Cambridge vice-chancellor Sir Alec Broers has attacked the university's "abominable" management system signalling an overhaul of its structures.
Sir Alec said that the university was seriously debilitated by poor management and out-dated systems. He indicated that he was ready to sweep away its ancient democratic structures and traditions in a modernising drive.
His criticisms come as the university prepares to publish a report into "severe problems" encountered during its attempts to introduce a new financial accounting system last year.
In his annual October speech to the senate, Sir Alec said: "There is in Cambridge a circle of inter-related confusion as frustrating to the critics as it is to those striving to the best of their ability to make a system devised in earlier and easier days fit the pace and exigencies of the present day.
"We must be flexible and willing to change and to accept that there is a need to clarify our decision-making procedures."
Sir Alec, who spent 20 years working at computing giant IBM, has been stung by recent criticisms from the head of the Massachusetts Institute of Technology in the US that Cambridge cannot cope with commercial realities.
His modernisation drive is expected to meet resistance from academics eager to protect ancient democracies. But Sir Alec will have ammunition in the form of the hard-hitting report by Mike Shattock, former registrar of Warwick University. The report is due to be published next Friday.
Professor Shattock, now professor of higher education at the Institute of Education, is expected to pull few punches in his critique of the university's disastrous implementation of a new financial accounting system last year.
In September 2000, The THES reported that the system had left staff unable to carry out the most rudimentary functions such as accessing research grants and paying salaries and invoices.
Many staff complained that teaching and research were in danger as the university almost ground to a halt. Sir Alec admitted that the university had encountered "severe problems" that placed "huge stress" on administrators.
He said: "It has been pointed out that we have far fewer financial experts in our administration than much smaller UK universities."
In his address, Sir Alec cited an 1891 attack on the university's governance from its former chancellor, Arthur Balfour, who said the university suffered from an "abominable system of managing everything through syndicates and committees - ingenious contrivances for making the work of ten wise men as if it were inferior to the work of one fool".
Sir Alec said: "Who can say that there is not now as much, or more, truth in what he said?" The university is working on reforms to its central administration, considering plans for two more pro vice-chancellors and a new tier of administrative professionals. Sir Alec said that there would always be "committees and syndicates" at the university, but that it had to find "the best way to use them".
* Cambridge has introduced new ethical guidelines for accepting benefactions, following a number of controversies.
The vice-chancellor, responsible for accepting donations, will seek the advice of his executive committee on all benefactions over £1 million "or likely to give rise to significant public interest".
Among factors the committee will have to consider is whether there is "published evidence" that the proposed benefaction arises from activity that has evaded taxation, violated international conventions on human rights, limited freedom of inquiry or falsified academic research.