Companies can benefit via these partnerships in the following ways:
1) Universities coordinate with the R&D teams of partner firms and conduct research projects for them. 2) Universities offer free certificate courses and create specifically tailored learning and development programs for their employees. 3) Access to college facilities for organizing trade shows, product launches, conferences and other company events. 4) Access to students as a sample group for conducting market research, consumer focus groups, surveys, product test runs, pliot launches, test ad-campaigns, referral programs, etc. 5) Marketing support – Company marketing collaterals placed in college brochures, newsletters and journals, banners and placards in college events, etc. 6) Business Incubation and mentorship support to start-ups that promise to offer internships to students. 7) Innovative business/technology ideas sourced from students through contests and open challenges, e.g. “Microsoft Imagine Cup”. 8) Low skilled tasks that are usually outsourced by the company to a temporary workforce can be offered to students – such asdata entry work, writing product reviews, customer cold calling, etc. Students benefit monetarily while companies get a steady stream of workforce for such jobs. 9) University events – Company delegates get free passes for university networking events such as industry conferences, networking events, panel discussions, co-curricular events, etc. 10) Help companies in reaching their CSR goals. Some companies have specific CSR objectives such as promoting diversity, students from a specific minority group, etc. Universities can help them in reaching these targets by having them offer focused scholarships for niche student groups.
Research Insights and Cost-Benefit Analysis
After analyzing data from online reports and conducting interviews with HR/Business Managers of companies and Corporate Relationship teams of universities, the following insights have been obtained to assess the potential cost savings and revenue uplift that can be achieved by a partner companies. Please find the key insights below:
- Financial worth to companies – The monetary impact of these benefits differ significantly. These are the ideas in descending order of the magnitude of financial attractiveness: a) Corporate sponsored research projects and open innovation idea challenges can have the most valuable impact. They could help in saving a few hundred thousand dollars in research costs as well as have the potential to provide millions of dollars in ROI apart from significant strategic advantage. b) Targeted marketing to other corporate partners and alumni members and access to networking opportunities could help in generating significant leads which might lead to new revenue opportunities worth a few thousand to few million dollars depending on the size of each deal and nature of business. For example, reputed universities such as Stanford or Oxford have a large well established alumni community and corporate network. Being promoted to this group could result in significant new business opportunities. c) Learning and development programs present the next sizable opportunity. According to the Association for Talent Development's (ATD) 2014 study, a midsize organization with 500 employees spends on an average $950k annually on learning and development budget, while a large company with greater than 10,000 employees on an average spends $8.4 million in this area. If even a small portion of these learning needs could be satisfied by specifically tailored university programs, it presents a significant cost saving opportunity for the partner company. d) Recruitment costs can be saved significantly by offering full time positions to students that engage with them through internships/other projects. A large scale company in a high growth sector such as IT spends hundreds of thousands of dollars on recruitment agencies, talent acquisition partner firms, general recruitment drives, etc. These hiring costs can come down significantly by hiring students for full time roles. e) If a company offers paid opportunities such as market research activities, user beta tests and low skilled tasks such as data entry work to 100 students, it can save $50k-$400k annually, if it’s a large company and approx. $ 30k annually if it’s a small company. f) The next area is cost savings attained by providing access to college facilities for company events to small scale companies (less than 100 employees) and business incubation support provided to start-ups. The potential savings in this case could range from approx. $30k to $50k annually. (For a detailed analysis of how some of the above calculations were obtained, check the “Reference Sheet for Calculations” attachment.)
- Industry Sectors – Some of the ideas such as corporate sponsored research projects and technology led innovation challenges are most well suited to Science/Technology related industries such as IT, Electronics, Communications, Pharmaceutical, Healthcare, etc. While ideas such as access to students for conducting market research, consumer focus groups, surveys etc. are most suited to consumer oriented industries such as CPG/FMCG. User beta tests are most suited to software, internet and mobile technology companies.
- Large-Scale, Mid-Scale and Small-Scale Companies – Large-scale companies might be most interested in ideas such as corporate research projects, innovation challenges, learning and development programs, networking events and achieving their CSR goals. They might be most interested in the long term strategic benefits than saving a few bucks. While mid-sized and smaller organizations might be most interested in marketing support, networking opportunities, learning and development programs. A start-up might benefit most from business incubation, mentorship support, access to relevant networking events such as those attended by VCs, etc.
Use Cases, Sample Plans and Student Benefits
Let us discuss 3 scenarios where a large scale Technology MNC, an early stage start-up and a medium sized CPG company have strategic alliances with a university.
1)Large Tech MNC with greater than 10,000 employees
A large MNC involves a university in their research initiatives and is able to save $500k in R&D costs , around 5% of their learning and development costs through tailored university programs (say approx. $ 400k based on previous analysis) and around $100k savings in recruitment costs on hiring 20 student interns (assuming $5000 savings per recruit). This provides net savings of $ 1 million through university affiliation. Assuming the cost of attendance (tuition and living expenses) for a college student for 1 year is $60k. They can provide scholarships covering full attendance cost to 16 students ($ 1 million divided by $60k) every year. Assuming each student intern is paid approx. $10k for the duration of summer internship, that is another avenue to make up for higher education costs. Additionally the university may also aim for a profit sharing agreement in the new revenue streams generated by its research projects for the company and this earning could be further used to sponsor more student scholarships.
An early stage 5-member start-up gets business incubation support from a university and saves $60k annually. It also gets free access to business building, capital raising and other entrepreneurial workshops. Assuming there are 10 such events in a year and $100 is the attendance cost of each. For a 5 member team, the annual worth = $100 * 5 * 10 = $5,000. The start-up also gets access to networking events through which it is able to connect to a VC or angel investor. If a deal materializes through the university network, the contract might state that a small proportion of the funds thus generated could be used to provide student internships, paid projects and scholarships. For instance, if a start-up is able to win $ 1 million from a VC through the university, it commits 5% ($50k) back to the college. The total financial commitment that the start-up could pledge back to the university in return is $115k ($60k + $5k + $50k). It could offer 3 student internships/projects with a stipend of $5,000 each, totalling $15k and spend the remaining $100k on offering scholarships.
3)Mid-size CPG company with about 1,000 employees
A CPG company engages a business school to develop learning programs for its executives, sales and marketing professionals, customer insights teams, etc. and is able to save 10% of its learning and development costs (average L&D costs for an organization of this scale is $ 1.9 million, so 10% is approx $200k). It also hires university facilities for large scale company gatherings such as annual meetings, product launches, etc. Assuming it organizes a big scale event 10 times a year at a reasonably priced venue, the annual cost savings for this comes out to be: (10 times) * $5000 (data obtained through research – check “Reference Sheet for Calculations” attachment) = $50k. The net savings it gains in this case from university affiliation = $250k. They can sponsor approx. 4 student scholarships using these cost savings ($250k/$60k) each year. The company also runs its market research programs, consumer focus groups and product beta tests, ad campaign tests on the student community. If 100 students work 10 hour per month on these and are paid $10 dollar for 2 hours of work, they earn $50 per month, working for 10 months could generate $500 per year from 1 such company. If a student is able to work on such projects from multiple companies for 10 hours per week, they could earn about $ 2000 per year. This might be a small figure, but it could help in sponsoring laptops, books, etc. Plus it also provides a networking opportunity for the student to engage with the corporates and see how things work in the real world.
A University can engage in multiple such partnerships with companies from diverse industries with different sizes and scales of operations to tackle the financing needs of all the students who face challenges in funding their education.
User Experience Maps
Please find attached the user experience maps describing the end-to-end user journey of a student as well as a large scale Tech MNC who benefit through these University Partnership Plans.
Ideas for Implementation
A university can follow the steps below to implement these ideas:
Step 1: The Corporate Relationship committee meets with the Admission and Financial Aid committees to evaluate the net requirement for financial assistance based on past few years' data - How many students were unable to join the program or had to drop out in past few years because they failed to secure finances? What was their average total financial need? How many students were able to receive funding through existing university resources? Has there been any change in these sources?
Step 2: The university should first start pilots with existing industry partners who are associated with them in some way or the other since it would be relatively easier to convince them as compared to exploring new partnerships. It should organize cross-functional meetings attended by company executives across R&D, Learning & Development, Marketing, HR, Talent Acquisition, etc. and university representatives responsible for creating course content, event management, research, etc.
Step 3: Identify ways in which the university could provide benefits to the partner company. Conduct cost-benefit analysis and create financial projections for the net benefits that could be availed by the partner company.
Step 4: Some of the benefits provide cost savings which can be determined conclusively in advance, while some might provide revenue uplift which can be figured only after a while. Create partnership plans with the company where they commit to offer scholarships, loan benefits, etc. to students for an amount equal or close to the net cost savings they could generate.
Step 5: Once all existing industry partners have been exploited and if still there is a gap between the total financial requirement and the amount committed by partners, the university should explore opportunities for new partnerships and create strategy and sales pitches for targeting new companies. Conduct cross-functional meetings and follow steps 3 and 4 again.
Step 6: The partner companies offers scholarships to the students at the start of the program and internships and projects during the course of the program.
Step 7: If any company is able to generate new sources of revenue through university collaboration (research, marketing, networking, VC funding, etc.), they could share a small percentage of these back with the university, which can be further utilized by the latter for offering scholarships to students in the next fiscal year. Include these clauses in the initial agreement as a part of the original contract beforehand mentioned in Step 4.
Step 8: The Corporate Relationship team at the university gathers feedback periodically from all stakeholders - partner companies, university administration, students, etc. to see which initiatives work and do not work and to improve them further.
Ensuring these benefits reach students from low income families...
University admissions are merit based irrespective of the economic background of the candidates. Students from low income families usually grow up in unfavorable circumstances and they don't have a level playing field as compared to others. It's a reasonable possibility that students from more privileged backgrounds perform better than them during admission tests and are able to secure most of the seats. A university that really wants to help the underprivileged students can reserve 5-10% of their seats specifically for them. So that they get additional opportunities to secure an admission apart from the more competitive general applicant pool. But this would reduce the net seats available to other candidates. To tackle this, universities can increase their student intake slightly so that the other candidates are not impacted and the total seats available to them stays the same. Usually universities are able to handle this minor increment in number of students without any impact on their resources and without the need to invest in additional facilities. In terms of the benefits available to the students through university-industry collaborations: Some benefits such as need based scholarships should be available only to students who struggle with finances. While research projects, internships and idea contests should be available to everyone irrespective of their economic background as a partner company wouldn't like to compromise on the quality of work obtained through these important initiatives. However, earning opportunities through some of the easier, low-skilled tasks such as filling customer research surveys, beta tests, data entry work, etc. can be be offered first to students from low income backgrounds.