A NEW STRATEGY FOR THE SCOTTISH ENTERPRISE NETWORK

A NEW STRATEGY FOR THE SCOTTISH ENTERPRISE NETWORK

A NEW STRATEGY FOR THE SCOTTISH ENTERPRISE NETWORK

The Royal Society of Edinburgh welcomes the opportunity to respond to Scottish Enterprise’s consultative document on A New Strategy for the Scottish Enterprise Network. The Society has been actively engaged in the national Technology Ventures initiative to promote the commercialisation of the Scottish science base, and partnered Scottish Enterprise in delivering a programme of activities over the past two years to promote a better understanding of the issues involved in innovation and commercialisation.

It would be useful if the document clearly emphasised what Scottish Enterprise Network priorities were. The outlined strategy is in danger of being so broad as to justify almost anything. Priorities should be set and weighted based upon Scottish Enterprise’s own strengths and capabilities. Distinctions should also be made between areas where it takes the lead, ones in which it provides a supporting role and ones in which it encourages other relevant organisations to play their part. While a successful economy benefits from positive attitudes to learning and an inclusive economy, the balance needs to be struck between these social policies and providing the skills and support the economy needs. In creating a prosperous economy the first priority is getting profitable companies. Then there is the framework on which to build. An integrated set of functions is important, but the Strategy document is being pulled too far in that direction. In this respect, the approach of sharing common objectives with partners would be more appropriate than the sharing of goals.

One of the key issues for the future will be the implications of what is happening to the economies of Asia and elsewhere. Events there are likely to have a major impact upon Scotland when contrasted with its present industrial activities. It is appreciated, that the Strategy document was written some time before the momentous changes now affecting the world economies. It would be useful, therefore to revisit the document, in light of these developments. For example, the recent devaluation’s in currencies of competing Far East suppliers has exposed some weaknesses in what Scotland is doing in the electronics industries.

In addressing the consultation document, the difficulties are recognised in balancing economic development with long term opportunities based on high-value, highly skilled but not labour-intensive jobs, against short-term needs of current unemployment. A successful economy, however, needs a broad mixture between the two.

The Changing Economy

Economic value lies in knowledge

Existing indigenous industry needs to be helped to modernise. The general proposition taken in the document is correct but the significance of traditional manufacturing and engineering
appears to be sidelined. Such manufacturing will have to be smart manufacturing and as such it could well find ways of competing in a diversity of hitherto low-tech products as well as the more obvious hi-tech – high value products. Industrial R&D and university patents and IPR are also more prevalent in the manufacturing than the service sectors. Inclusion of manufacturing and engineering in the Strategy document will therefore be important.

Analysing the Scottish Economy

Scotland’s export performance has relied heavily on the strategies of foreign owned companies and the preferential arrangements which their global networks provide. It would be useful to know where Scottish owned companies stood in this activity.

In terms of the inward investment mentioned in the document, disappointingly it has not been an evident source of indigenous opportunities. We still face the ingrained, but improving, traditional perception that somehow commercialisation of academic research is "not quite the done thing". In this context the Technology Ventures initiative has been key in seeking to address this.

With regard to the pockets of success noted in the document, it is important not to be over-optimistic, and challenges and threats should be mentioned. For example, the measures applied to a more strict definition of components of financial services have shown historically that Scotland is, or has been, a significant player in these components. However, there are two worrying trends worth noting: Leeds and Manchester financial institutions are expanding rapidly and claim to have overtaken Scotland in certain activities; and Scotland is losing ownership control to companies elsewhere in the UK or Europe. There are also dangers of back-office jobs being contracted overseas. In describing the Scottish university sector, however, its strength has been underplayed in that it lies not only in its research but also in underpinning the high technology skills base at the graduate level, which is often a deciding factor in the decision to locate.

Regarding the structural weaknesses noted:

  • in terms of the number of global companies per unit of population, proportionality with size of population can be affected by threshold levels of absolute population. Comparison of Scotland with Taiwan, which has a considerably greater population, could therefore be misleading.
  • with regard to the apparent low levels of corporate R&D, the major weakness is that there are few company Headquarters in Scotland, which tend to carry out the R&D. More could be done to assist Scottish units of companies argue their case to do R&D, to their Headquarters.
  • the age distribution in Scotland is shifting towards older people, and there could be mention of how this particular human resource might be made to contribute to the well being of Scotland.Purpose,

Principles and Approaches

The Strategy stresses the broad goal of enhancing the dynamism of the Scottish economy as the principle objective of the Network. This should be welcomed. The challenge for real advance by Scottish business will be to both exploit and withstand macro-economic change. Non Scottish owned businesses will work to their own policies in these circumstances which is another reason for directing resources towards the indigenous segment.

References are also made to previous programmes in the document, but few new ones. In the absence of indicating the new, the implication is that there will be more of the same. It would therefore be useful to include what was achieved previously through these programmes, and how these achievements meet the priority for the future, and then move on to suggest possible future programme changes.

Our Contribution to the Goals for the Scottish Economy

The main functional activities of Scottish Enterprise are the two platforms of training and economic development. The provision of a well-trained labour force and the promotion of a thriving and efficient small and medium-sized enterprise (SME) sector through advice and support are essential to maintaining and improving economic efficiency. These two inter-related provisions could be further emphasized as themes within the Strategy document, if not priorities. It would be useful, however, if the linkages between these two within the Strategy were strengthened, as unless commercial opportunities are generated, many of those benefiting from such education and development must be expected to move elsewhere.

Innovative, Far-Sighted Organisations

Although Scotland is a world leader in academic scientific research it has a disappointing record for exploiting these advances in Scotland. In this respect, the Technology Ventures initiative to promote the commercialisation of the Scottish science base is rightly emphasised, and more needs to be done to fully realise this valuable resource.

In terms of the key industry clusters, the main reasons for the development of a cluster strategy could be further described, recognising that it is difficult to develop an industrial sector unless there are the various supporting elements in place and unless these elements are linked together. This approach also assists in stimulating the growth of businesses originating in Scotland, as distinct from those depending on turn-key inward investment projects. It would also be useful if the reasons were provided for the pilot cluster industries selected. Given the recent factory closures, and the massive devaluations in currency of competing Far East suppliers, a focus on certain sectors of the semi-conductor industry would seem to leave Scotland vulnerable and will need a convincing argument for differential support. Scotland needs to focus on areas where it can make a difference, and in this respect the outcomes of the Foresight programmes would be relevant.

It would be useful if the document gave indications as to the providers of the insight and information mentioned which will be helping develop organisations in a changing environment. It will be important for it to be available to the 100,000 small VAT registered businesses in Scotland, given they constitute the key grouping of indigenous companies.

The Strategy document makes much of internationalization in Scotland's economy, but fails to mention business connections with the rest of the UK. While more needs to be done on the international than the UK front, it would be advantageous if links of all kinds with firms external to Scotland were focused on. This is also going to be a key area that will need to be addressed with the advent of a Scottish Parliament. The emphasis on global companies also sidelines the value in creating successful and profitable companies in general, whether or not they operate globally.

Positive Attitudes to Learning and Enterprise

In terms of stimulating demand for learning, more could be said about the Scottish Learning Foundation if the learning community, of further and higher education institutions, were to respond. It would also need to emphasise the added value of the Foundation in the context of the existing University for Industry, NGFL, the People’s Network, the Campaign for Learning, ECLO etc.

Competitive Place

Within the Strategy document, the statements on physical business structure could be further developed to set out a clear policy in the context of the private sector. The Strategy document should include the goal of promoting a healthy industrial land and property market.

Overall

While the consultation document sets out a national industrial strategy for Scotland, the background to Scottish Enterprise will not be known to all. If the intention were to use this document to promote a place for Scottish Enterprise in this strategy, it would be useful to provide more detail on its roles and responsibilities (perhaps in an annex). This would then assist in highlighting where Scottish Enterprise Network’s comparative advantages and access to resources lie in relation to the future needs for Scottish industry.

The Royal Society of Edinburgh looks forward to continued partnerships with Scottish Enterprise, and would be willing to continue to help in its strategy review.

Further information is available from the Research Officer, Dr Marc Rands

 

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