Arranged marriages often make sound business sense, argues Philip Love. In the popular view of recent history, the universities experienced a rude and long overdue awakening in the early 1980s. One minute they were safe in the bosom of their family, quietly extending the boundaries of knowledge for its own sake as they had for decades. The next minute they were in bed with industry following a shotgun wedding, with the Government's fingers on the trigger. This was not the outcome of a passionate and productive love affair but was an arranged, dynastic marriage, intended to benefit industry - and thereby, to benefit the United Kingdom.

We might wince at the underlying generalisations but if we are honest we will acknowledge that there is more than a grain of truth in this portrayal. Although some universities were not just on speaking terms, but on exceedingly familiar terms with certain industries long before the early 1980s, by and large the older universities and the new "plate glass" universities felt they should save themselves for higher things. Conversely, many industrialists were unwilling bridegrooms, anticipating an early divorce on grounds of incompatibility.

Fifteen years later, universities and industry are much more warmly disposed. Indeed, the most striking thing about their relationship is how multi-faceted it is. Collectively, universities interact with industry in a surprisingly wide range of contexts, most notably teaching, research and technology transfer. The diversity of the university sector means that the balance of emphasis varies from one institution to the next. The University of Liverpool, for instance, is committed to the view that students benefit immeasurably from being taught by staff at the cutting edge of research. The strength of our research orientation can be gauged from our external research awards: more than Pounds 35.4 million in 1994/95, which places us among the top earners.

In the mid-1980s, nearly all our external research funding came from traditional sources such as the research councils and charities, rather than industry. Ten years later the proportion of our external research funded directly by industry has risen by over 600 per cent. This is an encouraging statistic, but it does not really convey the extent of our research-based collaboration with industry. Part publicly-funded programmes supported by the research councils, the Department of Trade and Industry, the European Commission and so on give tremendous scope for universities and industry to collaborate. If we take these into account, nearly one third of our external research funding now derives from projects involving industry. The annual aggregate value of these awards is heading for the Pounds 10 million mark.

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Inevitably, our strong research orientation has affected the way we relate to industry. Like many universities, I suspect Liverpool has been slower off the mark when it comes to collaboration with industry in the context of technology transfer. We recognised this some time ago and we welcome the challenge. Following an in-depth review, we have established where we are now compared to a range of other universities, and where we want to go. We are committed to doing what we can to facilitate the journey. We know this will be welcomed by staff, many of whom are increasingly involved in technology transfer.

Merseyside's Objective 1 status has demonstrated unequivocally how keen and inventive our staff can be. To date, the total value of Objective 1 projects led by the university is just short of Pounds 23 million; around Pounds 10 million of this will come directly to the university as grant aid to support six major, strategic technology transfer projects. We are also partners in a number of other projects. For instance, we will be setting up a Teaching Company Centre in Merseyside, jointly with John Moores University, to promote research-based co-operation with industry via the Teaching Company Scheme.

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One of the projects led by the university will shortly transform the city's old Royal Infirmary into The Foresight Centre for Advanced Technology and Management. This will house the university's expanding technology transfer management team and function as a state of the art, working showcase for key technologies like laser engineering, rapid prototyping and information technology.The centre aims to encourage and facilitate interaction between academics and industry, and to help individual companies - particularly small to medium-sized enterprises (SMEs) - to develop their technology base and manage the resulting change.

Our graduates make a significant contribution to this process. Technology transfer obviously involves the dissemination of physical artefacts or processes, and knowledge embodied in published papers, consultancy reports or training packages from one context to another. Dissemination via people with advanced knowledge, skills or expertise is equally important.

We have already placed nearly 1,400 graduates in local companies since 1990. Eighty-five per cent have found a job within six months of completing their placement, 60 per cent in SMEs. Graduates on placement often improve the business performance of these SMEs to such an extent that effectively they create and pay for their own job.

This programme has now been incorporated into a wider Graduates for Merseyside initiative, in partnership with the Government office, the local authorities, Training and Enterprise Councils and other ÖйúAƬ institutions.

We are also helping SMEs to recognise and take full advantage of electronic marketing via the Internet. CONNECT - the Internet Centre for Merseyside - is the brainchild of our department of computer science. It aims to raise awareness of the Internet's marketing potential, train organisations which wish to set up a "home page" on their own initiative, and set up a "home page" on behalf of those which prefer out sourcing.

But this is only the tip of the iceberg. CONNECT can perform any Internet-related service a company might require. For instance, a small distribution company has commissioned CONNECT to research and develop an Internet-based order system linking its outlets to its central warehouse. A local football club is interested in creating a closer match between its electronic merchandising catalogue and its mail order operation.

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I have heard cynics suggest, with regard to research-based collaboration in particular, that UK universities would file for a divorce from industry tomorrow, were it not for the sticks and carrots deployed by Government to keep the two co-operating.

I would guess that even ten years ago, many of our staff feared that cooperation with industry would require them to devote their energies to short-term, applied research at the expense of long-term, fundamental research. Since most universities had encountered companies which saw them as little more than bargain basement contract research organisations, their fears were understandable - and even today, we occasionally encounter companies with this kind of attitude. By and large, though, universities and industry have accepted that they have different but equally valid functions in society.

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Getting the fine print right can be tricky, given industry's relatively narrow horizons and the idiosyncratic approach of industry in particular to the disposition of intellectual property.

But the benefits can be significant - and they are not only financial. Important new research topics are often identified through cooperation with industry, and consultancy and even student placements can lead to contract research. Research, in turn, can lead to the recruitment of graduates or postgraduates by the company, and to other forms of technology transfer; consultancy and research can also provide invaluable teaching material; company staff may even contribute to a teaching programme, and so on. There is enormous potential for creating a "virtuous circle", in which any of these activities can act as the starting point.

The cynics fail to appreciate the very profound cultural change which has taken place in universities. Many academics get a real kick out of seeing the fruits of their labours implemented. They do not simply respond passively to approaches by industry. Academics today are more atuned to opportunities and they are looking for partners who will work with them to capitalise on those opportunities, to realise their visions.

This can lead to quite unexpected collaborations. Our laser engineering group, for instance, has collaborated with the national museums and galleries on Merseyside and with Loughborough University on the development of techniques for the non-destructive cleaning of statuary and even ancient bones. They are now working on the laser-assisted reproduction of priceless statuary and are actively seeking additional backers for a start-up company which will exploit these techniques for the benefit of museums and galleries worldwide. Lateral thinking has led them to recognise that their world-beating techniques could also be exploited to make scaled-down reproductions of famous statuary under licence for the consumer market.

We should look beyond the scope offered by formal programmes. We know that UK industry needs to increase its competitiveness with other countries. Innovation is one of the keys to increased competitiveness. Universities and industry must tackle this problem in partnership.

Philip Love is vice chancellor of the University of Liverpool.

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