How MIT Became the Most Important University in the World

And why Harvard—Harvard!—is scrambling to catch up.

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Last November, with great fanfare, Harvard celebrated the opening of its sparkling new $20 million Innovation Lab. A soaring 30,000 square-foot testament to contemporary architecture built right into the heart of the Harvard Business School, the I-Lab represents something profoundly new for the university: a full-throttle effort to transform itself into a leader in the increasingly important world of tech entrepreneurship. The goal, both simple and ambitious, is to bring together the world’s best and brightest young entrepreneurs, to nurture them in a stimulating and collaborative environment, and to help them transform their ideas into real-world businesses. “Gathering great minds under a single roof” is how Harvard’s president, Drew Gilpin Faust, described the mission of the I-Lab at the opening ceremony, “so that they can become great together.”

Tech entrepreneurship is the new sexy. It’s what legions of promising teens and twentysomethings are crazy for today, and Harvard wants in on the action. Sure, the university can claim two of the great tech entrepreneurs of the age, Mark Zuckerberg and Bill Gates, as its own. But they had to drop out of Harvard in order to transform their world-changing ideas into reality. “Zuckerberg did Facebook over our dead body,” says Joe Lassiter, the faculty chair of the I-Lab. “The commitment to [entrepreneurship] at this level, and across the university, is quite a new thought.”

True to form, Harvard has been touting the creation of the I-Lab as a revolutionary development, as a stop-the-presses, here-we-come moment of change not just for the university but also the world of higher education. But the thing is, it’s not. Harvard is actually nearly a quarter-century late to the world of tech entrepreneurship, and as it scrambles to get into the game, it’s finding itself in an uncomfortable position, not leading the charge, as it would like to, but desperately playing catch-up to its crosstown rival, MIT.

In many ways, the I-Lab is actually a derivative enterprise, clearly based on the Martin Trust Center for MIT Entrepreneurship, which since 1990 has been nurturing tech entrepreneurs and churning out an astonishing number of startups. “You can see that Harvard copied MIT,” Bill Aulet, the managing director of the Trust Center, and himself a Harvard alum, told me recently. “We’ve been doing entrepreneurship for a long time, and now Harvard is finally coming over to our way. But MIT has never been better. This is our time.”

Indeed it is. Everybody’s suddenly sweet on MIT. This past July, speaking in Boston at the Global Business Travel Association, Bill Clinton described the university as having the “best technology-transfer program in the country,” tops at turning student ideas into blockbuster businesses. It’s hard to disagree. Between 2000 and 2006, MIT graduates started more than 5,800 companies, and the numbers have only been rising since. The Institute produces more patent applications than any other single university in the world, with 179 in 2011. MIT’s entrepreneurial impact is so great that, according to a 2009 study conducted by the founder of the Trust Center, active companies created by its alumni bring in a combined revenue today of as much as $2 trillion. That would make those companies the equivalent of the 11th-largest economy in the world.

Those in the rankings business are also falling over themselves to praise MIT. This past August, Forbes named the Institute the second-most-entrepreneurial college in the country, and that same month, after taking into account such factors as the potential earnings of graduates, Newsweek’s the Daily Beast named it the nation’s most affordable college. Then in September came the best moment of all. In its annual ranking of the world’s great universities, QS, a London-based education-consulting-and-research firm, moved MIT above Harvard—and named it the best in the world.