Do Universities Need To Be Fundamentally Re-imagined For The 21st Century?

Dr Caroline Burt
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Olivia Williams, Copywriter

In the second half of the 20th century and the early years of the 21st, higher education dramatically expanded in many countries, extending the prospect of a college education to increasing numbers of students from a wider array of backgrounds.[1]

 

Here, we look at the current situation in two major providers of higher education, the US and the UK, to draw some conclusions about how universities can (re-)position themselves for success in a climate that is much less favourable than it was when expansion began, and in which the sector is under significant financial strain.


Current Challenges

 

The United States

 

In the US, college enrolments moved into reverse in 2010, falling by an average of 1% per year since then, dramatically affecting tuition fee income, which represents the largest portion of university revenues.[2]

 

This fall in overall student numbers was despite an increasing US population and a rise in international students studying in the US.[3] This pain, though, has not been evenly distributed.[4] In the US, elite institutions have been largely unaffected (quite the opposite in fact), but smaller private colleges in particular have seen marked declines. A number have already folded (861 between 2004 and 2022 to be precise)[5] and some have merged in order to survive.

 

The forecast for others looks perilous.[6] The present outlook is not promising unless enrolments begin to increase again. Yet, state funding is now significantly lower than it was before the Great Recession and shows no sign of increasing significantly any time soon.[7] The situation is worse in some states than in others, partly because funding reductions from 2008 did not affect all states equally; for example, a number of southern states were disproportionately affected. While the overall average reduction in state funding per student between 2008 and 2018 was 13%, it was above 30% in Alabama, Arizona, Louisiana, Mississippi and Oklahoma.[8] To put this into perspective, at public universities, state funding covers around 50% of teaching costs.[9] Colleges have tried to compensate for declining government income by reducing staffing and restricting the programmes and services on offer, but there is now arguably little left to cut.

 

With concurrent increases in federal government support for individual students not having kept pace with significant rises in tuition fees, a fee ceiling has arguably been reached. Furthermore, the scale of fee rises has led to changes in the way students approach university applications, with the recent trend being for students to set their sights on a smaller number of elite institutions.[10] If you are going to pay more, you might as well aim for a better school with better career outcomes.

 

One recent survey put the difference in preference for a more expensive university with a good reputation, compared with going to a cheaper institution with a lesser reputation, at over ten percentage points for both prospective students and parents.[11] As some universities have pulled ahead in the enrolments game, opportunities have inevitably declined for those students with less money and capacity to travel out of state to university. General perceptions of the financial inaccessibility of a college education came out in a recent survey as the top reason why people decided not to go to college/complete their degree.[12]

 

The new race funded by debt

 

In order to try to succeed in a challenging environment, many universities in the US have embarked on costly infrastructure projects, creating something of an arms race in facilities. To put figures on this, between 2000 and 2010-11, the aggregate capital spend on new facilities was up by over 100%, at more than $11bn per year in 2010 and 2011.[13]

 

A report by EY-Parthenon noted that US HEI long-term debt in 2018 stood at almost $300bn, which represented an increase of 36% since 2011, dramatically at odds with the overall pattern of enrolments.[14] The same report showed that total debt was roughly equally divided between public and private institutions, despite public institutions accounting for around three quarters of total enrolments. In 2023, College Values Online reported on 30 US colleges that had changed a lot in the last five years, showing that in the vast majority of cases infrastructural improvements to academic and other facilities had been core to their approach. Aside from COVID-19-related measures, this was the stand-out takeaway of the summary. This is not to say that other things had not been done—several had increased the number of programmes on offer, improved resources devoted to student wellbeing, generated partnerships with businesses, and focussed on innovation and entrepreneurialism—but the extent to which colleges were looking to improved facilities to appeal to potential applicants was striking.[15] For those without strong endowments or public funding, this is a high-stakes approach, making failure and insolvency likely bedfellows.

 

The Private Equity effect

 

A further trend in the US has seen private equity firms acquiring universities. In 2018, an article in The Review of Financial Studies reported on 88 private equity deals involving 994 private institutions, showing that this led to increases in tuition fees and per-student debt.[16] This was coupled with lower rates of graduation, lower educational inputs, lower loan repayment rates and lower earnings among graduates, the latter possibly explained at least in part by students who would otherwise have attended community colleges being recruited to universities. In other words, there was a trade-off between value creation for the firm and value creation for the institution, particularly its students, in which the latter were the losers.

 

Private equity-owned institutions were also better at accessing government aid after acquisition and raising tuition fees quickly when government loan limits increased. There was a correlation between higher enrolment and an increased spend on marketing, with private equity-owned colleges employing twice as many ‘sales’ staff than other private colleges. As a result, the ratio of faculty to students and spend on tuition declined significantly following acquisition. Going forward, private equity might save struggling institutions, but the cost to students in terms of educational inputs and outcomes is likely to be high.

 

The United Kingdom

 

In the UK, private universities do not exist in the same way as in the US, and different arrangements are in place for each of the devolved nations. In England, central government funding has declined sharply in the last decade, and across the UK it was at its lowest point ever in 2021-22, according to Universities UK.[17] More widely, UK university funding is low relative to many countries: in fact, spending on tertiary education is the lowest among OECD countries. Tuition fees are also high, and only 20% of university spend is on R&D compared with an OECD average of 29%.[18] Russell Group (research intensive) universities indicate that they currently have a deficit of £1,750 per student, with this set to increase to £4,000 by 2024-25.[19]


The situation has been made particularly difficult by the marketisation of higher education in the last decade, in which caps on student numbers were removed as individual loans to students replaced government grants to universities. Already under strain, universities were forced to compete for students, with some, as in the US, investing heavily in expansion projects, especially infrastructural, creating high levels of debt in the sector.[20] In the same way as across the Atlantic, this debt could only be managed if the institution won, and continued to win, in the battle to recruit and retain students, even before COVID-19. While, unlike the US, numbers of UK enrolments have continued to increase, some universities have begun to lose applicants to competitors. In 2023, the University of East Anglia (UEA), announced a major projected budget deficit of £30m in 2023-24, a figure that it stated was likely to increase by 50% to £45m in three years; while it was trying to avoid compulsory redundancies, it could not rule them out.[21] It cited a challenging student recruitment market, leaving it down on enrolment targets/forecasts, at a cost to the institution running into millions.[22]


It was a similar story at Birkbeck in London.[23] It is currently unclear whether, in what is a relatively new market in higher education in the UK, the government at Westminster will step in to shore up institutions if they end up facing insolvency.[24] Alongside these individual instances of institutional challenges, we are beginning to see significant cracks appear more broadly: disputes about academic pay, working conditions and pensions, and cuts to staffing, are obvious and well publicised ones.[25]

 

General challenges to universities

 

In many countries, the UK and the US not excepted, wider questions have also emerged about the continued relevance of university degrees, particularly in the arts and humanities; and how well graduates are prepared for today’s working world.[26] It is likely that the move towards STEM subjects has particularly affected the smaller liberal arts colleges in the US, and it has had a significant effect on UK higher education.[27] In addition, there are now some employers who no longer require a university degree in order to apply for professional roles with them, complicating the picture further.[28] It is hard to know what effect this change will have, given how recent it is, but existing financial and other pressures already add up to something of a perfect storm for higher education providers, especially when coupled with the rise of competitive online learning companies, the increasing need to make improvements to student support and services, and a general rise in regulation.

 

Conclusion

 

There is no doubt, then, that areas of the tertiary education sector are not functioning well, for a mixture of reasons. This brings with it economic and societal costs. It is still the case that university graduates, on average, earn more in employment than their non-graduate peers: in the US, there is an average 40% pay gap between high school graduates and university graduates, while in the UK it is 30%.[29] So, if fewer students from less wealthy backgrounds attend university, income differentials will increase, to the detriment of both individuals and wider society: we are already seeing these trends among millennials in the US.[30] Furthermore, in areas with lower proportions of college graduates, outside investment is also less likely, exacerbating the problem. It is also generally bad news for economies: nations where university enrolments are falling rather than rising, and which therefore find themselves with a shortage of appropriately trained workers, are likely to see adverse economic impacts. Lack of funding for universities will also affect their ability to innovate and provide graduates with the skills that will be relevant in the economy as it changes, thus creating something of a vicious circle.[31]

 

How can universities respond?

 

Is it time for reinvention?

 

It would be easy to suggest that universities in the US, the UK, and many other nations, need to fundamentally reinvent themselves for a new world of learning and employment. One argument might be that they need to adopt more fully hybrid and digital learning in order to respond to increased competition in the virtual space, and hunger on the part of students for a different learning experience from the traditional university format. At the same time, it might be assumed that many of the traditional degree programmes, especially in the arts and humanities/liberal arts, are increasingly defunct in a working world for which graduates are regularly described as unprepared, and in which the skills needed are very different even from ten years ago.

 

It would be equally easy to point to the likelihood of better times soon as a result of the continued growth of the global (mobile) middle class and of international students from the southeast Asia and India in particular.

 

Both approaches are problematic. The overall growth in the number of international students in the UK and the US looks set to continue in the medium term at least, but in both countries this growth is not sufficient to offset the reductions in government funding or reverse the extent to which student aspirations have become increasingly funnelled into more elite schools and into STEM subjects. Similarly, universities in other countries are competing more strongly with the US (and the UK) than ever before; there is no guarantee therefore that universities in either country will be able to count on international students to help correct deficits in the long run.[32] In the US, this leaves struggling private colleges and state universities, which have seen steady infrastructural decline, in a precarious position that is not likely to change any time soon. State colleges might not fail entirely, but the quality of the education they offer is likely to fall significantly, disproportionately affecting particular socio-economic and racial groups. In the UK, universities with high levels of debt, and which are struggling to fill their places, are not likely to be rescued by international students.

 

On the other hand, while it is always important to look at things from an existential perspective and consider reinvention, it is also easy to fall into the trap of jettisoning both baby and bathwater. There are arguably many things about the traditional HE model that work well, and look set to continue to do so. In-person community is important to students (even if they are increasingly attracted to hybrid), as are career prospects and learning at a high-quality institution with high-quality course content.[33]

 

Furthermore, on the other side of the equation, we know that online learning provision in general is complex, requires high levels of investment, and even for specialists is not yet delivering net profit: Duolingo increased its total revenues by 47% to $369.5m in the last year, but its net loss of just under $60m was not very different from the loss it made in the year before. The growth in revenues is promising, but it remains unclear whether that will turn into net profit in the near future.[34] Pearson Education, whose initial contract with Arizona State University (ASU) was groundbreaking and helped turn ASU into a market leader in online education, has recently offloaded its online services unit to a private equity company. In a crowded and volatile market, it had not been able to keep up with competitors, and clearly did not see a profitable future for itself in online learning.[35] Pearson’s key competitors, Coursera and 2U, have not yet made a net profit, and the history of edX, bought by 2U recently, does not suggest that the viability of non-university online providers of higher education is established. In fact, most of edX’s users already had a college degree.[36] Share prices in some providers have also been falling recently after a warning by one company that ChatGPT was beginning to hurt sales.[37]

 

In connection with this, and crucially, it should be noted that ASU never outsourced the content of its online offering; even when working with Pearson, it produced and updated content in-house using its subject-based expertise. The fact that online success still depends on content developed and regularly refreshed by university staff indicates the extent to which the platform of delivery is just one part of a much more complex and multi-linked picture; universities remain specialists in tuition and research. One good example of how this can be highly effective is the Masters partnership between ASU and MIT which began in 2019.[38]

 

A more financially sustainable approach to creating the successful universities of the future

 

To state the obvious, there is no one-size-fits-all method that universities can adopt in order to remain/become successful. But, in a world in which interest rates are rising and liquidity in the economy is reducing, with no guarantee of increasing enrolments, taking on greater debt for infrastructural projects is likely to be high risk for all but a minority of universities – in other words, those with the biggest endowments and the largest sustained intake of students. Particularly given existing institutional debt levels, most universities would be wise to shore up operations in other ways before turning to the highest expenditure initiatives. One persistent issue that is often under-appreciated in its impact is the quality of institutional leadership and management. A series of small decisions can have a major effect when aggregated, so while getting the fundamentals of management right is not attention grabbing, it is an obvious (if far from easy) win. This is not just about inter-personal relationships within an organisation, but about strategy and operations. It is hard because it is the whole package.

 

A good leadership team is more likely to identify the most effective ways for the institution to move forward. Some examples of universities that have made significant strides forward in different ways in the US in recent years are the University of South Florida (USF), the University of Florida (UF) and Arizona State University (ASU).

 

In 2022, USF attained its highest position ever in US News and World Report rankings, and has been the fastest rising US university in rankings. The university has made major efforts in recent years to improve graduation rates, especially among low- and moderate-income students.[39] In 2010 its four-year graduation rate was 24%; by 2020 that had improved to 59% in the most recent federal statistics. Particularly notable was the success rate among Latino and black students, which was roughly equivalent to that of the student body as a whole. Key to this has been proactive support of students identified as being at risk of not graduating, a focus on improving courses with the highest rates of failure and reducing class sizes. Making it easier for students to remain on campus was another important plank of the strategy. Better graduation rates have impacted positively on recruitment too, in a self-fulfilling trend. What is interesting is the extent to which this strategy of improving graduation rates fits in with the weight the state government gives to this in its funding models, something that is not replicated in some other states.

 

Elsewhere in Florida, UF has similarly made a variety of improvements to its operation that have seen it rise further up the rankings, in relation to retention and graduation, class sizes, curriculum quality, in-state and out of state reputation and research expenditure.[40]

 

Meanwhile, at ASU, whilst it might be assumed that it is the university’s successful commitment to online education that has given it an edge on its competitors, that is only one part of the overall picture. Alongside the online offering, ASU has addressed multiple elements of its operation:

 

  • It has reduced its reliance on state funding (at the same time maintaining the lowest tuition fees of the three state universities in Arizona)
  • It has adjusted its approach to philanthropy
  • It has focused on the student experience, significantly raising retention and completion rates
  • It has invested in facilities
  • It has aggressively increased its research income and prestige, as well as research-driven enterprise
  • It has utilised big data to understand what is working well for students and what is not, and to enable interventions
  • It has placed great emphasis on increasing its needs-based funds and on diversifying its student intake.[41]

 

In other words, ASU has taken an innovative and dynamic approach on a number of fronts without removing the core components of how a university has traditionally been defined, and it has done so successfully.[42]


The traditional model of university education can be viable, but in a world where there are few easy wins, this requires strong leadership that analyses the university’s position and does not seek to apply a one-size-fits-all model. Instead, it builds on core strengths as a collective package, and/or seeks to carve out a USP for itself based on effective analysis of its market and operating environment.

 

In the UK, the University of Hull is an example of a university that has had to confront major difficulties, including an unsustainable deficit, and to reimagine itself in the light of those difficulties. The process of change was inevitably painful, but the university has not only weathered the storm, it has also improved its standing markedly. How it achieved transformation is discussed with bell-like clarity by Professor Susan Lea who, as Vice Chancellor, led the institution between 2017 and 2022 when the bulk of the reforms were devised and implemented.[43] As with the US case studies, Hull did not deviate from its core mission as a university; rather, it doubled down on it.

 

How can other universities achieve similar success?

 

Our model below provides an outline roadmap for other institutions to work with. The starting point is that there is no urgent need for a complete existential re-thinking of what a university is. Success can follow on performing the core functions of a traditional university well. This is not to say that innovation cannot be effective – it has always in fact been at the heart of what universities are – but rather that complete re-invention is not called for.

 

The steps to success

 

Step 1: Fully assess the current situation in relation to both internal and external factors; gather and analyse data.

 

Internal

For example:


  • Enrolments by programme
  • Retention and graduation rates by programme and student type
  • Financial position
  • Current USP/brand/niche
  • Origins of students (in-state, out of state, international, etc.), as well as their socio-economic background, ethnicity and other factors
  • Where it is doing well and where it needs to improve
  • Quality of leadership and management
  • Quality of governance structures, engagement and communications

 

External

For example:


  • Its market and the wider market, including opportunities for organic and inorganic growth
  • Brand and Competition
  • Revenue streams and opportunities to create more of these
  • Its operating environment, e.g. skills needs in the region
  • Relationships with external stakeholders
  • Emerging trends

 

Step 2: Develop a strategy and implementation plan based on the above information.

 

The model below signals the array of factors a university leadership will need to consider as part of its overall strategic vision and action plan.

Conclusion

 

Higher education institutions in a number of countries face great challenges, but to imagine that now is the time to rethink the entire function of a university would be a mistake. Fundamentally, universities offer something distinct, for which it is clear that there is still a market. The concept therefore remains valuable and viable, but in a climate of declining government funding, slowing/declining enrolments and a general shift towards STEM subjects, differentiation within the range of traditional core functions will distinguish the winners from the losers. Innovation will be an important part of differentiation for universities, as it always has been, but it should never be an end in itself.

 

At Cambridge MC, we have the expertise to help universities pivot for a stronger future. Please get in touch if you would like to learn more about our bespoke services. Use the form below or Contact Us page.


References


[1] E. Schofer & J. W. Meyer, ‘The Worldwide Expansion in Higher Education in the Twentieth Century’, American Sociological Review, vol. 70, no.6 (2005), pp. 898-920.

[2] https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/strategy/pdf/ey-the-other-looming-educational-debt-crisis-institutional-debt.pdf?download

[3] https://www.bestcolleges.com/research/college-enrollment-decline/; https://educationdata.org/college-enrollment-statistics; https://researchbriefings.files.parliament.uk/documents/CBP-7857/CBP-7857.pdf; https://www.tandfonline.com/doi/full/10.1080/21568235.2021.1944250

[4] https://www.publicpolicyexchange.co.uk/event.php?eventUID=NE30-PPE; https://hechingerreport.org/analysis-hundreds-of-colleges-and-universities-show-financial-warning-signs/

[5] https://hechingerreport.org/proof-points-861-colleges-and-9499-campuses-have-closed-down-since-2004/

[6] https://hechingerreport.org/analysis-hundreds-of-colleges-and-universities-show-financial-warning-signs/

[7] https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2019/10/two-decades-of-change-in-federal-and-state-higher-education-funding

[8] https://www.cbpp.org/research/state-budget-and-tax/state-higher-education-funding-cuts-have-pushed-costs-to-students

[9]

[10] https://www.cbpp.org/research/state-budget-and-tax/state-higher-education-funding-cuts-have-pushed-costs-to-students

[11] https://morningconsult.com/2022/06/29/inflation-concerns-college-education-costs-reputation/

[12] https://www.highereddive.com/news/why-arent-people-going-to-college/632915/

[13] https://www.washingtonpost.com/news/innovations/wp/2014/10/13/why-colleges-should-stop-splurging-on-buildings-and-start-investing-in-software/

[14] https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/strategy/pdf/ey-the-other-looming-educational-debt-crisis-institutional-debt.pdf?download

[15] https://www.collegevaluesonline.com/colleges-changes-last-five-years/

[16] https://eml.berkeley.edu/~saez/course131/Eatonetal2020privateequity.pdf: what follows is taken from the same article.

[17] https://www.universitiesuk.ac.uk/what-we-do/policy-and-research/publications/opening-national-conversation-university

[18] https://www.universitiesuk.ac.uk/what-we-do/policy-and-research/publications/opening-national-conversation-university

[19] https://russellgroup.ac.uk/news/russell-group-warns-of-long-term-squeeze-on-uk-skills-pipeline/

[20] https://www.fenews.co.uk/skills/uk-universities-debt-burden-grows-50-in-five-years/; https://www.sciencedirect.com/science/article/pii/S1059056022002076

[21] https://www.bbc.co.uk/news/uk-england-norfolk-64810537

[22] https://www.edp24.co.uk/news/23257565.university-east-anglia-set-make-job-cuts-loss/

[23] https://www.ft.com/content/25f803fd-f5cb-4577-8d86-f120ca03f6e3

[24] https://www.hepi.ac.uk/2021/09/01/why-the-government-should-never-bail-out-a-university/; https://www.hepi.ac.uk/2023/03/21/are-universities-really-at-risk-of-ending-up-in-the-public-sector/

[25] https://researchbriefings.files.parliament.uk/documents/CBP-9387/CBP-9387.pdf

[26] https://www.hrmagazine.co.uk/content/news/employers-think-graduates-are-unprepared-for-the-workplace/;

[27] https://educationhub.blog.gov.uk/2021/02/09/more-young-people-are-taking-stem-subjects-than-ever-before/; https://hechingerreport.org/proof-points-the-number-of-college-graduates-in-the-humanities-drops-for-the-eighth-consecutive-year/; https://www.washingtontimes.com/news/2023/apr/4/focus-stem-education-killing-already-struggling-li/

[28] https://www.businessinsider.com/google-ibm-accenture-dell-companies-no-longer-require-college-degrees-2023-3?r=US&IR=T

[29] https://www.nbcnews.com/news/us-news/americans-are-increasingly-dubious-going-college-rcna40935; https://www.unit4.com/blog/the-us-and-uk-comparing-higher-education-in-the-two-top-ranking-nations

[30] https://www.pewresearch.org/social-trends/2014/02/11/the-rising-cost-of-not-going-to-college/

[31] https://russellgroup.ac.uk/news/russell-group-warns-of-long-term-squeeze-on-uk-skills-pipeline/

[32] https://www.universityworldnews.com/post.php?story=20210610150037741

[33] https://www.universitiesuk.ac.uk/what-we-do/policy-and-research/publications/lessons-pandemic-making-most; https://tallo.com/data-insights/what-high-school-college-students-want-higher-education/

[34] https://www.statista.com/statistics/1247949/annual-duolingo-net-income/

[35] https://www.insidehighered.com/news/2023/03/22/pearson-once-leader-sells-its-online-services-business

[36] https://www.harvardmagazine.com/2021/09/jhj-edx-sold

[37] https://www.ft.com/content/0db12614-324c-483c-b31c-2255e8562910

[38] https://news.asu.edu/20190619-asu-edx-and-mit-announce-innovative-stackable-online-master-science-supply-chain-management

[39] https://edsource.org/2022/how-a-florida-public-university-helps-more-students-get-to-graduation/671805. What follows is taken from the article.

[40] https://eu.gainesville.com/story/news/education/campus/2019/09/09/uf-reaches-no-7-among-top-public-schools/3457664007/

[41] https://umdearborn.edu/news/how-arizona-state-reinventing-american-university

[42] https://heeap.org/news/us-news-and-world-report-ranks-asu-ahead-stanford-mit

[43] https://www.hepi.ac.uk/wp-content/uploads/2023/03/Turning-Around-a-University-Lessons-from-personal-experience.pdf

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Our View: New UK Government Guidance on Multi-Region Cloud & SaaS

by Tom Burton • 27 March 2025
Well Intended Guidance Leaves more Questions than Answers The UK Government Digital Services – part of the Department for Science, Innovation and Technology – has recently published guidance for how the public sector should adopt a multi-region approach to cloud technology. At first sight this appears encouraging. Any unnecessary constraints on hosting arrangements (or any other non-functional requirements) reduce the available market of providers, constrain competition, and therefore inevitably reduce value for money. If parts of Government, whether central, regional or local, have felt that everything must be hosted in the UK then it makes sense to produce guidance that clarifies this perception and helps to open their options up. But for guidance to be useful it should guide. It should make it easier for people to take actions that they previously would have discounted. The guidance in this case, which at 1420 words is almost as short as this article, probably leaves the reader with more questions than answers. It may reveal some unknowns, but without increasing certainty. The Guidance in a Nutshell A summary of the guidance is as follows: Look wider than UK: Many cloud solutions may not offer UK hosting, particularly new innovative solutions that haven’t scaled up yet. Irrespective, their staff are likely to be distributed around the world if the service is supported 24/7. There may also be other benefits in looking wider than UK hosting, such as enabling better business continuity and disaster recovery options if the vendor only has one UK site. Get legal advice: Before you even consider a non-UK option you need to seek advice from your own legal advisors and your Data Protection Officer (DPO). Ensure compliance with ICO guidance: Before you even consider a non-UK option you need to check and make sure that any international transfer of personal data will be compliant with the Information Commissioner’s Office (ICO) guidance, and you should get further guidance from your own legal advice and DPO. Do a full review of vendor security: Before you even consider a non-UK option you need to make sure the vendor and solution are compliant with your own security policies. In a nutshell, it says: 'you should consider options outside of the UK but only if you have checked everything is legal and secure'. This seems to be verging on a statement of the obvious; the real difficulty in going offshore is covering all of the legal, regulatory and security compliance aspects. Adequacy is a Moment in Time On point 3, the guidance points out data protection compliance is easier if the country in question is considered by the ICO to be adequate – having equivalent regulations for data protection to the UK. Sound advice. But even this is not that simple. For instance, the USA is not considered adequate unless it is under an extension of the EU-US Data Privacy Framework. This framework is dependent on an Executive Order that the Biden administration put in place, and it is entirely possible that it will be revoked by the current administration. If such an action was taken, or if for any other reason the EU decides that adequacy is no longer met (also not unlikely given Herr Schrems has achieved this twice already and has stated he plans to challenge the DPF), then the vendor will no longer be considered compliant. Consideration is Far Wider than Residency Security is far wider than data residency though. This is where point 4 both states the obvious and understates the complexity. Managing risk in the supply chain is inherently difficult. Cloud providers, and particularly SaaS solutions, aggravate this challenge by an order of magnitude. By their nature they are solutions designed for a broad and varied range of customers. This means they will always involve compromise. If they tried to meet the most demanding requirements, they would price themselves out of the scale marketplace. If they went for the lowest common denominator, they would be unable to meet the requirements of the majority. An individual customer can rarely dictate a specific security requirement for themselves. They are also highly opaque. The vendor presents their service as a black box. The features delivered to the customer are defined, but much of the underlying design and the means the vendor uses to manage it in operation are hidden. This makes assessing the risk far more of a judgement call than when the design and delivery is conducted under your control. Depending on the supplier, and the leverage that the customer has over them, it may be possible to get some information and assurances; but the right questions need to be asked, and the answers need to be interpreted correctly. Third party certifications and audits, such as the ISO27000 series of standards or the SOC1, SOC2 and SOC3 reports, can also provide some additional assurances. But only the customer will be able to decide the extent to which they can mitigate the risk, and the confidence they have in the supplier to manage their own. This is a business decision informed by the specifics and nuances of the risks being considered. Summary It is important to minimise the non-functional requirements and keep an open mind about potential solutions and vendors. This includes looking wider than just the UK when national security requirements are not paramount. But this is not something that can be distilled onto a single sheet of A4 in any meaningful way. Yes, there are legal and regulatory issues that need to be reviewed. And geopolitical risk needs to be factored in, considering how you would respond to future external changes that are outside of the UK’s control. But from experience, the greatest challenge is getting comfortable that the vendor’s organisation and their solution have adequate security – this applies equally whether the solution is hosted in the UK or overseas. The SaaS world is opaque, and balances priorities across a broad and varied customer base. The public sector needs to increase its adoption of cloud and SaaS solutions to remain efficient and relevant, in the same way that the private sector has had to. But the route to responsible adoption is more nuanced, requiring candid conversations with suppliers, and ultimately an informed but subjective judgement by the customer’s leadership. Sources/Links: DSIT Guidance for Multi-region cloud and software-as-a-service ↩︎ ICO Guide to International Transfers ↩︎ Executive Order (E.O.)14086 of October 7, 2022, on Enhancing Safeguards for United States Signals Intelligence Activities ↩︎ Note: This article originally appeared on Tom Burton's personal blog at https://digility.net/insights/
Palace of Westminster at night

APPG Report Summary: 'Care to Connect: Public Switched Telephone Network (PSTN) Migration'

by Craig Cheney • 25 March 2025
The Digital Communities All-Party Parliamentary Group (APPG) shared the ‘Care to connect: Public Switched Telephone Network (PSTN) Migration’ report with key parliamentarians on Monday at a launch meeting on Parliament Street. This report highlights key recommendations for managing the ongoing Public Switched Telephone Network (PSTN) migration, focusing on protecting vulnerable residents and ensuring effective solutions. Here are the major takeaways for local government and communication providers: Data-Sharing Agreements (DSAs) DSAs between communication providers (CPs), local authorities, and telecare providers are crucial for identifying vulnerable residents during the migration. Challenges include inconsistent responses from local authorities and fragmented approaches across CPs. The APPG recommends all local authorities and housing associations sign DSAs, regardless of progress in digital switchover, to promote uniformity and resident safety. Telecare Devices The sale of analogue telecare devices must end, as these can leave residents unsupported during the transition. The government, in collaboration with the TEC Services Association (TSA), should enforce higher standards (TEC Quality’s Quality Standards Framework) across the telecare industry to achieve robust digital migration practices. Financial support for local councils is critical to replace outdated telecare devices and prevent double costs. Battery Backup Solutions Existing guidance from Ofcom, requiring one-hour resilience for power cuts, is insufficient. The APPG recommends increasing power backup requirements to at least 4 hours in homes and 6 hours for fixed networks. Communication and energy providers must jointly create resilient power solutions, particularly for vulnerable residents reliant on telecare devices. A multi-sector priority service register should integrate communications and energy service protection for those at risk. Sunset of 2G and 3G Networks UK mobile network operators plan to stop supporting 2G and 3G networks by 2033, with some networks already switched off. There are cases where local authorities and residents have purchased telecare devices using 2G/3G SIM cards, as a lower-cost, interim solution — these devices will need to be replaced again, posing double replacement costs for local authorities and additional risks to residents. The government should stop the sale of analogue devices and accelerate efforts to prevent the redeployment of outdated telecare alarms. Summary We welcome these recommendations alongside the December 2023 PSTN Charter, the Telecare National Action Plan and the PSTN Non-voluntary Migration Checklist. The conclusions make it clear that coordination between local and central government, industry regulators (such as Ofcom and Ofgem), and communication providers (CPs), as well as significant investment in digital teams at a local level, are essential goals to ensure a safe and inclusive digital switchover for all vulnerable residents and telecare users. Read the full report here: https://digitalcommunities.inparliament.uk/care-to-connect-public-switch-telephone-network-migration-report About the APPG The Digital Communities APPG is a cross-party group of parliamentarians, with the aim to promote the delivery of digitally equipped places that support and foster a connected, healthy, and productive community. This includes the creation and maintenance of sustainable digital infrastructure, as well as providing residents with equal opportunity to thrive in a digital world. The LGA provides the secretariat to the APPG. Cambridge Management Consulting Our Public Sector and PSTN teams can help local councils and other public bodies by providing strategy, financial planning, procurement, and project management services to ensure that you have a comprehensive transition strategy and accurate financial costing for the PSTN switch-off. We can help you follow the recommendations in this report by completing a full audit, signing DSAs with CPs and most importantly, protecting vulnerable service users. Get in touch with Craig Cheney, Managing Partner and lead for Public & Education, to discuss a range of services which might suit your needs: ccheney@cambridgemc.com (or use the form below). Act now, before time and resources run out.
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The Real Financial Cost of Scope 3 for Businesses

by Simon King • 20 March 2025
What Do Your Scope 3 Emissions Have to Do with Inflation? Scope 3 emissions cover everything outside your direct operations —the carbon footprint of your supply chain, purchased goods, logistics, business travel, and more. The higher your Scope 3 emissions, the more energy-intensive your supply chain is. And the more energy-intensive your supply chain, the more vulnerable you are to rising costs. Think of it this way: High Production Costs- If your suppliers are heavily dependent on fossil fuels, their production costs are rising fast Price Volatility- If your supply chain lacks efficiency and resilience, price volatility will hit you harder Locking in High Costs- If you’re not actively engaging with suppliers to reduce emissions, you’re locking in long-term cost increases that could have been avoided Without accurate Scope 3 data and a clear engagement strategy , businesses are leaving themselves open to higher prices, lower margins, and greater financial risk . Why Businesses Struggle with Scope 3 A major challenge is that Procurement and Sustainability teams often operate in silos: Procurement teams focus on cost and supplier relationships but often lack deep sustainability expertise Sustainability teams focus on compliance and decarbonisation but aren’t typically measured on financial performance This disconnect means emissions reduction is rarely treated as a financial opportunity —when in reality, cutting carbon from your supply chain is also one of the most effective ways to reduce exposure to cost inflation. The Businesses That Get This Right Will Lower their Costs Leading organisations are already taking action. They are: Gathering detailed Scope 3 emissions data to map out cost risks in their supply chain Engaging suppliers to drive efficiency, reduce emissions, and lower costs Building resilience by shifting towards lower-carbon, more cost-stable alternatives The result? Lower long-term costs, reduced financial risk, and a competitive edge over those stuck with inefficient supply chains. This is not just about sustainability compliance —it’s about smart financial decision-making. If You’re Not Taking Action, You’re Losing Money Every business will feel the impact of rising supply chain costs—but not every business will be prepared for them. If you don’t have accurate Scope 3 emissions data and an effective engagement strategy, you are: Paying more than you need to for essential goods and services Exposing your business to long-term cost inflation Missing out on opportunities to build a stronger, more resilient supply chain The sooner you act, the better the outcome for your bottom line and the planet. Is your business ready to take control of its costs? Get in touch with Cambridge Management Consulting and edenseven today. About edenseven edenseven is the sustainability-focussed sister-company of Cambridge Management Consulting. We work with businesses across all sectors in multiple regions to deliver robust and deliverable net-zero strategies. The success of any strategy relies on its awareness of how changes in policy and subsidies can create both risks and opportunities for a business. If you are a business trying to enter a new market or evolving in an existing market and would like to learn more about how edenseven can support you, please get in touch with the team at edenseven at info@edenseven.co.uk or use the contact form below. Find out more about edenseven on their website: edenseven.co.uk

Customer Centricity: Leveraging Technology for Customer Satisfaction

by Daniel Fitzsimmons • 13 March 2025
Peter Drucker wrote in his book The Practice of Management (1954) that ‘it is the customer who determines what a business is’. This sentiment still firmly holds true today, as consumers increasingly expect personalised shopping experiences from aspirational businesses that desire to have a positive impact on the community, country, or world in some way. Across this series of articles, Daniel Fitzsimmons explores the role of customer-centricity as a mechanism to support the delivery of superior customer experience and business profitability. In the first two articles in this Customer Centricity series, Daniel has established the foundations of what makes a truly customer-centric organisation, and how a business can be tailored towards ensured customer satisfaction. In the final article in the series, he takes this further to discuss how technological innovation can amplify these goals. Digital Transformation – Technology Acceptance Model (TAM) Technology is typically the most common interaction point for customers engaging with products, and is especially critical to the service industry. The banking industry has pioneered the digitalisation of services (Dube and Helkkula, 2015), with digital payment services and blockchain solutions. In a fiercely competitive environment, the creation of superior value requires increased insight into how customers experience value (Medberg and Heinonen, 2014). Value can be typically defined as the ‘consumers’ overall assessment of the utility of a product based on perceptions of what is received and what is given’ (Zeithma, 1988). This concept can be extended to a value definition in the following forms: Total Monetary Value – The amount a customer is prepared to pay for a product Perceived Use Value – Defined by a customer’s perception (utility) Exchange Value – Realised when the product is sold Value can be enhanced through digital capabilities, marking technology solutions, and digital marketing strategies to support user acceptance. Securing User Acceptance One compelling approach to understanding how users may engage with a new technology is the TAM model. The TAM model suggests that Perceived Usefulness (PU) and Perceived Ease of USE (PEOU), define how a user will interact with a new product or service, i.e. if the product usefulness and ease of use can be communication, barriers to adoption can be mitigated. When developing new customer solutions, mobilisation of the TAM model is the engagement of consumers in product development, and inclusion of then construct of ‘user intent’ to inform product ideation. Venkatesh et al. formulated the unified theory of acceptance and use of technology (UTAUT). This model was found to outperform other models (Adjusted R square of 69 percent), and is worthy of further investigation in terms of its ability to predict user acceptance of new technology solutions. Experimentation Technology should function as an enabling mechanism to support experimentation in the creation of products and services, and increased alignment with prospective customers. Experimentation, which from an engineering perspective represents ‘continuous improvement’, allows businesses to see what does and doesn’t resonate with target personas, iterating towards a value proposition that will drive superior customer engagement and subsequently an increased % of the customer wallet. Booking.com runs more than 1,000 tests simultaneously to fine tune its offering specific to a user profile, behaviours, and characteristics. Experimentation and the subsequent data generated provides a meaningful base from which to make decisions, thereby negating ‘strong opinions or the HiPPO mentality, which is often pervasive in organisations. For experimentation to be successful, leadership needs to create a culture of curiosity in the business, supported by organisational design and the psychological safety to try and fail. Digital continuity provides an exciting opportunity to enhance the customer voice in product development. Real time data availability provides instant insight into consumer preference, which can be used to support product development and increasingly personalised product offers. Through the experimentation cycle, digital prototypes can be rolled out quickly to support the product innovation cycle. For experimentation to be successful, customer requirements should be integrated into business operations to create an industry-aligned value proposition (Ohmae, 1988). Conclusion Throughout this three-part series, I have demonstrated the importance of customer-centricity as a critical way to ensure success. In this article specifically, I have covered how to leverage technology – a power that is already prevalent and constantly evolving – to best support this venture. Building upon the TAM model, technology can be used to facilitate enhanced customer satisfaction, consequently spurring innovation and growth.
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A Wave of Change: The Trafalgar Saints Surf Club in South Africa

by Naaz Bax • 7 March 2025
Funds donated by Cambridge MC supplied some new equipment, including new boards.
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Red is also the Colour of our Carpet: Recent Awards Won by Cambridge Management Consulting

by Lucas Lefley • 4 March 2025
At Cambridge Management Consulting, we pride ourselves on building a consultancy practice that goes beyond traditional consulting. Our team is composed of specialist practitioners who have reached the pinnacle of their industries, bringing years—often decades—of hands-on experience to guide others in achieving exceptional results. This approach has established Cambridge MC as a consultancy powered by a network of diverse, proven expertise, consistently recognised for its impact and innovation. Our consultants and their work have been honoured with numerous accolades, reflecting the value we bring to our clients and industries. For example, Zoë Webster, an expert in AI, Digital & Innovation, was named one of AI Magazine’s Top 10 AI Leaders in the UK & Europe, celebrated as a pioneer reshaping industries and societies. Similarly, Craig Cheney, Managing Partner, Marvin Rees, Board Advisor, and David White, Associate, were recognised with a World Economic Forum Award for Public Private Collaboration for their contributions to the Bristol City Leap project. Craig Cheney was made an Alderman of the City of Bristol, acknowledging his eminent services to the city; and just recently, Marvin Rees OBE was introduced into the House of Lords. These achievements were further complemented by our success at the Consultancy Awards, where Cambridge MC proudly received awards in every category we were nominated for. The Consultancy Awards The Consultancy Awards, hosted annually by The Consultancy Growth Network, celebrate hard work, commitment, and innovation across the consultancy sector. Cambridge MC was honoured to receive three awards in recent years, recognising our contributions across key areas: Digital Transformation: For our project management of a multinational oil and gas company, coordinating the development of a portfolio of high-priority EV charging hub sites in major cities. Productivity Improvement / Cost Reduction: For delivering £10m in savings for a large UK online retailer in just 13 weeks, leveraging our expertise in procurement, contract, and vendor management. Fastest Growing: Celebrating our 30% growth in revenue, 100% increase in geographies, and doubling the profit we donate to charity to 12%.  These awards are a testament to our commitment to delivering exceptional results for our clients while contributing to the industries we serve. Celebrating Industry Excellence While receiving accolades is always an honour, the opportunity to give back to the industries that shaped us is equally rewarding. Cambridge MC has been privileged to sponsor and judge several prestigious awards, recognising the talent and innovation that drive progress across telecommunications, technology, and connectivity. ITP Telecoms Awards As Platinum Sponsors of the ITP Telecoms Awards, hosted by the Institute of Telecommunications Professionals, we celebrated the achievements of individuals and organisations making significant contributions to the digital industry. Tim Passingham, Founder & Chairman of Cambridge MC, presented the Engineer of the Year award to Mike Mawson, Head of Fibre Innovation at Hyperoptic, recognising his exceptional work in advancing telecommunications. Global Connectivity Awards The Global Connectivity Awards, held at the O2 in London, marked its 20th year of honouring innovation across 40 categories, from technology breakthroughs to regional achievements. Cambridge MC’s Managing Partner, Charles Orsel des Sagets, joined the panel of 30 impartial judges, bringing over 30 years of expertise in fintech, cybersecurity, and connectivity to evaluate the finalists. This event highlighted the ingenuity shaping the connectivity industry and provided a platform to celebrate its brightest minds. World Communication Awards The World Communication Awards, now in its 25th year, continues to recognise excellence across telecommunications. Naaz Bax, Senior Partner and Chief of Staff at Cambridge MC, served as a judge and presented the prestigious Woman in Telecoms Award. This category celebrated the achievements of brilliant women in the industry, with the award going to Josephine Sarouk, Managing Director of Bayobab Group, for her invaluable contributions to telecommunications. DCD>Global Awards The DCD>Global Awards, held at Grosvenor House in London, celebrated talent and achievement in the data centre and telecommunications industries. Duncan Clubb, Senior Partner for Data Centres, Edge & Cloud, brought his expertise to the judging panel, evaluating finalists in categories such as the Edge Data Center Project of the Year. This event showcased the transformative impact of innovation in data centre infrastructure and edge computing. A Legacy of Ingenuity The awards, events, and individuals highlighted here reflect the wealth of expertise, innovation, and achievement that define the consulting, telecommunications, and technology industries. At Cambridge MC, we are privileged to contribute to these industries, whether by delivering impactful projects, receiving accolades, or celebrating the achievements of others. As we look ahead, we remain committed to supporting and shaping the industries we serve, continuing to drive progress and innovation in the years to come.
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The Impact of the PSTN Switch-Off on Property: Act before Services Cease to Function

by Steven Boyd MBE • 3 March 2025
In my discussions with building owners and occupiers about property technology, the conversation often centres on leveraging new technologies and existing data to enhance compliance, reduce costs and carbon emissions, and improve workplace experience. Many people in the property sector share a common concern around the quality of data currently held on their buildings. This gap in record-keeping could pose significant challenges as the UK's Public Switched Telephone Network (PSTN) is retired in early 2027.  PSTN is the analogue telephone network that carries voice and data over copper wires. This legacy infrastructure is becoming increasingly costly and difficult to maintain, and it is unable to handle the data demands of modern telecommunications. As a result, BT and other UK phone companies intend to withdraw PSTN services by the end of January 2027. Although records may not show it, many buildings rely on PSTN lines for critical services such as lift emergency calls, fire alarms, security systems, door entry monitoring and building management systems. Once PSTN is decommissioned, these services will cease to function without warning, potentially leading to safety compliance and security risks. To mitigate these risks, building owners should proactively assess their exposure before PSTN services are discontinued. Identifying and replacing existing PSTN connections with future-proofed, and potentially more cost-effective, digital solutions is essential for business continuity. Building occupiers should also seek assurances from their landlords regarding these transitions. At the Connected Britain Conference last year, the Minister of State for Data Protection and Telecoms, Sir Chris Bryant MP, highlighted the vital importance of digital infrastructure and cited the PSTN switch-off as a significant concern. BT recommends that its business customers act before the end of 2025. The transition to digital alternatives including testing and commissioning could take 6-9 months. A critical first step is to carry out an audit to identify systems that rely on PSTN. This audit should identify all devices connected to the PSTN, their locations, their functions, and upgrade options. I have been urging property owners and operators to develop and implement a programme of discovery and rectification as a priority. Without early and rigorous planning, the risks to safety, business continuity, and occupier experience are high. Also, as the switch-off date approaches, the costs of this work are very likely to increase significantly. Cambridge Management Consulting has a team of PSTN experts, who can identify existing PSTN-based systems, procure replacement solutions and migrate your services, as well as identifying and implementing cost reduction strategies that become possible through the transition to digital solutions. We can also ensure your organisation avoids the risks to compliance, security and occupier experience when PSTN services are withdrawn as well as reaping the long-term benefits of going digital.
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Partner Spotlight: Darren Sheppard

by Lucas Lefley • 28 February 2025
At Cambridge Management Consulting, we place just as much emphasis on the growth and development of our in-house industry experts and professionals, as the businesses and organisations that they work with. We do not hire consultants; we hire genuine practitioners with hands-on, demonstrable real-world experience – but we also make sure that doesn’t stop at the door. We ensure that our consultants get as much out of our partnerships and business ventures as our customers do. One of our consultants who has experienced this growth and progression first hand is Darren Sheppard, recently made a Senior Partner for Contract Management & Digital Transformation. In this article, we are shining a spotlight on Darren’s numerous career highlights with Cambridge Management Consulting, including the delivery of multiple successful projects and award-winning cost saving programmes. Darren Sheppard With nearly 30 years of experience, Darren began his career as a collections agent, underwriter, and later a Credit Risk and Collections Manager for 20th Century Fox. Since then, Darren has occupied numerous senior consulting and senior management roles across Finance, Operations, Sales/Business Development and Commercial/Contract Management for major telecommunications companies such as T-Mobile, EE and BT. After establishing his own consultancy business, he was engaged by Sovereign Business Integration Group as Group Director of Operations. Darren joined Cambridge MC in 2021 as a Partner to lead our Digital Contract & Service Management practice. Since then, he has delivered multiple complex and successful programmes for numerous high-profile clients and customers. Throughout his career, his positions have seen him responsible for setting and delivering the strategy of each organisation, be it driving partner growth, managing stakeholder relationships, coordinating go-to-market, operations, and commercial management. Contract Management, FTSE250 Financial Services Provider In 2021, Darren began a programme with a FTSE250 financial services provider specialising in trading solutions to support the transition of two of their financial derivatives trading platform businesses. Throughout this, Darren was responsible for reviewing the TSA document and all associated Vendor Contracts, negotiating with the vendors on a continuation and/or transfer of agreement post-closure and throughout the term of the TSA. Due to his proficiency, Darren and the team were able to deliver this TSA programme six months early and significantly under budget. You can read more about this project here . Following the success of Darren’s work, this financial services provider continued to engage Cambridge MC to support their Strategic Partnerships & Commercial Management. In reviewing their current processes and modernising as appropriate, together with assessing strategic supplier contracts to align their KPIs with business goals, Darren helped to establish a set of processes to help his client reach their business goals. Deputy COO, Management Consultancy Between the summers of 2022 and 2023, Darren occupied the role of Deputy Chief Operating Officer for a management consultancy, overseeing strategic planning, project management, and operational efficiency initiatives. During this time, Darren designed and implemented a lifecycle workflow for managing engagements, ensured effective contracting, and successfully delivered the implementation of ISO 27001 standards. COO, Environmental Air Quality Monitoring Alongside the above interim role, Darren was engaged to occupy the role of COO for IKNAIA, an environmental air quality monitoring organisation, of which the CEO was originally forced to occupy both C-Suite positions. In this role, Darren managed day-to-day operations, elevated the leadership team, and oversaw all operational aspects of company strategy. Throughout this time, Darren has helped them to overcome limited capital, streamline operational efficiency, and re-prioritise their pipeline. Finally, he supported the successful divestment of the company, carefully balancing the interests of stakeholders, he ensured that the deal structure was both fair and beneficial, delivering long-term value to the acquiring organisation while safeguarding the interests of the employees, investors, and clients. Ultimately, his efforts achieved a transaction that positioned the company for continued success under new ownership. You can read more about this work here . Cost Reduction, Online Retailer In early 2023, Darren supported a large UK online retailer through a downsizing exercise and the changes in demand and expenditure which came with it. By performing a deep dive on all vendor contracts, establishing priority saving areas and engaging in supplier negotiations, Darren and the team were able to deliver £10m of savings on an addressable budget of £85m, in just thirteen weeks. This programme was later nominated for and won an award at the Consultancy Awards 2024 in their Productivity Improvement/Cost Reduction category. Due Diligence, Wholesale Networks Provider Darren’s next programme involved conducting commercial due diligence for a wholesale networks provider, working with their investors to review the feasibility of investing in a company specialising in telecoms software. This saw him evaluate their business model, examine the software’s features to identify any intellectual property and patents, and assess the business’ risk register to ensure that it was future-proofed. Darren’s due diligence work and focus led to the successful acquisition of the company. Vendor Performance Management, Russell-Group University For a prestigious academic institution, Darren conducted Vendor Performance Management and Service Performance Management, assessing their current performance delivery in order to identify areas where improvement was needed. During this time, Darren was responsible for all of the Vendor Performance for their three Modern Network Vendors, analysing data to identify areas for improvement, developing a communication plan, and presenting a negotiation strategy to the university. Get in Touch Across all of these projects and programmes, Darren has leveraged his commercial, contract management and vendor negotiation capabilities to streamline and strengthen each organisation he has supported. For more information on how Darren can optimise your business, contact him using the form below.
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Should AI Appreciate its own Ignorance?

by Tom Burton • 26 February 2025
Since the origins of the quest for artificial intelligence (AI), there has been a debate about what is unique to human intelligence and behaviour and what can be meaningfully replicated by technology. In this article we discuss these arguments and the ramifications of 'ignorance' as it is expressed by current AI models. To what Extent can Artificial Intelligence Match or Surpass Human Intelligence? This article approaches the question of artificial intelligence by posing philosophical questions about the current limitations in AI capabilities and whether they could have significant consequences if we empower those agents with too much responsibility. Two recent podcast series provide useful and comparative insights into both the current progress towards Artificial General Intelligence (AGI) and the important role of ignorance in our own cognitive abilities. The first is Season 3 of 'Google DeepMind: The Podcast”, presented by Hannah Fry, which describes the current state of art in AI. The second is Season 2 of the BBC's 'The Long History of… Ignorance' presented by Rory Stewart, which explores our own philosophical relationship with ignorance. A Celebration of Ignorance Rory Stuart’s podcast is a fascinating exploration of the value that we gain from ignorance. It is based on the thesis that ignorance is not just the absence of intelligence. It feeds humility and is essential to the most creative endeavours that humans have achieved. To ignore ignorance, is to put complex human systems, such as government and society, into peril. The key question we pose is whether or not current AI appreciates its ignorance. That is, can it recognise that it doesn’t know everything. Can AI embrace, respect and correctly recognise its own ignorance: meaning it doesn’t just learn through hindsight but becomes wiser; and is fundamentally influenced, when it makes decisions and offers conclusions, that it is doing so from a position of ignorance. The Rumsfeldian Trinity of Knowns The late Donald Rumsfeld is most popularly remembered for his theory of knowns. He described that there are the things we know we know; things we known we don’t know; and things we don’t know we don’t know. Stewart makes multiple references to this in his podcast. At the time that Rumsfeld made the statement it was widely reported as a blunder—as a statement of the blindingly obvious. Since then, the trinity of knowns has entered the discourse of a variety of fields and is widely quoted and used in epistemological systems and enquiries. Let us take each in turn, and consider how AI treats or understands these statements. Understanding our 'known knowns' is relatively easy. We would suggest that current AI is better than any of us at knowing what it knows We also put forward that 'known unknowns' should be pretty straightforward for AI. If you ask a human a question, and they don't know the answer, it is easy to report this an an unknown. In fact, young children deal with this task without issue. AI should also be able to handle this concept. Both human and artificial intelligence will sometimes make things up when the facts to support an answer aren’t known, but that should not be an insurmountable problem to solve. As Rumsfeld was trying to convey, it is the final category of 'unknown unknowns' that tends to pose a threat. These are missing facts that you cannot easily deduce as missing. This includes situations where you have no reason to believe that 'something' (in Rumsfeld's case, a threat) might exist. It is an area of huge misunderstandings in human logic and reasoning; such as accepting that the world is flat because nobody has yet considered that it might be spherical. It is expecting Isaac Newton to understand the concept of particle physics and the existence of the Higgs boson when he theorises about gravity. Or following one course of action because there was no reason to believe that there might be another available: all evidence in my known universe points to Plan A, so Plan A must be the only viable option. In experiments with ChatGPT, there is good reason to believe that it can be humble; that it recognises it doesn’t know everything. But the models seem far more focused on coping with 'known unknowns' than recognising the existence of 'unknown unknowns'. When asked how it handles unknown unknowns, it explained that it would ask clarifying questions or acknowledge when something is beyond its knowledge. These appear to be techniques for dealing with known unknowns and not unknown unknowns. The More we Learn, the More we Understand How Much we Don’t Know Through early life, in our progression from childhood to adulthood, we are taught that the more you know and understand, the more successful you will be. Not knowing a fact or principle was not something to be proud of, and should be addressed by learning the missing knowledge and followed by learning even more to avoid failure in the future. In education we are encouraged to value knowledge more than anything else. But as we get older, we learn with hindsight from the mistakes we have made from ill-informed decisions. In the process, we become more conscious of how little we actually know. If AI in its current form does not appreciate or respect this fundamental concept of ignorance, then we should ask what flaws might exist in its decision-making and reasoning? The Peril of Hubris To feel that we can understand all aspects of a complex system is hubris. Rory Stewart touches on this from his experience in government. It is a fallacy to believe that we should be able to solve really difficult systemic problems just by understanding more detail and storing more facts about the characteristics of society. As Stewart notes, this leads to brittle, deterministic solutions based on the known facts with only a measure of tolerance for the 'known unknowns'. Their vulnerability to the 'law of unintended consequences' is proven repeatedly when the solution is found fundamentally flawed because of facts that were never, and probably could never be, anticipated. These unknown unknowns might be known elsewhere, but remain out of sight to the person making the decision. Some unknown unknowns might be revealed, by speaking to the right experts or with the right lines of enquiry. However, many things are universally unknown at any moment in time. There are laws of physics today that were unknown unknowns to scientists only few decades previously. The Basis of True Creativity Stewart dedicates an entire episode to ignorance’s contribution to creativity, bringing in the views and testaments of great artists of our time, like Antony Gormley. If creativity is more than the incremental improvement of what has existed before, how can it be possible without being mindful of the expanse of everything you don’t know? This is not a new theory. If you search for “the contribution that ignorance makes to human thinking and creativity” you will find numerous sources that discuss it, with references ranging from Buddhism to Charles Dickens. Stewart describes Gormley’s process of trying to empty his mind of everything in order to set the conditions for creativity. Creativity is vital to more than creating works of art. It is an essential part of complex decision-making. We use metaphors like 'brainstorming or blue sky thinking' to describe the state of opening your mind and not being constrained by bias, preconception or past experience. This is useful, not just to come up with new solutions, but also to 'war game' previously unforeseen scenarios that might present hazards to those solutions. What would you Entrust to a Super-Genius? So, if respecting and appreciating our undefined and unbounded ignorance is vital to making good and responsible decisions as humans, where does this leave AI? Is AI currently able to learn from hindsight – not just learn the corrected fact, but learn from the very act of being wrong? In turn, from this learning, can it be more conscious of its shortcomings when considering things with foresight? Or are we creating an arrogant super-genius unscarred by its mistakes of the past and unable to think outside the box? How will this hubris affect the advice it offers and the decisions it takes? What if we lived in a village where the candidates for leader were a wise, humble elder and a know-it-all? The wise elder had experienced many different situations, including war, famine, joy and happiness; they have improvised solutions to problems that they have faced in the past, and have learnt in the process that a closed mind stifles creativity; they knew the mistakes they had made, and therefore knew their eternal limitations. The village 'genius' was young and highly educated, having been to the finest university in the land. They knew everything ever written in a book, and they were not conscious of making a bad decision. Who would you vote for to be your leader? Conclusion The concepts described here are almost certainly being dealt with by teams at Google DeepMind and the other AI companies. They shouldn’t be insurmountable. The current models may have a degree of caution built into them to damp the more extreme enthusiasm. But I’d argue that caution when making decisions based on what you know is not the same as creatively exploring the 'what if' scenarios in the vast expanse of what you don’t know. We should be cautious of the advice we take from these models and what we empower them to do—until we are satisfied that they are wise and creative as well as intelligent. Some tasks don’t require wisdom or creativity, and we can and should exploit the benefits that these technologies bring in this context. But does it take both qualities to decide which ones do? We leave you with that little circular conundrum to ponder.
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