In my recent thoughts on new business models for universities CMM  June 25), I made the case for clear strategic differentiation between institutions, rather than the current practice of the “me-too” lookalike strategies which prevail in universities around the world. This latter is either led by, or contributes to, the fixation with ranking tables as the ultimate performance measure of a universities’ standing.

So, what might strategic differentiation look like in a future university? Several people have questioned how this might be achieved in a world where size and breadth of offering have come to define the majority of our major institutions.

The first point to recognise is that being number one (however defined) is not a strategy!! Professor Michael Porter at Harvard gives a brilliant explanation of strategy in his presentations. In one example, he sites BMW and Volkswagen. His logic is that BMW is a good car – but so is Volkswagen. Each provides a unique and different value to a particular audience, even though both are ostensibly serving the same purpose – people transportation.

In other parts of Michael Porter’s work, he gives another pointer to how we might re-imagine how our own university could deliver a unique value to a specific audience through the concept of the “cluster.”

In his 1998 Harvard Business Review article, “Clusters and the New Economics of Competition”, he defines clusters as   “….. geographic concentrations of interconnected companies and institutions in a particular field.” One option for defining unique differentiated future value for universities could see them move from a monolithic entity under a single organisational control (and often concentrated in a large main campus) – to a series of devolved institutions in geographically discrete subject-based clusters, with each cluster site(s) being independent under an overarching brand. Here, each cluster would itself become the centre of an ecosystem which engages with local and national government, established industry players and entrepreneurial start-ups.

So how would these separate clusters be identified, and does it represent anything fundamentally different from the current set of faculties that make up our universities today?

One approach to cluster identification would be to leverage a unique purpose defined by the geography of the core institution.

For example, the University of Tasmania already has its Institute for Marine and Antarctic Studies – a logical entity and potential cluster institution derived from its obvious geographic location.

Other clusters might emerge from the wider economic aspirations and priorities of national or local government. For example, in Singapore, the government thrust to knowledge-based growth through encouraging bio-medical companies creates an obvious potential cluster opportunity for a Singapore university.

Rather than seeking to incorporate these centres of excellence within a broad based (horizontal) set of disparate subject offerings, clusters would encourage individual centres of excellence that were vertically integrated with government and industry. Clusters would not share a single campus in the traditional university configuration of faculties. Expansion by  each cluster would not need to be defined by geo-political borders, but could naturally expand to campus developments in other relevantly defined areas in the world, either through direct expansion or through partnering with like-focussed institutions which might not even be tertiary education establishments. The self-managed agility of each cluster would determine the scope and scale for its future growth.

Clusters would lead to a more agile approach to decision making. They would be smaller and self-governing entities within an overall university brand.  They would create dynamic links to entrepreneurial activity and would facilitate employability options for their graduates and researchers, as well as contributing to the “body of knowledge” globally in their focus areas. They would contribute to an overall flexible environment of smaller physical sites offering the future opportunity to expand or contract, reflecting global and economic priorities. They would allow for reward structures to be appropriate to the nature of the cluster subject area and the prevailing market appreciation of the same. Each cluster, based on its achievements across its ecosystem, would become a magnet for the best capabilities globally and should become an accelerator in the development of the global body of knowledge.

Of course, moving to this framework is not a trivial task given the investment to date in physical facilities. However, as I argued previously, this is the time to re-think and plan a five to ten year migration strategy. The future, post Covid 19, will not be a replica of our past experiences, and we must grasp this once in a lifetime opportunity to redesign our world.

Thoughts and opinions are welcome as usual. Please contact me at

Nigel Penny is a strategy, performance and leadership consultant. An ex-partner of KPMG in Melbourne, he was a VP of Balanced Scorecard Collaborative where he worked with Professor Robert Kaplan and Dr David Norton


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