Innovation - A Driver for Innovation - A Driver for Economic Growth In ScotlandEconomic Growth In Scotland

PAUL LEWISPAUL LEWIS

23 April 201023 April 2010

Build a globally competitive business

environment

Grow globally competitive sectors

Grow globally competitive companies

An economic

development agency

that helps Scotland…

Scottish EnterpriseScottish Enterprise

Working with partners

to help achieve the

Scottish Government’s

purpose of increasing

sustainable economic

growth

Low Business R&D

Few Companies of Scale

Low Productivity

Uncompetitive Demand Side

Asset Performance

Creativity15% UK - HEI Patents

National Resources20% Euro wind/tidal sub-sea capability:

life science excellence

Competitive Supply Side

Existing Assets

Double

To Achieve OECD/Top Quartile

Scotland’s Economic ChallengeScotland’s Economic Challenge

Double

15%

Sweden 3.8%

Finland 3.5%

OECD Average 2.2%

UK 1.8%

Scotland 1.6%

Investment

DemandPull

Risk Component

>Business Sectors

>Companies of Scale

>High Growth Companies

= HIGH GROWTH= HIGH GROWTH

Total Investment Total Investment as % GDPas % GDP

BERD as BERD as % Total Investment% Total Investment

74%

71%

68%

61%

38%

Research & Development Investment Research & Development Investment

Productivity ChallengeProductivity Challenge

Participation

Drivers of ProductivityDrivers of Productivity

PRODUCTIVITY

Enterprise Innovation

Investment

CompetitionSkills

Growth

Population

Productivity+ 15% (= +£18.7bn GDP)

Business base+ 32,000 VATbusinesses

Business R&Dspend

+£760 million pa

Exports+£380m pa

The EvidenceThe 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

Does Innovation Produce Growth?Does Innovation Produce Growth?

Scottish Government’s Economic StrategyScottish Government’s Economic StrategyIncreased 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 IdeasInnovation - The Successful Exploitation of New Ideas

Creation of Customer or Citizen Value.

SE Approach to InnovationSE Approach to Innovation

CommercialisationCommercialisation

Clear line of sight to the market Market-based approach Maximising the sunk investments Focus on “commercial champions”

“Addressing significant market opportunities”

Business InnovationBusiness Innovation

Broaden innovation beyond science and technology New Visible Innovation Service Increasing the pool of “innovative active”

“The successful exploitation of ideasfor business growth”

Innovation SystemInnovation 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”

Scottish Enterprise Innovation PolicyScottish Enterprise Innovation Policy

Web, InfoGuides and

ToolsPromotionPromotion

AdviceAdvice

SupportSupport

WinningThrough

Innovation Events

InnovationSupport

GrantR&D Grant

InnovationSpecialists

InnovationSector Support

SMART

InnovationPartners

Collaboration

EnterpriseEurope

Scotland

Innovation Celebration

Get business to do more innovationGet more business to do innovation

Business InnovationBusiness InnovationBusiness InnovationBusiness 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”

Design, Services

& BusinessModel

Innovation

Industry-SpecificSupport

Business InnovationBusiness Innovation

Broaden innovation beyond science and technologyNew Visible Innovation ServiceIncreasing the pool of “innovative active”

“The successful exploitation of Ideas for business growth”

Business InnovationBusiness Innovation

Web, InfoGuides and

ToolsPromotionPromotion

AdviceAdvice

SupportSupport InnovationSupport

GrantR&D Grant

InnovationSpecialists

InnovationSector Support

SMART Collaboration

EnterpriseEurope

Scotland

Design, Services

& BusinessModel

Innovation

Industry-SpecificSupport

WinningThrough

Innovation Events

InnovationPartners

Innovation Celebration

Winning Through InnovationWinning 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

Business InnovationBusiness Innovation

Broaden innovation beyond science and technologyNew Visible Innovation ServiceIncreasing the pool of “innovative active”

“The successful exploitation of Ideas for business growth”

Business InnovationBusiness Innovation

Web, InfoGuides and

ToolsPromotionPromotion

AdviceAdvice

SupportSupport

WinningThrough

Innovation Events

InnovationSupport

GrantR&D Grant

InnovationSpecialists

SMART

InnovationPartners

Collaboration

Innovation Celebration

Industry-SpecificSupport

InnovationSector Support

EnterpriseEurope

Scotland

Design, Services

& BusinessModel

Innovation

Tourism Innovation - +£15MTourism Innovation - +£15M

Web, InfoGuides and

ToolsPromotion

Advice

Support

WinningThrough

Innovation Events

InnovationSupport

Grant

R&DGrant

InnovationSpecialists

InnovationSupport Service

SMART

InnovationPartners

Collaboration

WTIWorkshops

EnterpriseEurope

Scotland

IndustrySpecificSupport

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”

InnovationCase Studies

Innovation Celebration

Culture ofInnovation

Design, Services &Business

ModelInnovation

R&D Company Support£30M invested – generating £400M of R&D.

Business InnovationBusiness Innovation

CommercialisationCommercialisation

Clear line of sight to the market Market-based approach Maximising the sunk investments Focus on “commercial champions”

“Addressing significant market opportunities”

Business InnovationBusiness Innovation

Broaden innovation beyond science and technology New Visible Innovation Service Increasing the pool of “innovative active”

“The successful exploitation of ideasfor business growth”

Scottish Enterprise Innovation PolicyScottish Enterprise Innovation Policy

Per Patent

Per $1m of Royalties

Per Spinout

Scotland

Scotland

Scotland

USA

USA

USA

2.9mn

4.6mn

52.1mn

40.8mn

48.2mn

131.7mn

Cost per output in US$ Mns

Dead

< 15 FTE

>50 FTE

30%

55%

5 Year Performance: Scotland (%ages)

SE commercialisation interventions

No.

of c

ompa

nies

Projected t/o

< £

1mn

£1m

n -

£5m

n

£5m

n -

£20m

n

£20m

n +

3

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

Commercialisation - How We CompareCommercialisation - How We Compare

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 more where we have proven market lead and capacity

to secure economic results in Scotland - earlier stop/go decisions.

The ChallengeThe Challenge

CommercialisationCommercialisation

Market-based integrated approach Increasing focus on commercial champions Consistent SE approach Maximising the sunk investments

“Addressing significant market opportunities”

CommercialisationCommercialisation

CommercialisationCommercialisation

Clear line of sight to the market Market-based approach Maximising the sunk Investments Focus on “commercial champions”

“Addressing significant market opportunities”

Business InnovationBusiness 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”

Innovation SystemInnovation 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”

Scottish Enterprise Innovation PolicyScottish Enterprise Innovation Policy

Scotland has over 70% of the UK’s tidal power which has been estimated at 13 billion kilowatt hours per annum

Scotland’s position at the end of a long Atlantic

Ocean fetch produces tremendously energetic

waves

Scotland’s Wave and Tidal ResourcesScotland’s Wave and Tidal Resources

£100 Bn investmentUp to 48,000 jobsUp to £38 Bn GVA

R&D

SFC Research Pools

Offshore & Sub-Sea Expertise

Renewables Innovation for ScotlandRenewables Innovation for Scotland

Test & Demonstration

Energy Infrastructure

30,00 employed in sector

Large clinical trials infrastructure - commercial and academic

Strengths in major disease areas:- oncology; diabetes; cardiovascular medicine; inflamation

Scotland’s Life Science IndustryScotland’s Life Science Industry£1.3 billion GVA £1.3 billion GVA

Edinburgh Bio Quarter; Edinburgh Bio Quarter; Centre for Regenerative Medicine;Centre for Regenerative Medicine;

• 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.

ConclusionsConclusions

Innovation - A Driver for Innovation - A Driver for Economic Growth In ScotlandEconomic Growth In Scotland

PAUL LEWISPAUL LEWIS

23 April 201023 April 2010