I want to acknowledge Ambassador Howard Baker and his wife, Senator Nancy Kassebaum, who are here with us, and thank them for honoring Harvard and all of us with their presence, and thank them also for their service to our country, both in the past and in their current positions in the Ambassador’s Residence.
When people ask me what the essence of Harvard is, it’s many things. It’s the students. It’s the community. But if there’s one thing the university depends on, it is its faculty, and Harvard is extraordinarily fortunate in its faculty, and in no area more than in the study of Asia and the study of issues relating to this region. So I want to join in recognizing Mike Yoshino, Bill Kirby, Susan Pharr, and Ezra Vogel, for their service to the university.
And finally, I’m grateful to all the alumni who are here today. One of the things that has been a joy in coming to my position, and something I didn’t fully recognize when I was on the faculty at Harvard, is just how much commitment and concern Harvard is able to enjoy from its alumni body. The continuing interest and attentiveness and constructive criticism and support from the alumni body is a major source of the university’s strength. So thank you very much for your involvement.
This is my first trip abroad as Harvard’s President. I’ve now been president for six months, and it seemed to me that, in line with the university’s commitment to becoming ever more international and to tackling international questions, it was important that I travel and meet with our international alumni and think about international academic issues. I asked myself where would be best to go first, and the answer became relatively apparent. In light of all that is happening in Asia, in light of the extraordinary group that Bill Kirby and Ezra Vogel had convened for the Asia Center Advisory Group, and in light of Harvard’s long-standing relationships with Japan, it seemed obvious that the right place to come was to Japan. And, since it was a country I had come to know well during my time in government, I was very glad to make this my first international visit as president of Harvard.
Harvard has strong connections with Japan. The first Japanese student graduated from our law school in 1874. I reminisced at lunch today with Professor Shuro, who some of you may know, about how he befriended my uncle when they were both graduate students at Harvard, in economics, at a time when I was negative 20 years old. We have today 3,000 alumni living in Japan, and 163 students from Japan at Harvard. So I would dare to say something that I would guess that Ambassador Baker has said at least a thousand times since he’s been here, and that I said every time I was here when I was in government: that, as Mike Mansfield said, the most important bilateral relationship in the world is between the United States and Japan. Propositions become clichés because they are true. And that one is true. And I believe no international relationship is as important for Harvard as its relationship with Japan.
What I thought I would reflect on briefly tonight was the role of universities in the new global economy. There are a number of aspects of this relationship. Perhaps the one that gets the most attention and may actually be the most important, is that what universities do is produce knowledge, and what is essentially novel about the new global economy is its emphasis on knowledge; is the fact that companies which once found their valuation primarily in the land they owned, in the machinery and the physical capital they owned, today derive the bulk of their value from their intellectual property, from the value that is locked in their organizations and is locked in their people.
And this is closely related to the work of universities. A National Science Foundation study a few years ago found that 75% of patents that cited scientific research cited research that was done in one of America’s major universities. The examples of abstract research finding application are legion. My favorite is this one:
If you think about all that we do in the university, probably the most abstract subject we contemplate is mathematics. If you think about all of mathematics, probably the most abstract branch of mathematics is number theory. If you think about all the parts of number theory, probably the most abstract part of number theory is the study of prime numbers. And yet if you challenged me to give a detailed explanation of why this is I will fail. And the reason why you’re able to use your ATM card with safety is because of encryption algorithms that derive from research in number theory, not a century ago, not a half century ago, but two decades ago–completely abstract research that has spawned large amounts of capacity to do electronic commerce. I could go on and on with examples that demonstrate the proposition that, in a knowledge economy, the contribution of universities is becoming ever more important.
Indeed, the relationships are, I would suggest, mutually reinforcing and a bit more complex than this example suggests. If strong universities contribute to a strong economy, so also a strong economy contributes to strong universities. Harvard has been, very substantially, a beneficiary over the last decade of the strength of the American economy. If one asks the question why tuition at Harvard has essentially kept pace with inflation over the last decade, after very substantially outstripping inflation over the previous two decades, a large part of the reason has been the increased capacity provided by the rising value of our endowment in a strong economy.
If we are able to take great pride at Harvard in the fact that the loan burden with which a typical student has to graduate has been cut more than in half in the last seven years, much the reason we have been able to do that has been the strength of the American economy and what that has contributed to the American financial position.
Indeed, one sees examples of this in microcosm. Think about the mutually reinforcing success of Stanford and Silicon Valley. Stanford’s success helped to spawn Silicon Valley. Silicon Valley’s success, which has involved so many Stanford alumni, has benefited Stanford enormously. And there has been a mutually reinforcing cycle.
I say to you, parenthetically, that this has not gone unnoticed at other universities. And one of the issues that I think is terribly important for Harvard and the Boston area in the years ahead is the recognition that in Boston, between Harvard and M.I.T. and the leading teaching hospitals in the world, we have the greatest cluster of biomedical research talent that there has ever been. Route 128 in Boston missed being the epicenter of Silicon Valley. The next Silicon Valley will almost certainly be in the life sciences, and it is very important for Harvard, very important for the Boston area, very important for new England, that we do all the things necessary that make that be in our area.
But I want primarily tonight to focus on a different aspect of universities in the new global economy, and one that is discussed less frequently, but one that I select because I think it has substantial resonance for understanding the success of the American economy over the last decade, and, I might suggest, some considerable lessons for what may be important in other countries as well in the years to come.
And that is this: While universities are often derided by men of affairs, as being impractical, as being ivory towers, as being separate from the real world, the irony is that the most successful business organizations in our society have increasingly come to take on more and more of the attributes that we classically associate with universities.
One of the essential features of a university culture is that an idea is judged by the quality of the argument, not the status and authority of its proponent. In the university, any graduate student is free to challenge any professor in a seminar. It is considered welcome and desirable to provide new evidence suggesting that your thesis advisor was not right in some conjecture he or she made. It would be unthinkable that any student reasonably advanced would not call his advisor by his or her first name. It is the quality of the ideas, not the strength of the hierarchy, that matters.
And if one thinks about the most dynamic and successful business organizations, they are increasingly organizations that have exactly that character: that invite challenge from anywhere; that seek to spawn creativity; that have moved away from command and control and hierarchy.
A second crucial feature of university life has been a very substantial emphasis on diversity of perspective. Universities, in their pursuit of intellectual excellence, have led other sectors of our society in being open to women, as well as to men; in being open to people of all races, all faiths, all creeds, all income classes. And this, too, is something that is increasingly being done, and being done with increasing success, in the most successful business organizations. Because the most successful business organizations are coming, increasingly, to recognize that if you search in a big pond, you do better than if you search in a small pond, and that by being open to all, you improve your quality and your standards.
A third difference, or a third very salient aspect of university culture, it’s one that relates, I think, very much to one of the ones I already mentioned–is that there is a emphasis on informality and internal competition. The members of the Harvard biology department disagree violently on the status of evolutionary theory. The members of the Harvard economics department have every opinion known to man on the Bush tax cut. Actually, if there are 22 members of the Harvard economics department, there are 23 or 24 opinions on the Bush tax cut.
Those ideas compete and are debated. And that ongoing constant argument has always been a feature of academic life at the best universities, and it is, increasingly, a feature of life at the best companies.
Similarly, in the best universities, there has always been vigorous competition between universities for the best faculty, and a willingness not to confine searches for faculty members to faculty members within a given university or the students of a given university. We may over time at Harvard actually redress this balance slightly and will, I think, take somewhat more of our faculty from within the institution. But, much more than in most other sectors of life, the best universities are willing to look anywhere and recruit from outside for their faculty. And, increasingly, the best business organizations are doing the same: being willing to look from the outside to find the best people in any given specialty.
Universities have for a long time been global in their perspective. While we talk about the challenge of making Harvard a global university, the truth is that, even 25 years ago, before globalization was a buzzword, when I was in graduate school, in economics, about 40% of my class of Ph.D. students were students from other countries, including a number of Japanese economists who have gone on to have very considerable influence. Universities have looked, not just within the best universities, have looked not just within their own countries, but around the world for the best faculty.
And finally, a defining feature of university life has always been an emphasis on discoveries for the long run. There’s always been the idea that ideas will matter over the long run, that you cannot judge the magnitude of a contribution by the immediate or initial reaction to it, but that it is only over the long run that ideas are tested, and that the real test of scholarship is staying power and lasting influence on the work of others.
And here, too, the most sophisticated and best business organizations have moved to adopt the university’s view, concentrating on aspirational planning, focusing on development models that pay out over the long run, and moving away from the obsessive focus on quarterly earnings that dominated so much of business thinking fifteen years ago.
An emphasis on the long run. An international perspective. Informality in internal competition. A commitment to diversity. A move away from hierarchy and towards testing ideas through argument. An emphasis, above all, on knowledge as the most valuable asset of all. This list, which I’ve presented as a description of key values of universities as organizations, sounds a great deal like lists of management consultant’s observations of the best and the most effective companies over the last decade.
I think it suggests that there is yet another resonance between universities and this new economy: that the kind of informal, consensual community that universities represent will, increasingly, be a model for other organizations in our society.
But of course, if universities are to serve as “templates for the future”, as they have in the past, universities, too, will need to evolve in the years ahead. So I want to conclude by speculating on some of the dimensions of evolution that seem to me to be most important.
First, universities will have to concentrate, with increasing vigor, on doing those things in our society that markets will not. There are a number of examples. Take one that I find especially vivid: More money was spent by the pharmaceutical industries of the world last year on pet disease than on tropical disease, even though tropical diseases kill more than 5 million people each year, and even though modern biological science offers the prospect of real progress against malaria, against tuberculosis, against AIDS.
That is not an indictment of the pharmaceutical industry, which, of necessity, must concentrate its work where returns lie. And similar examples that I could cite in the area of the environment, in the area of technologies that would promote agricultural production in tropical soils, point to the enormous importance of what might be called global public goods; of ideas, innovations, understandings that will have enormous benefit globally, but for which the capacity of individuals to pay and collect returns in the market will inherently be limited.
And in an age of globalization, this concern is one that has to be addressed. It will be addressed in many ways through international organizations, but I believe it is one, crucially, in which universities will have to play a major role. And it is my expectation that as part of its ongoing strengthening in the life sciences area, this will be an increasing area of focus at Harvard in the years ahead.
I’m pleased to be able to tell you that already a little less than half of our medical students at some point in their medical education take time away from the medical school and spend it in a less developed country, learning about the kinds of problems that patients face there.
A second increasing priority for universities in the years ahead will be life long learning. Traditionally, the university has operated on a career model in which individuals go to the university, have their “intellectual fuel tank” filed up, and they then deplete it through their life-time, and they retire largely ignorant of what is going on in their field at the moment when they retire, which is part of the reason they retire.
And there’s a certain logic in that. There’s a certain logic in teaching people before their careers rather than halfway through their careers. On the other hand, in a world where knowledge is developing more rapidly, ideas are becoming obsolete more rapidly than ever before, in a world where individual careers are lasting longer than ever before, and individuals are increasingly having multiple careers within a single life-time, the demand for education through life will increase. The internet will increase our capacity to provide that education through a life-time, and it will, I suspect, be the case that for the university of the future, mid-career education will not be a sideline but a mainline activity, and that will carry with it all sorts of challenges: of creating the right kind of community, of developing the right kind of faculty, of maintaining the right kinds of connections with students.
A third requisite, I believe, for the university of the future really is something I think is particularly important to Harvard in the years ahead, and it’s something that connects back to my earlier theme of resonances between universities and the best business organization. And that is, a focus on developing the best and most able people. And here, it will, I believe, be increasingly important that we promote direct contacts between students and faculty. If there’s a weakness in the educational model that I have described, it is that, as busy as our faculty are and as contributing as they are, perhaps that which is most elemental in education–direct contact with students–sometimes slips away.
And we will need, at Harvard and I believe at other universities, to make sure that, with all this knowledge, with all the choices, with all the activities, that which is most basic in education: direct contact between students and teachers, becomes more common in the years ahead, rather than less common.
And that’s why I’ve emphasized a focus on Harvard College and a focus on the undergraduate curriculum as a particularly important priority for Harvard in the years ahead.
And finally, and here too I’m discussing something that connects very much with what the best organizations in every sector are doing: We will need to find ever more effective ways to cut across traditional boundaries within the university. If you think about the most important questions, whether it is how to stop an AIDS epidemic in Asia from paralleling the AIDS epidemic in Africa; whether it is how to balance the imperatives of genuine and intense faith with the imperative of tolerance and respect for nations dominated by other faiths; whether it is the question of how to balance the tremendous opportunities created by technology with the imperative of privacy–I could go on and on with these kinds of large questions that will define our world–none of them can be answered within the perspective of a single academic discipline. None of them can be answered within the perspective even of a single Harvard school.
And so the intellectual organization of the university of the future, will have to be much more permeable and malleable with respect to combinations of knowledge that cut across these traditional boundaries, and that too must be a priority for Harvard and for other universities in the years ahead.
I’ve tried tonight to both celebrate what universities are, because I believe, in ways much deeper than are usually appreciated, they are “templates” for the effective organizations of the future. But at the same time, they need to be a template in yet one final respect, and that is that universities are not self-satisfied communities. They are not, at their best, complacent communities. And certainly Harvard has never been. They are communities determined to strengthen themselves, to rise to new challenges, and to always try to be better. They are communities that benefit from an alumni group like the one represented here, and I’m very grateful for your presence and for the support you have given and support I know you will give to Harvard in the years ahead. Thank you.