Innovation - A Driver for Economic Growth In Scotland

1. Innovation - A Driver for Economic Growth In Scotland PAUL LEWIS 23 April 2010

2. Build a globally competitive business environment Grow globally competitive companies Scottish Enterprise Grow globally competitive sectors An economic development agency that helps Scotland… Working with partners to help achieve the Scottish Government’s purpose of increasing sustainable economic growth

3. Scotland’s Economic Challenge To Achieve OECD/ Top Quartile Existing Assets Asset Performance Creativity 15% UK - HEI Patents National Resources 20% Euro wind/tidal sub-sea capability: life science excellence Low Business R&D Few Companies of Scale Low Productivity Double Double 15% Competitive Supply Side Uncompetitive Demand Side

4. Research & Development Investment Total Investment as % GDP BERD as % Total Investment Demand Pull >Business Sectors >Companies of Scale >High Growth Companies Investment Risk Component = HIGH GROWTH

5. Productivity Challenge

6. Growth Drivers of Productivity PRODUCTIVITY Productivity + 15% (= +£18.7bn GDP) Participation Population Enterprise Innovation Investment Skills Competition Business base + 32,000 VAT businesses Business R&D spend +£760 million pa Exports +£380m pa

7. Does Innovation Produce Growth? • The Evidence • “The findings of the Index to date show that innovation may be responsible for the lion’s share of the UK’s productivity growth from 1990-2007. Two-thirds of UK private sector productivity growth between 2000 and 2007”. NESTA Innovation Index 2009. • Innovation is strongly linked to business growth across a range of sectors. It may come as no surprise that innovative software firms enjoyed a much faster growth rate than non-innovative ones (13% average revenue growth per year compared to just over 0%). • Council of Economic Advisors report - Productivity and Innovation. • “Innovation Nation report” - McKinsey

8. SE Approach to Innovation Scottish Government’s Economic Strategy • Increased priority given to Innovation & Commercialisation, recognised as a key driver of competitiveness • Specific priorities to increase Scotland’s performance on innovation, beyond the focus on science & technology - skills & business models as well as product and services. • Strengthen links between Scotland’s research base & business innovation to address low levels of R&D. • Utilisation of ICT. Innovation - The Successful Exploitation of New Ideas Creation of Customer or Citizen Value.

9. Scottish Enterprise Innovation Policy • Business Innovation • Broaden innovation beyond science and technology • New Visible Innovation Service • Increasing the pool of “innovative active” • “The successful exploitation of ideas • for business growth” • Commercialisation • Clear line of sight to the market • Market-based approach • Maximising the sunk investments • Focus on “commercial champions” • “Addressing significant market • opportunities” • Innovation System • Improve the business environment for Innovation in Scotland’s key sectors • Innovation is industry-specific • “Building a sustainable innovation • system in our key sectors”

10. Business Innovation • Business Innovation • Broaden innovation beyond science and technology • New Visible Innovation Service • Increasing the pool of “innovative active” • “The successful exploitation of • Ideas for business growth” Get business to do more innovation Get more business to do innovation Web, InfoGuides and Tools Winning Through Innovation Events InnovationPartners Innovation Celebration PromotionAdviceSupport Innovation Specialists Innovation Sector Support Enterprise Europe Scotland Design, Services & Business Model Innovation Innovation Support Grant R&D Grant SMART Collaboration Industry- Specific Support

11. Business Innovation • Business Innovation • Broaden innovation beyond science and technology • New Visible Innovation Service • Increasing the pool of “innovative active” • “The successful exploitation of • Ideas for business growth” • Winning Through Innovation • Stimulating a culture of innovation • 1,200 delegates in 2 years • Speakers including:- • Barry Gibbons, former Global CEO of Burger King • Brian Williamson, Chief Executive, TIGER EYE • Helen Battersby, ex-Sales and Marketing Director, Gleneagles Hotel Web, InfoGuides and Tools Winning Through Innovation Events InnovationPartners Innovation Celebration PromotionAdviceSupport Innovation Specialists Innovation Sector Support Enterprise Europe Scotland Design, Services & Business Model Innovation Innovation Support Grant R&D Grant SMART Collaboration Industry- Specific Support

12. Business Innovation Tourism Innovation - +£15M • Business Innovation • Broaden innovation beyond science and technology • New Visible Innovation Service • Increasing the pool of “innovative active” • “The successful exploitation of • Ideas for business growth” Web, InfoGuides and Tools Winning Through Innovation Events InnovationPartners Innovation Celebration PromotionAdviceSupport Innovation Specialists Innovation Sector Support Enterprise Europe Scotland Design, Services & Business Model Innovation Innovation Support Grant R&D Grant SMART Collaboration Industry- Specific Support

13. Business Innovation • Business Innovation • Broaden innovation beyond • Science and technology • New Visible Innovation Service • Increasing the pool of “Innovative active” • “The successful exploitation of ideas • for business growth” R&D Company Support £30M invested – generating £400M of R&D . PromotionAdviceSupport Winning Through Innovation Events InnovationPartners InnovationCase Studies Innovation Celebration Web, InfoGuides and Tools Design, Services & Business Model Innovation Innovation Specialists Innovation Support Service Enterprise Europe Scotland WTI Workshops Culture of Innovation Industry Specific Support InnovationSupportGrant SMART Collaboration R&DGrant

14. Scottish Enterprise Innovation Policy • Business Innovation • Broaden innovation beyond science and technology • New Visible Innovation Service • Increasing the pool of “innovative active” • “The successful exploitation of ideas • for business growth” • Commercialisation • Clear line of sight to the market • Market-based approach • Maximising the sunk investments • Focus on “commercial champions” • “Addressing significant market • opportunities”

15. Commercialisation - How We Compare Strong supply of IP:- • 2008 Research Assessment • Universities efficiency report (Top 10 US vs Top 8 Scotland) • Comparable 5-year performance with Denmark • But we are not achieving outcomes and impacts sought

16. The Challenge • Challenge is to significantly increase the impact of initiatives. • Some lessons:- • Impacts are highly concentrated - few firms deliver. • Focus resources: market sectors; “bigger” projects, increase chance of success. • Greater commercial focus - from the outset and on people dimension. • Don’t incorporate too soon - wait until the technology is sufficiently mature and market opportunity clear. • Invest morewhere we have proven market lead and capacity to secure economic results in Scotland - earlier stop/go decisions.

17. Commercialisation • Commercialisation • Market-based integrated approach • Increasing focus on commercial champions • Consistent SE approach • Maximising the sunk investments • “Addressing significant market • opportunities”

18. Scottish Enterprise Innovation Policy • Business Innovation • Broaden innovation beyond science and technology • New Visible Innovation Service • Increasing the pool of “innovative active” • “The successful exploitation of • Ideas for business growth” • Commercialisation • Clear line of sight to the market • Market-based approach • Maximising the sunk Investments • Focus on “commercial champions” • “Addressing significant market • opportunities” • Innovation System • Improve the business environment for Innovation in Scotland’s key sectors • Innovation is industry-specific • “building a sustainable innovation • system in our key sectors”

19. Scotland has over 70% of the UK’s tidal power which has been estimated at 13 billion kilowatt hours per annum Scotland’s Wave and Tidal Resources • Scotland’s position at the end of a long Atlantic Ocean fetch produces tremendously energetic waves

20. Renewables Innovation for Scotland SFC Research Pools Energy Infrastructure Test & Demonstration R&D Offshore & Sub-Sea Expertise £100 Bn investment Up to 48,000 jobs Up to £38 Bn GVA

21. Scotland’s Life Science Industry £1.3 billion GVA Edinburgh Bio Quarter; Centre for Regenerative Medicine; • 30,00 employed in sector • Large clinical trials infrastructure - commercial and academic • Strengths in major disease areas:- oncology; diabetes; cardiovascular medicine; inflamation

22. Conclusions • Innovation - the Challenge and the Solution • Critical we encourage more companies to engage in innovation – stimulate demand. • “Raising the Bar” on commercialisation outcomes • Importance of building Innovation “partnerships” to deliver “system level” change in sectors • Role for Knowledge Exchange – beyond IP - skills, connections, knowledge/culture.

23. Innovation - A Driver for Economic Growth In Scotland PAUL LEWIS 23 April 2010