Dean Dad talks about junking tenure maybe replaced by a series of long-term contracts. His perspective is from being an administrator at a community college. It might make sense there, I don't know enough to comment. With regards to research universities though for those in the natural sciences it is absurd.
Why? Science faculty already have to stay competitive in order to keep getting grants. The grants pay for the research, internet access, going to conferences, having students and oh yes part of their salaries. In other words they are already competing and staying productive. Of course in exchange for giving up tenure, universities would have to give up something-money. After 5-7 years of being a grad student and then spending another 3-4 years as a post-doc and then 7 years at an institution as a junior faculty member, scientists want a little security. Lowering the security means universities would have to pay significantly higher salaries. Given the nature of contracts and the competition involved there would be bound to be more movement than there is now leading to more expenses. Would the university really gain that much more? Science faculty already have to stay productive. The difference in overhead dollars brought in would be minimal and that is what the university wants hence that is the primary determinant in getting tenure. Most likely universities would be unwilling to pay for giving up tenure. Without the increase in pay, it would be silly for faculty to give up on tenure. It is a no go. It would get faculty to be better teachers. Under certain scenarios it would actually favor faculty focussing more on research than being good teachers/mentors.