Will the dinosaurs survive the asteroid?

Is "the university" defunct or is it poised to become the main driver of the global economy in a "knowledge century"? Millennial angst is breaking out all over.

This week, a self-selected group of "entrepreneurial universities" met at the University of Twente in the Netherlands (page 52) to celebrate the publication of Professor Burton Clarke's two-year study (page 12) of how universities can organise themselves to be nimble enough to respond to new opportunities. And as The THES went to press, 250 European vice-chancellors were gathering at Guildhall University under the auspices of the Association of European Universities (formerly the Conference of European Rectors) to discuss The Renewal of Teaching in Higher Education in a world of mass demand and new technologies. Last week in Montreux, in an elegant hotel redolent of the end of the last century, 20 heads of American and European research universities gathered to discuss The Challenges Facing Higher Education.

What does all this amount to? Is it, as one participant in the Swiss conference put it, "a case of the dinosaurs looking at the asteroid"? Or is the angst and introspection part of the process of change, "the creaking of the wheel as the ship adjusts to the wind"?

The challenges identified at the Swiss conference are accepted by all and are formidable: ever-growing demand for qualifications; too little money to meet that demand in traditional ways as states and students jib at ever-rising prices; eager competitors eyeing a mass education market made accessible by new technologies; a legacy of university governance, and, in Europe, university law, which makes change slow and difficult.

How institutions will respond is less clear and will vary according to the circumstances surrounding universities and national higher education systems.

But two things emerged over three days of detailed discussion in Montreux. The first is that for all their worries, the leading American universities with their multi-million dollar operations - medical schools, campus police, halls of residence, huge labs and libraries, and tenured faculty - do not intend to be pushed out of the new world market for knowledge and learning. Instead they are gearing up to protect the revenue streams which support their research by exploiting new opportunities, often turning their long-established extension (adult education) programmes to new use.

They will offer new services locally: the University of Michigan, for example, has set up the Millennium Project to "develop and test new paradigms of the university". They started with the Michigan Virtual Automotive College to develop training packages for the workforce (average age 52) in the state's car industry. They are now doing the same for tourism, furniture, health care products, agriculture and software industries.

But American universities are also reaching out worldwide using their brand names to secure new markets. The Midwest University Consortium for International Activities run out of Columbus, Ohio, is offering validation and accreditation worldwide. Universities like Duke and MIT are marketing their MBAs through the pages of The Economist.

The competition comes from new styles of university and from the huge communications companies. The for-profit distance-learning University of Pheonix, started more than 20 years ago, now has 40,000 mature, part-time students and shares which are soaring on the stock market. The governors of 13 western states are starting their own virtual university to provide courses via the Internet.

Meanwhile, Time Warner, Disney and Microsoft, with their colossal capacity to exploit the new technologies, are moving into education. The anti-trust suit against Bill Gates will be of more than academic interest to universities eager to get into the market.

The second thing to emerge in the Swiss colloquium was that if Europe's universities cannot sort out the blockages to enterprise in their more bureaucratically controlled higher education systems and their internal decision-making arrangements, they will lose out not only to new commercial competitors but to their American colleagues.

Change may seem slow and difficult in American universities. It is much slower, smaller-scale and more complicated in Europe. The difficulties in reforming the French, German and Italian state-controlled systems are covered regularly in our columns (page 9). Most UK universities, while they have more freedom than their continental colleagues, seem too shell-shocked by the battles they have been fighting over funding and regulation to use their greater autonomy as creatively as the Americans do. The pioneering described by Professor Clarke has taken a decade to show results.

Meanwhile, on both sides of the Atlantic private universities are starting up to circumvent constraints: the inability to charge fees, to select students, to introduce new programmes in Europe, and the resistance of tenured academic staff everywhere. The International University in Germany, which will open its doors this autumn with 30 students studying information and communications technology in English, working closely with major German companies, is just one of these new ventures.

But it is going to be hard for new institutions to grow into internationally competitive research universities outside national state systems. The University of Buckingham's struggles illustrate the toughness of the task. The German National Research Centre for Information Technology with 1,300 research staff cannot be accredited to award degrees because it is a federal institution. Accreditation is a Land responsibility.

The number and type of organisation bearing the title university is proliferating on both sides of the Atlantic. This will change the meaning of "university" over the next decades. The question is how far universities of a traditional type can survive too. Can they socialise the invaders into their traditional values? Or will they be wiped out by the asteroid?

The paradox is that universities are and must increasingly be international in their reach, as Fred Halliday describes on page 12. But they are also regionally based and regions are becoming ever more assertive, determined to have their own university because of the impact a powerful "knowledge factory" can have on local social and economic success. The University of California at San Diego, with its hundreds of biotech spin-out companies clustered around it, illustrates the point.

But it is not just commercial advantage which is at stake. Universities are more than generators of potentially valuable commercial ideas. They may need to make money themselves in the global knowledge market to survive, but we need them to survive to underpin a broader set of values - values which are important to local communities and may be in conflict with commercial interests.

What are universities' core values? Post-modernism has made people embarrassed at trying to articulate values of any kind, yet most would subscribe to a role for universities which includes defending standards of evidence and objectivity, inculcating habits of rational debate, upholding respect for the truth, fostering open debate, questioning received wisdom, generating new ideas, and even, as in Indonesia, daring to call time on corrupt regimes.

The success of the knowledge century will depend not on the spread of new technologies themselves but on the quality of the information which is made available through them and our ability to use it wisely. The challenge to universities is to adapt fast enough to exploit the opportunities of the market so they survive to uphold those values.