Strategic direction to the Enterprise Networks and an enterprise strategy for Scotland
growing businesses
A culture of enterprise and more businesses of scale
Challenge
Entrepreneurial attitudes, creativity and drive are increasingly differentiators that lead to success. These attitudes and behaviours are not only relevant to rates of business start-ups but also to innovation in established businesses, the public and voluntary sectors and our education establishments.
The rate of start-ups is an indicator of potential for economic growth. A high rate of business births drives up levels of competitiveness and productivity. But Scotland's business start-up level is low compared to the rest of the UK and many of our international competitors.
However, increasing new business starts are not enough to impact significantly on overall productivity. There remains significant scope to improve productivity levels in established businesses and, while Scotland has successful, innovative businesses, we lack a critical mass of larger businesses. A key challenge is growing and sustaining businesses of scale- both nationally and relative to others in their local area. Level of ambition and management capability can be among the principal barriers to growth.
Access to finance continues to be a barrier to growth for some companies. Businesses can face difficulties in accessing risk capital, e.g. when there is a long lead time before returns on investment are realised in R&D-intensive industries. Approaches are needed that work alongside existing private sector sources of finance to ensure that the needs of growing businesses are met.
Support for businesses needs to ensure maximum impact and achieve value for money. This will continue to require segmentation of the business base with information and advice widely available but resources focused on where there is the greatest potential contribution to the economy.
Levers
Our education system has a leading role in developing the skills, experience and behaviours which support creativity and entrepreneurship. Careers Scotland will continue to support education providers in actively developing these competencies.
The Networks will encourage and support business start-ups, focusing on ease of access and quality information and advice. In doing so, they should work with partners to ensure a co-ordinated approach, through the Business Gateway and First Stop. The Networks will also focus on growing our entrepreneurial base through working with groups that are under-represented, including women, young people, ethnic minorities and those in disadvantaged areas. A Scottish manufacturing advisory service will assist the managers of SMEs to access specialist advice, rooted in practical experience and expertise, to address issues including strategy and lean production in order to improve competitiveness in the global market.
Start-ups with high growth potential should be identified and supported further, for example, in raising finance and developing market opportunities. Help for businesses in raising finance will be provided through advice, business start-up grants for young people and assisting access to equity funding (including the successful Scottish Co-investment Fund).
Existing businesses must also be able to access information through clear channels: Business Gateway in the Scottish Enterprise area and the local enterprise company in the Highlands and Islands area. In providing advice and support, the Networks should target businesses with the potential to achieve or sustain scale through account management. Programmes tailored to the needs of the customer may include workforce and leadership development, accessing private sector investors and advice on internationalisation. The Networks must ensure companies are aware of support available from other parts of the public sector, such as Regional Selective Assistance (RSA). They will also take account of the economic, social and community benefits of social economy organisations, providing support to those organisations with a clear commercial orientation.
Increased innovation and commercialisation of research
Challenge
Productivity and competitiveness increasingly depend on the ability to generate and exploit knowledge. But business expenditure on R&D in Scotland is still considerably below the UK average. More generally, businesses need to be aware of, and adopt, new technologies and processes in order to stay ahead of their competitors and meet changing customer requirements. Opportunities to innovate occur at all stages of product and service life cycles and in the processes used to support delivery. But while innovation is difficult to measure, the evidence suggests that Scottish performance is poor compared with other EU countries.
Industry must increase internal knowledge generation and seek out and access external ideas wherever they exist. Universities should be helped to package the knowledge generated by their research and to bring it to the attention of business. Equally, businesses must articulate their demand for such knowledge and seek to exploit the commercial potential of university-produced research. This requires close co-operation, market understanding and a desire to maximise the impact of high quality research on product and processes.
Levers
The Enterprise Networks and the Executive are able to provide financial support towards business R&D and must work closely together in doing so. The Enterprise Networks also have a role in bringing together businesses with the desire to innovate with those who have knowledge to help each understand the capabilities and requirements of the other. Real opportunities exist in extending the ability of existing businesses to "pull" ideas and experience from our research base. And our universities and research institutes should continue to build on mechanisms to "push" research and technology in ways more easily understood and accessible by the business base, particularly SMEs. Consequently, there will be a focus on increasing commercialisation opportunities and increasing business awareness of what the research base has to offer. The three Intermediary Technology Institutes will increase the availability to businesses of market-focused technology, through carefully directed commercially orientated research.
Assisting more firms to innovate is a key component of effective business support. Companies should be encouraged to consider where knowledge could be applied, where it exists and how to access and use it. Benefits can also be gained from raising businesses' awareness of their intellectual assets and how to protect and exploit them.
Success in key sectors
Challenge
Scotland needs to:
- achieve maximum impact from sectors where Scotland should have competitive advantage through, for example, scale of existing players, quality and product differentiation (e.g. financial services, energy, food and drink and tourism)
- create an environment where potential high growth sectors can continue to emerge, flourish and make an impact on the national economy (e.g. creative industries, life sciences and renewable energy)
- ensure that sectors important to local economies successfully transform to meet the challenge of changing trading conditions both locally and globally
Levers
Business support is available across all sectors. But working with specific sectors can be an efficient and effective way to increase productivity and growth. Support at sector level should focus on understanding industry level issues and opportunities through close co-operation with those in the industry. Where they are justified by potential benefits, specific action plans can draw on the Networks' ability to support, for example, skills development, property provision and partnering initiatives. In these instances, the Networks can also support business networks which promote innovation, quality enhancement and shared good practice. It is important that decisions on the nature of sector support are clearly communicated and understood and that the approach taken ensures that business growth opportunities outside sectors with specific plans are not missed.
Use of e:business to create business advantage
Challenge
Scottish companies were relatively early adopters of basic e:business applications such as on-line trading. These early applications have become increasingly commonplace and other countries have caught up and passed Scotland's penetration levels. However, advances in the technologies that support e:business (such as broadband access, wireless communications, enhanced networking and growth of personal computing as well as changing customer attitudes) create new opportunities to:
- develop business models that radically alter existing approaches to doing business or even create new market opportunities
- work with partners across borders or access new geographic markets
- re-engineer existing processes to reduce costs and/or improve customer service
Levers
Company use of e:business needs to move from a position of awareness and early adoption to one where it is an integral part of how business is done. Support from the Enterprise Networks in this area must integrate with wider business support and focus on how technological advances can create business advantages, how its use fits with the specific circumstances of a given business and how to ensure benefits are realised in practice.
skills and learning
Improve the operation of the Scottish labour market
Challenge
The ability to identify and respond quickly and flexibly to changing demands from employers is a characteristic of an effective labour market. To achieve this, a culture of lifelong learning amongst those in the market and those involved in supplying the labour market is needed. Timely and high quality information on the labour market must be available, especially when requirements are changing as a result of growth, changing business practices or technical advances. Current and future requirements need to be articulated to individuals, educational establishments and those involved in career counselling, curriculum development, skills development and policy making. Enhanced skills in areas that can transfer across industry sectors, including problem solving, team work, communications, sales and marketing, are all highly important when the labour market demands flexibility. The development of high quality business leadership and management skills are also crucial to success in a changing business environment.
Levers
The Executive's lifelong learning strategy: Life Through Learning; Learning Through Life sets out objectives and delivery mechanisms. Careers Scotland and Futureskills Scotland are part of the Enterprise Networks. They will continue to work with the Sector Skills Councils, JobCentre Plus and others to help individuals, employers, policy makers and education and training providers better understand the labour market and make appropriate investment in skills development. For people of all ages, Careers Scotland will help build an understanding of the changing demands of the labour market as well as develop the skills and attitudes needed to plan their careers. The Enterprise Networks will also help inform the work of learning providers, including schools, colleges and universities, to ensure that people get the skills - both technical and core - needed to match market demand and adapt successfully to changes in demand. Where skills gaps are shown to exist, the Enterprise Networks will take action to address them.
The best start for all our young people
Challenge
All young people need to be equipped with the skills, advice and support needed to allow them to contribute to, and benefit from, economic growth and to underpin lifelong learning. From the earliest years in education, skills, knowledge and attitudes need to be developed that equip individuals to achieve their potential in the workplace. Once in the labour force, young people need access to quality and relevant learning, training and experience to give them the skills, competencies and confidence on which to build their careers. Services and support should be centred on the individual with adequate provision to address the range of barriers to entering the labour market faced by the most vulnerable.
Levers
Enterprising attitudes and an understanding of the world of work are being developed as part of the education system through initiatives including Determined to Succeed - the Executive's enterprise in education strategy. Careers Scotland will play a supporting role. Vocational training of sufficient quality to allow Scotland to compete with the best in the world will be offered by the Networks, working with employers and colleges through Modern Apprenticeships. Modern Apprenticeships and industry-standard training of similar quality will be key in helping young people enter and become established in the labour market. Support for those young people facing multiple barriers to employability will be a priority and will require close co-operation and effective communication between a range of agencies, including specialist support services, to ensure the needs of the individual are met.
Developing people who are in work
Challenge
Motivated, high quality and appropriately skilled people are a fundamental requirement in delivering innovation, increased productivity and growth. Scotland's record in getting people into apprenticeships, college and university is amongst the best in the world but there is still a challenge in getting people to continue developing their skills and learning once in work. The level of investment in training by businesses varies considerably and training is not always sufficiently well aligned with business objectives to generate real benefits. Training courses are not always structured in ways that maximise the potential benefit for businesses or individuals and there is a need to ensure delivery in ways that fit with business operating environments and that provide value to the individual in their career. In particular, more and better training is needed in building confidence and skills amongst leaders and managers.
Levers
The Enterprise Networks will support businesses to take a strategic approach to the development of their people. A systematic approach, such as that provided through Investors in People, is needed to better understand business requirements and to identify where training is necessary to remove obstacles to improved performance. Modern Apprenticeships will be offered to support workforce development when a business is growing or changing. Initiatives will be put in place to develop entrepreneurs and business leaders as part of the drive to create and grow businesses. Effective career planning support, delivered by Careers Scotland, will help achieve career progression, increase the long-term employability of individuals and reduce the risk of skills becoming obsolete. Trade unions, business organisations and others with influence in the workplace have a key role to play in encouraging and supporting skills development.
Narrowing the gap in employment and reducing economic inactivity
Challenge
Employment rates in Scotland are at historically high levels and unemployment rates have fallen, although there are still pockets of high unemployment and some social groups remain significantly under-represented in the labour market. Moreover, unemployment data hide economic inactivity where individuals, for a variety of reasons, are not looking for work. Over 600,000 people of working age are currently inactive in Scotland, over 100,000 of them in Glasgow alone. This level of inactivity contributes to social exclusion and acts as a barrier to growth. The causes of economic inactivity are varied and complex. Addressing them requires support, advice and training focused around individual needs. The opportunity to boost the output of the economy through increasing the proportion in work is significant.
Levers
Increasing economic activity requires action by a number of agencies. The barriers which individuals face must be addressed, as must the special circumstances faced by disabled, ethnic minority, older, disaffected and disadvantaged members of the community.
The Executive is currently developing an employability framework that will set out objectives and a basis for local agreements between different parts of the public sector as to their roles. The aim will be to create an environment that allows each local partner to play to its strengths and which ensures individuals can pass smoothly along the path from inactivity to employment. The Enterprise Networks must work in partnership with other agencies to ensure that all clients, from those with multiple barriers and furthest from the job market to those requiring advice and training to get them into work, can access an integrated portfolio of services that helps them progress from their current situation to employment.
The Enterprise Networks will focus on supporting individuals where there is a clear employment objective. In doing so and in directing their activity to maximum economic impact, the Enterprise Networks' support must reflect both the difference in the nature and scale of unemployment and inactivity and the difference in opportunities for employment between different parts of the country. Their activity may therefore vary from area to area.
global connections
Increased involvement in global markets: taking Scottish knowledge to the world and bringing the world's knowledge to Scotland
Challenge
Many Scottish businesses urgently need to broaden their outlook and operations by taking advantage of the full range of ways to generate value from Scottish knowledge around the world. Scotland cannot rest on exporting, important though that remains. We need to be more involved in international collaborations and partnerships and increase our own overseas direct investments. We want to see more Scottish-headquartered companies becoming truly global in their outlook and operations, making a more substantial contribution to the economic and social development of the country. We also want to see companies from outside Scotland not only locating operations here, especially those that generate high value jobs, but seeing the benefits of sharing knowledge with Scottish companies and universities to mutual advantage. We want to see them buying from Scotland and choosing to invest in Scotland.
Levers
The Enterprise Networks should work closely with potential multinational players to help them develop and implement globalisation strategies. They should also work with exporters to help them better penetrate existing markets, access new ones and develop their capacity to become more competitive suppliers to overseas markets. Scottish Development International (a joint body run between the Executive and Scottish Enterprise) should work with companies headquartered outside Scotland, especially in key industries, in order to help them enter partnerships with Scottish companies, to locate high value activities here, to buy from Scotland and to invest here. New measures will be introduced to improve capacity in product launch and marketing.
Scotland to be a globally attractive location
Challenge
Scotland needs to be a world class location, not just to attract but also to retain talent, businesses and finance. We must make the most of the attractive places we have. A specific challenge is to regenerate and thus transform places which offer real opportunities but which are not contributing their full economic potential and which potentially damage Scotland's attractiveness.
In making Scotland a more attractive place to work and do business, we must take account of the role that cities play in driving the economic prosperity of their regions. But we also need to recognise the complementary roles of other places - urban and rural - in developing, retaining and attracting the businesses and the talent which are needed for success.
We need to continue to project an image of Scotland overseas that will be persuasive in alerting people and businesses outside Scotland to the opportunities here. Good design is important in presenting an image of a forward-looking and successful country and in creating successful places in which people want to live and work.
Levers
A wide range of factors, most beyond the scope of this strategy but discussed in FEDS, impact on Scotland's ability to compete in terms of quality of place. These include infrastructure, efficiently run public services and an effective planning system, including the availability of housing. They also encompass less tangible issues associated with quality of life: the natural environment, the cultural life of the nation and civic pride. In allocating resources, effective spatial prioritisation is needed to ensure maximum impact. The Networks have an important role to play in offering views on priorities in these areas from an economic development perspective. The Enterprise Networks' particular role in terms of delivery is to work with the private sector where that is necessary to ensure an effective supply of industrial and commercial property.
Area regeneration projects require co-ordinated and integrated action by a number of partners. Scottish Ministers expect the Networks to be the lead body in representing Executive interests in large scale regeneration projects.
Connecting to the rest of the world
Challenge
Significant progress has been made in extending digital communications infrastructure and in air and sea route development. But the challenge remains to ensure adequate connectivity to support the current and future flows of knowledge and people that must underpin our economy. Further roll-out of digital infrastructure is needed to ensure that more remote communities can communicate and do business electronically.
Levers
The Executive and the Enterprise Networks will continue to work with commercial operators to help ensure access to, and effective use of, broadband connections across Scotland. This will include stimulating demand and providing support for infrastructure roll-out where appropriate. Investment in the development of new direct air routes, which improve business links and encourage inward tourism, will continue with the aim of securing the greatest economic return for Scotland. The value of digital and transport connections will be reinforced through promotion of Scotland as a well connected location.
More people choosing to live, study and work in Scotland
Challenge
Scotland's demographic trends are not on our side. An ageing and falling population and continuing migration of talented people work against economic development. Diversity of ideas, experiences and cultures is increasingly important in stimulating the creativity and innovation that drives economic growth. We need to offer the jobs, quality of life and opportunities to encourage the talented to stay, those with experience to return and others to come to Scotland for the first time. Global companies, whether home-grown or from abroad, bring an infusion of talent which will benefit the economy.
Levers
Population decline can be addressed, as the experience of the Highlands and Islands demonstrates. Scotland has many assets, including the reputation of our higher education institutions, our education systems and our cultural heritage. Initiatives such as Scotland's International Image build on Scotland's traditional strengths and raise awareness of Scotland as a modern, connected, small country. The Enterprise Networks' international marketing and selling activities must support and build on this. The Executive's Fresh Talent initiative has begun to address Scotland's demographic trends and talent pool. The Networks have a supporting role to play in developing Scotland's key industries and businesses to provide high quality employment and business opportunities. They also provide key elements of the Executive's International Strategy, such as tapping into the network of Scots around the world, including through globalscot and the networks of those in Scotland with connections overseas.