Higher education globally is booming with 150 million students worldwide, projected to rise to over 260 million by 2025. 2.5 million are internationally mobile, a figure expected to rise to seven million by 2020 and expenditure is already some $1.8 trillion, and growing at roughly 8 per cent each year. Despite a vast increase in scale over the course of a generation the basic model of university education has not changed much since the second world war, and continue to centre around three or four year courses, lectures in lecture halls, reading lists, exams, dissertations and PhDs. Although universities are packed full of technologies, the many online tools for learning, from open universities and MOOCs to tools for adapting learning, remain on the margins of the system rather than at the centre. This paper focuses on one important strand of change: the rise of what we call ‘challenge-driven’ university models. These models develop students by putting them up against difficult problems and challenges for which there are no established answers. Instead students to draw on many disciplines to solve them; they have to work in teams; and they have to collaborate with organisations outside higher education.