Thanks for the post, I wrote something about your post: it is here.
The book "The Road to Academic Excellence: The Making of World-Class Research Universities," suggests the following elements for the making of a world-class research University -- [by the way, see the pretty interesting collection of case studies in the link above]: Leadership matters, [no surprises here]. It is easer to start a research university from scratch than it is to transform an existing university [the main idea in the book]. Inner virtues, and a combination of humanities and the sciences are key: “[O]nly an education that can nourish inbuilt virtues can impart true intelligence” (Sri Sri University 2010). What about teaching universities? [my own ideas here, I have in mind developing countries ]: Technology in the form of Youtube, Skype, etc., is making virtual education more effective than ever before [have you seen the Khan Academy?]. This reduces the fixed costs of a University that focuses on virtual education, and reduces significantly the marginal cost per student. Cost might be even lower if universities automatize certain key processes, like grading, for example. With this cost structure one might think that virtual education should take off and grow much faster than traditional education. But there is one thing virtual education might have a more difficult time to automatize: "localized research" [or research in general for that matter]. Doing research and focusing on localized research, which can not be automatized easily [because research papers have to be read by an informed professor, who knows the theories, the literature, etc.], might be indeed a survival strategy for universities in the present and the future. This can also bring a fair amount of positive externalities. The future of higher education looks bright indeed !!! [HT Jamil Salmi]