If you’ve hung around higher education for even a millisecond, you’ll know that the sector is often told that it should listen more to industry.  To the extent that institutions are about preparing graduates for a career in the labor market, and to the extent they are in the business of solving problems which are relevant to innovation and economic development, this sounds like a really good idea.  Almost so good an idea as to be unarguable.

Except for one thing: it is based on an almost complete misreading of how industry (or “business” or “employers” – use whichever term you prefer) actually works.  In most situations, “listening to industry” is a bad idea because industry has literally no idea what it needs other than cheaper labour.

To be clear, I am not saying this from what might be called a reductionist Marxist position, that industry has no interest in innovation and that its default option is to increase profits at the expense of labour income, thereby increasing immiseration.  I don’t think that’s the way business works at all.  What I do believe is that firms’ behaviour with respect to investments in technology and skills varies enormously according to how close they are to the technological frontier.  When a firm is close to the frontier, institutions should indeed listen very closely, because those firms are in effect creating the future.  When they are not – and in Canada this is usually the case – then frankly business often has almost nothing useful to say and – if anything – it is they who should be listening to institutions rather than the other way around.

Take, for instance, a typical mid-sized manufacturing enterprise.  Maybe something in the metal trades or the food processing industry.  In Germany, these “mittelstand” companies are at the forefront of national innovation systems; in Canada, they are what hold us back.    Our mittelstand is not full of thrusting risk-takers at the cutting edge of technology: it’s mostly small businesses trying to keep their head down and stay in the game.  Most of them are poorly capitalized and hence generate little demand for skilled labour.  Often that’s really the only way they know how to compete.  And – this bit is crucial – they can rarely articulate their training needs very well because they have almost no clue about future directions in their own industry.  They are as much in the dark about their own future skills needs as anyone else.  They are not technology makers, they are technology takers: their need for skilled labour comes spasmodically as they react – late – to changes in the structure of their industry. 

This is where the rhetoric and the reality collide.  When Canadian governments invest heavily in post-secondary and skills, they do so because they believe (sincerely, I think), that investing in cutting-edge skills will make business more competitive and hence make everyone wealthier.  The problem is: what if local business isn’t hiring for cutting-edge skills?  Someone trained on the next generation of equipment may be less useful to business than someone trained on 15-year-old equipment if that business itself is still mostly using 15-year-old equipment and can’t see the point in upgrading. 

The advantage of big business is that it is…well, big.  Scale allows it to devote resources to things like scanning the technological frontier, making investments in research and development and fostering the skills needed to make those investments in capital pay off.  Small and medium businesses tend to be too swamped by the daily grind of staying solvent to look up and see what is going on.  They don’t have the resources to spare to look at future trends and think about where their business will be 24-36 months down the road.  This is why, when a college or polytechnic comes by to ask them “hey we’re re-designing our curriculum, what new skills do we need to put in there”, the answer is usually something which is pre-occupying them right at that very instant rather than what they will need three years hence when next year’s intake into that program will have graduated.  “Listening” to technology takers on curriculum can therefore actually leave your graduates permanently behind the times.  To invert Wayne Gretzky slightly, it institutionalizes a focus on where the puck is, not on where the puck will be.

Is there a solution here?  Well, yes.  The key problem is that a lot of Canadian industry needs better foresight.  That’s not because they are stupid or incompetent or anything like that – it’s just because they are too small to devote the resources to it.  But this is actually something higher education institutions – Polytechnics in particular, I think thanks to their mix of scientific/professional/technical expertise and direct industry experience  – can help with this.  If institutions can themselves provide industry with some foresight, and if they are connected enough to regularly convene companies in a sector to get them to talk about how these future trends might affect them, then it might finally be possible to get good discussions going about where the puck will be a couple of years down the road, and allow business and institutions together to do some forward-thinking about curriculum. So: should institutions listen to business?  Absolutely.  But to be of maximum value to society, they can’t just leave it at that.  Where local business are technology-takers rather than technology-makers, institutions need to use their powers of foresight and their capacity to convene to not just listen to business but also to haul them closer to the technological frontier, where their better-resourced competitors probably already are.  A simple policy of listening might lead to jobs for graduates today but, if firms fail, also unemployment tomorrow; but a policy of listening, foresight, and convening means not just jobs today, but higher productivity and jobs tomorrow as well.