from other sources.

There is enormous scope for reducing the costs of university activities, once institutions shift their attention from covering historical costs to optimising the value realised from their resources. Equally, there is huge potential for institutions to take a larger share of total spending on research, learning and innovation from across the whole economy. But neither strategy will be given the priority it needs as long as university leaders focus on ill-fated arguments for increased grant funding, or even higher regulated fees.

Universities must move on from their past certainties and gear up for a new world order in higher education. The prize is a global ecology of knowledge in which universities are valued as open, engaged communities of learning. An idealised future, perhaps, but one in which universities can exercise positive leadership rather than having to defend their increasingly beleaguered inheritance.