Imagine Apple was designed as a bureaucratic organisation composed of a number of unrelated, quasi-independent business units governed by in-group committees and an antiquated board of luminaries. Would its signature product, the iPhone, even exist ¨C never mind enjoy its iconic status? Probably not.

So why do most of our universities retain this ungainly structure? Why has it been so successful and so difficult to modernise? Is it still fit for purpose?

In the various business schools in which I spent my academic life, this question was raised often. Our executive MBA students would happily expose the weaknesses of such a conglomerate design. They would also suggest that a better configuration would be to organise a university around a core position, such as STEM, or humanities and social science. Economies of scale would still be possible, while economies of scope (efficiencies resulting from offering a variety of services) would be more likely.

But the free association of contiguous faculties also offers considerable benefits, which, in my view, outweigh the promises of rationalisation. I offer five examples.

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First, reputation matters. Over centuries, through the generation (research) and dissemination (education) of intellectual capital, faculties build their reputations. These faculty reputations accumulate to produce the reputation of the university. And while specialist, single-faculty universities can and do retain stellar reputations (think Caltech or the London School of Economics), it is inevitable that some faculty reputations ¨C especially below the very elite level ¨C will wax and wane. So a portfolio of diversified reputations offers the best protection for the institution as a whole.

A second advantage of the conglomerate model is to the local community. Given that a university intrudes into its community, a more diversified institution offers greater local education and employment opportunities. It also helps to define a more inclusive image of the community. What would Oxford and Cambridge be without their universities?

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A third advantage is for students. Their encounters with people from other faculties offer a fresh perspective.

A fourth advantage is political power. Many politicians who advance to ministerial rank and who want to leave their mark on a sector act like a natural disaster. So a large multiversity has more scope to cope with, and sometimes combat, the fashionable ideas of such political transients.

A fifth advantage is that in a largely underpaid employment sector, the lure of working in a traditional university, with its diversity of people and ideas, is a powerful drawcard for inquisitive minds. Academics require time and a patient institution to devote their professional lives to the highly problematic search for new knowledge. As recently seen with the development of Covid vaccines, this can sometimes save the lives of millions.

In short, universities are intellectual capital organisations and should be designed and operated as such. To many staff and students, they offer an identity-forming experience and so become sacred sites. Their somewhat shambolic organisation is part of this appeal. The costs endured are those that come with cross-subsidisation and a stifling bureaucracy.

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Yes, universities could probably be better organised, but it is doubtful that a management consulting firm could pull off that feat without throwing the baby out with the bathwater. Organisations that trade in superficial knowledge know little about what is required for intellectual excellence.

If governments want to change their countries¡¯ ÖйúAƬ sectors, let them add new forms of institution rather than reconfigure their landmark universities.

Grahame R. Dowling is professor emeritus at UNSW Sydney.