Universities need to respond more quickly to business demand

Because the same underlying technologies are impacting all organisations, businesses of all varieties are competing for the same sets of skills

Businesses are important end users of the graduates that universities produce.

Traditionally, businesses have been able to rely on universities to produce graduates with the skills that they need to compete and grow. But business is showing signs of losing patience with universities and other traditional sources of talent and is actively considering the task of developing talent themselves

Internationally, an increasing number of companies, including IBM, Google, Apple and EY, no longer require job applicants to have a university degree.

Auspost recently announced establishment of a tech academy, PwC has been experimenting with higher apprenticeships that bypass university and the Business Council of Australia is promoting a major rethink of post-secondary education funding.

All this is taking place at a time when Australian universities are producing more graduates than ever before.

Because the same underlying technologies are impacting all organisations, businesses of all varieties are competing for the same sets of skills

It may be tempting to conclude that businesses are taking matters into their own hands because universities are failing to produce employable graduates. Others go back further in the education system bemoaning the relatively small percentage of students encouraged to pursue STEM subjects at school.

While at the margins there may be some truth to these arguments, a more compelling explanation is the requirements of business are changing more rapidly than even the most flexible education system can respond to.

We are in the 4th Industrial revolution and it is reshaping the skills that businesses need to remain competitive. Most businesses need to become genuinely digital, to leverage a new wave of automation and deliver products and services through technology platforms if they're to survive.

Very few are ready for this transformation and most are playing catchup.

The workforce needed to sustain businesses in this new era is radically different. Organisations need fewer accountants, business analysts and sales managers and more coders, data scientists and experts in cybersecurity and artificial intelligence. And they need managers and leaders adept at building business strategies around these new technologies.

Because the same underlying technologies are impacting all organisations, businesses of all varieties are competing for the same sets of skills. Banks, fast moving consumer goods and mining companies need these skills just as much as the big name technology companies, such as Google and Atlassian.

And it's hardly surprising the graduates with in-demand skills choose a well-known technology company over more traditional firms, which Millennials regard as having questionable values and uncertain futures.

While the rise of corporate academies is in part designed to address the gap between demand and supply among recent graduates, this is not the primary driver.

Australian businesses caught up in the new industrial revolution have even more pressing talent issues with their existing workforces. McKinsey estimates that in Australia by 2030 automation will destroy 3.6 million jobs but create over 4 million new jobs.

At even modest levels of automation, most large organisations have too many people working in areas that will be replaced by technology and too few in the areas that will be demanded by new technology.

Few have the balance sheet strength or the social licence to make large percentages of their workforce redundant and so compete effectively in the tight market for emerging skills. In effect, most large companies have no choice other than to rely on large percentages of their existing workforce to meet future talent needs.

Curricula need to be updated continuously and more rapidly. Universities have natural advantages in designing effective learning that are difficult for companies to replicate at scale and their research is helping to produce the very technologies that are disrupting work.

This makes universities ideally placed to partner with businesses to power their corporate academies.

But if they are to successfully play this role universities need to rethink how they operate. Rather than just focus on degrees, the need to shift to shorter micro-credentials and continuous just-in-time learning. They will need to make greater use of technology to transform how they deliver learning.

To become genuine learning partners, they need to become more integrated and easier for businesses to deal with.

To remain relevant, universities need to transform their business models just as much as the organisations they will be partnering with.

Professor Nick Wailes is the director of AGSM@UNSW Business School. A version of this post appeared in The Australian Financial Review.