I taught at universities for 12 years. These are the places where knowledge is discovered. I think the idea of coupling it into the industry provides a mechanism to get it applied--for example, the sponsoring of research chairs and that type of thing. The mandates that the team that's working on whatever project it is be both industrial and academic are very positive things.
But I don't think one should ever get carried away with trying to force professors into applied research if they don't want to go there, because they won't.