Report on "Business of the Future" Discussion
Host: Christine May MSP, Deputy Convenor of the Enterprise and Culture Committee
Facilitator: Professor Russel Griggs, CBI Scotland, Growing Business Forum
Introduction
Christine May, MSP welcomed the delegates to the discussion session and recapped on the main themes of the opening business presentations in the Parliament. The meeting was asked to consider what would need to happen if the Scottish economy was to achieve the significant growth levels that would allow us to be internationally competitive.
Russel Griggs welcomed everyone to the meeting and stimulated the discussion by considering some of the relevant themes raised in the earlier business presentations. In particular, reference was made to Jim McColl's talk and the opportunity we had to start with a clean sheet of paper. David Milne's talk and the importance of people making things happen was also very relevant.
Summary of Main Points
Scotland's Vision For the Future
- The first topic centred on Scotland's vision for the future and in particular, whether there was a generally understood vision for Scotland - one that was accepted by business, Government and the general public.
- The consensus view was that if politicians and the Parliament had a vision for the future, this was not being well communicated to the public and business community. It would be difficult to obtain a coherent picture from central Government as issues tended to be dominated by personalities and party politics. For example, would there be the political will to carry forward unpopular policies that would be necessary in order to achieve a future vision?
- There were existing strategies and visions for Scotland. Examples were highlighted including "Smart Successful Scotland" and "The Best Small Country in the World". Although most people were aware of these terms, it was less clear whether anyone had looked closely at the steps involved in achieving these goals. There was agreement that industry had to become increasingly involved in pushing this agenda forward. It was not possible to rely solely on Government or the Economic Development Agencies.
- Public sector should provide consistency of support and address important issues such as improving SMEs involvement in the procurement process. However, approaches such as Scottish Enterprises concentration on 6 key industries were questioned. How were they identified and why had they changed over the years? The importance of supporting growing companies in all sectors with consistency was recognised as an important role of the public sector.
- A clear long-term vision was vitally important. Other successful nations were able to establish clear goals and unity on social structure, and communicate these internationally with one voice.
- Scotland's Strengths
- It was clear that Scotland had several key strengths, areas upon which we had the potential to build a successful economy. Scotland was frequently guilty of talking itself down and often without good reason. Comparisons were drawn with Switzerland, a small nation that has gained an international reputation for quality and excellence. Switzerland was viewed as a relatively small nation of "global citizens", identified as people who quietly carried out their business in areas such as high quality precision engineering, but who were also able to trade globally. We had the capacity to build a similar reputation based on important values such as financial probity, science excellence and an outstanding educational system.
- A more positive and confident picture had been emerging since Scottish devolution. There was a feeling that Scotland wanted more of a say and it was increasingly looking towards Europe rather than elsewhere within the UK. In addition, there was a premium on education, foresight on environmental issues and a sense of social conscience. These strengths all helped to make Scotland unique. However, there was a clear need for leadership and the ability to convey this picture to the outside world and to the Scottish public.
Business Confidence
- Business confidence and ambition were a key themes. In Scotland, 98% of businesses employ fewer than 10 people. It was clear that few businesses were making the transition from small to medium-sized and in order to create a vibrant economy we needed more companies of scale, with the confidence and ambition to grow. While the decision to grow or sell a business was always going to be a personal choice, we can provide an economic context which might influence thinking and a vision is key in that it gives that context. This lack of company growth was a significant factor in Scotland losing talented individuals to overseas competitors.
- Issues limiting this growth were considered. Business attitudes emerged as one vitally important factor. Were Scottish firms overly conservative in projecting growth potential and, as a consequence, in setting out their funding requirement? Experience had shown US investors unwilling to invest in a business plan showing $10m growth, but attracted to investing more significantly against an ambitious target of $50m growth. Scottish firms were also more likely to be acquired during a growth phase, rather than looking to acquire businesses themselves. This was largely seen as an issue of confidence.
Manufacturing Future?
- Scotland's inability to compete internationally in high volume manufacturing was universally accepted. Although there were exceptions in certain areas, particularly high margin/low volume goods, there was a need for Scottish firms to identify new ways of remaining competitive. Partnering was one possibility. There was potential for Scotland to partner with other smaller nations (50-100m population) in manufacturing.
- The Scottish whisky industry was a good example of effective partnering between small firms and large organisations in the delivery of a successful route to market. Once again, the issue of confidence and national pride was seen as important in developing these strategic relationships.
- Looking to the future, it was clear that Scotland's businesses would need to retain and maximise their intellectual assets, regardless of where manufacturing is undertaken. Increasing business investment in R&D would also be vitally important.
Scotland's Overseas Image
- The importance of leadership was highlighted when considering how other nations presented their image and strengths internationally. Ireland was highlighted as a good case study of a nation that successfully sold a "united picture" internationally, resulting in outstanding success in securing inward investment. The example was cited of a speech given by the mayor of Belfast to an audience in Boston. During his address he only made reference to Ireland and did not highlight Belfast specifically, in the firm knowledge that an element of inward investment would locate in Belfast. Although Scotland had a good reputation for quality of life, we had a tendency to act regionally and without a single voice on the international stage.
Sales and Marketing - a Key to Success
- Perhaps associated with the issues of confidence highlighted earlier, Scotland lacked core strengths in sales and marketing. Economic growth would only achieved through profitable business and selling product is central to the delivery of company profits. A significant programme was required to address this skills deficit. Possibilities may involve placement of young people in large successful companies, where there would be opportunity to gain hugely valuable experience in the key areas of brand awareness and marketing on a global scale.
Professor Russel Griggs
CBI Scotland, Growing Business Forum