It's doubtful that many vice-chancellors in the º£½ÇÊÓƵ have ever heard of Peter Drucker’s subliminal book Innovation and Entrepreneurship let alone read it.
First published forty years ago, the book argued that entrepreneurship was not a rare gift possessed by a few but a discipline that every organisation could and should practise. At its heart was a simple message namely innovation is not optional but the essential activity that determines whether institutions thrive or decline.
Nearly forty years later, that warning could have been written for our universities today. Across the º£½ÇÊÓƵ, higher education is facing a storm of financial and demographic pressures.
The number of 18-year-olds in the population is rising, yet many institutions are struggling to recruit. International student numbers, the financial lifeline of the past decade, have slumped under tighter visa rules. Tuition fees remain frozen at £9,000, losing value every year against inflation, while costs, especially pensions and pay, continue to climb.
The result is a system in crisis and the Office for Students has already warned that more than half of universities in England are forecasting deficits this year.
Here in Wales, Cardiff University has announced plans to cut up a significant number of jobs, Bangor University continues to battle severe financial difficulties, and the University of South Wales has undergone repeated rounds of restructuring.
This is not about trimming fat at the edges but about survival and yet, as Drucker might have predicted, the response from university leadership has been more about administration than entrepreneurship. Instead of embracing change as a source of renewal, institutions are doubling down on cost-cutting, centralisation, and control.
The qualities Drucker believed defined innovative organisations such as clarity, decentralisation, customer focus, and systematic entrepreneurship are glaringly absent.
Drucker insisted that all innovation must begin with the customer. For universities, that means students and yet how many students today feel their voice truly shapes their institution? In Wales, the National Student Survey has repeatedly highlighted concerns about value for money, quality of feedback, and employability support. Instead of redesigning provision around these needs, many universities appear more focused on protecting internal structures and hierarchies.
Equally, Drucker argued that change is the raw material of innovation and demographic shifts, digital disruption, and global competition should be fertile ground for reinvention. Yet universities too often treat change defensively and the explosion of online learning during the pandemic was largely seen as a stopgap, not as a springboard for more flexible, hybrid, or lifelong learning models.
Entrepreneurship thrives on clarity and focus and yet universities, have become masters of complexity. Governance systems are labyrinthine, decision-making is painfully slow, and managerial bloat has grown even as frontline teaching and research budgets are squeezed. Staff frequently report a culture of excessive bureaucracy that stifles creativity rather than enabling it.
Perhaps Drucker’s most important insight was that entrepreneurship is not about occasional flashes of genius, but about systematic innovation namely a repeatable discipline embedded into organisational life.
In higher education, innovation is too often ad hoc such as a new building here, a research initiative there, or a hasty pivot to online learning. What is missing is a culture of continuous renewal, where every part of the institution is encouraged and expected to find new ways of creating value.
Power has become increasingly concentrated at the centre of universities despite Drucker believing that decisions should be pushed as close to the action as possible. Too often, universities have gone the opposite way, stripping autonomy from departments and academic staff while creating layers of managerial oversight. The result is demoralisation, disengagement, and a widening gulf between leadership and those who actually deliver teaching and research.
The consequences of these failures are already visible and financial weakness is forcing job losses across the sector. Student dissatisfaction is rising and the º£½ÇÊÓƵ risks losing not just individual courses but entire institutions, with knock-on effects for communities, local economies, and future generations of learners. This crisis is not inevitable but is the product of leadership that has chosen to manage decline rather than embrace the entrepreneurial discipline Drucker championed.
Politicians cannot escape blame as for years they have has tinkered with regulation, commissions, and committees while failing to articulate a coherent strategy for the future of higher education. Instead of encouraging innovation and competition, both the º£½ÇÊÓƵ Government and the devolved administrations have presided over a system that rewards conformity and punishes risk-taking and the result is a sector paralysed by bureaucracy at the very moment it needs agility and boldness.
The message to universities from Drucker’s book is clear namely that they must put students at the centre of everything they do, treat technological and demographic change as opportunities to reinvent rather than retreat, and embed innovation as a systematic process rather than a sporadic gesture. Above all, they must stop behaving like organisations that simply deliver services and start behaving like entrepreneurial institutions that continually redefine their value.
Unless this mindset changes, the future is bleak and despite any short-term upturn in student numbers at the end of this month, the sector will see further job losses, falling student satisfaction, and ultimately, institutional closures. That will not just damage universities, but will weaken the º£½ÇÊÓƵ economy, undermine its research base, and close doors for tens of thousands of young people.
Back in 1985, Drucker warned that organisations which fail to innovate systematically will be left behind. The warning could have been written for our universities today and unless they embrace entrepreneurship not just as an academic subject but as a management practice, they risk becoming relics of a knowledge economy that has already moved on without them.
