1 THE STEP CHANGE BUSINESS-UNIVERSITY COLLABORATION POWERING SCOTTISH INNOVATION High Level Summary of the Final Report of the Growing Value Scotland Task Force Conclusions and Recommendations May 2016
2 03 The National Centre for Universities and Business The National Centre for Universities and Business develops, supports and promotes world-class collaboration between universities and business across the UK. We are: Led by leaders and guided by our networks of universities and business; Informed by research providing independent, myth-busting analysis; Digital innovators and curators of opportunities for universities, business and government; Change managers, through our Task Forces which tackle talent and innovation challenges. Universities are first and foremost designed to achieve a new understanding of natural phenomena and technologies: in this task they are naturally inventive. Conversely, in modern free market economies, it is firms that have the incentives and governance structures to make innovation their central goal, and are expected to be the almost exclusive sources of innovation. Foray and Lissoni (2010)1 1 Foray D. and Lissoni F. (2010) University research and public-private interaction, in Handbook of the Economics of Innovation, Handbooks in Economics, Elsevier. A National Centre Task Force brings together leaders from universities, government and business to focus on a particular economic sector or issue. We work together to identify problems, and we examine issues in depth. Dr David Docherty Chief Executive
Innovation is a source of profit so, by definition, businesses must be good at it. GVS research programme participant The Challenge The Task Since the industrial revolution, innovation has been a significant driver of Scotland s economy. However, the global innovation landscape is now changing at a remarkable pace and the Scottish economy and its innovation systems must evolve rapidly to respond. In 2013, Scotland spent just over two billion pounds on research and development (R&D) 2. Half of this funding originated from higher education institutions thereby highlighting the extraordinary strength of Scotland s university sector. Scotland must harness the world class creativity and inventiveness of its universities to bring about transformational innovation within its businesses and create economic growth and jobs. To achieve competitive edge at the forefront of global innovation, it is vital that Scotland has a step change in innovation. Responding to this challenge, the National Centre for Universities and Business established the Growing Value Scotland Task Force in mid-2014. Building on the UK-wide Growing Value Task Force 3, the Growing Value Scotland Task Force aimed to make recommendations based on the needs of the Scottish economy and the capabilities of Scottish universities by examining both regional and sectoral issues of relevance to collaboration in Scotland. This is a high level summary of the final report of the Growing Value Scotland Task Force which is available at www.ncub.co.uk/gvsfinalreport The Growing Value Scotland Task Force was created to explore the ways in which inventiveness and graduate talent in universities can be translated into jobs and growth in the Scottish economy. It was led by senior business executives, university principals and policy makers from across Scotland and the UK, and coordinated by the National Centre for Universities and Business. The Task Force sought to: Place Scotland s public and private sector research and innovation in an UK, EU and global context through a research programme that analysed expenditure on R&D, and broader indicators of innovation spend, by geographical region and by industrial sector. Promote an understanding of the challenge to deeper synergies between public and private sector research and innovation in Scotland, in part through deep dives into six sectors. Identify ways of connecting the university and public innovation system to the supply and value chains of major employers in Scotland, and to small and growing companies. 2 Office for National Statistics, UK Gross Domestic Expenditure on Research and Development, 2013 http://bit.do/nationalarchives-gov-uk 3 Docherty, D. et al., (2014) Growing Value: Business-University Collaboration for the 21st Century ; NCUB Publications. www.ncub.co.uk/reports/growing-value-book.html
06 07 The People The Task Force has been led by Prof Sir Ian Diamond, Principal and Vice-Chancellor of the University of Aberdeen, and Rob Woodward, Chief Executive of STV Group plc. They were advised by a senior level Executive Group who met monthly and whose purpose was to advise on the remit, scope and approach of the Task Force, to lead the research agenda and provide expert input to help shape the final output. Task Force Co-Chairs Task Force Executive Group Prof. Sir Ian Diamond Principal and Vice-Chancellor of the University of Aberdeen Mr Stephen Blackman Group Economist, Royal Bank of Scotland Prof. Sir Pete Downes Principal and Vice-Chancellor of the University of Dundee Mr Rob Woodward Chief Executive, STV Group plc. Dr. David Docherty Chief Executive, National Centre for Universities and Business Prof. Anton Muscatelli Principal and Vice-Chancellor of the University of Glasgow An independent research programme provided a solid evidence base from which the Task Force drew its conclusions and recommendations. The Phase I and II research programmes were led by Prof. Richard Harris, Professor of Economics at University of Durham and Graham Blackett, Director of BiGGAR Economics, respectively. The Steering Group met six times over an 18-month period. This group advised on the research agenda, provided expert insight into the issues and challenges, made recommendations, and guided the final output. Louise Alford Director of Business HR BSkyB David Brown Partner PricewaterhouseCoopers Alice Bryce Partner Maclay, Murray & Spens LLP Robert Calderwood Chief Executive NHS Greater Glasgow Dr. Alasdair Cameron Executive Director AURIL Melfort Campbell Chairman Imes Group Dr. Jamie Coleman Managing Director Codebase Prof. Jon Cooper Vice-Principal Innovation & Knowledge Exchange University of Glasgow Jeremy Cutler Head of Technology Innovation Total Exploration & Production UK Ltd. Dr. Elspeth Elliott Growing Value Scotland Project Manager National Centre for Universities and Business Dr. Stuart Fancey Director Research & Innovation Scottish Funding Council Adrian Gillespie Managing Director Scottish Enterprise Dr. Iain Gray Director of Aerospace Cranfield University Prof. Paul Hagan Vice-Principal Research Robert Gordon University Prof. Alan Hughes Senior Research Associate & Director Emeritus University of Cambridge Dr. Siobhán Jordan Director Interface David Lott Deputy Director (Policy) Universities Scotland Dr. Bridgett McConnell Chief Executive of Culture and Sport Glasgow City Council Lee McLaughlin Founder IC Mobile Lab Andrew Milligan Head of Global Strategy Standard Life Investments Gavin Nicol Director of Operations Support & Development Weir Group Prof. Andrea Nolan Principal and Vice-Chancellor Edinburgh Napier University Prof. Sir Timothy O Shea Principal and Vice-Chancellor University of Edinburgh Dr. Alan Rowe CEO, Rowett Research Services University of Aberdeen Prof. Rick Rylance Director, Institute of English Studies University of London David Scott Senior Director Tepnel Pharma Services Prof. Nigel Seaton Principal and Vice-Chancellor Abertay University Tim Summers Independent Industry Consultant Dr. Ken Sutherland President TMVS Chris van der Kuyl Chairman 4J Studios Dr. Rebekah Widdowfield Head of Higher Education Scottish Government Charlotte Wright Sector and Business Development Director Highlands and Islands Enterprise
08 09 The Conclusions The Recommendations Based on a solid foundation of evidence, the Steering Group reached nine conclusions and associated recommendations in its final report. 01. The Task Force s research and consultations with business, policy makers, and universities demonstrate a strong need for a major uptake of innovation by firms in Scotland. To enable this, there was a clear appetite for a step change in the way business-university collaboration is driven. 02. Scottish universities are highly successful in both attracting research grants and in producing research outputs. 03. There are significant business demand problems in Scotland s innovation system. 01. The Task Force supports reviews which address the ways in which government and its agencies of innovation and enterprise provide support to maximise business uptake of innovation. The Task Force further believes that initiatives to provide this step change are an urgent priority. Our subsequent recommendations represent the Task Force s contribution to optimising this step change, particularly in business-university collaboration. 02. Establish a new innovation funding system to leverage the research success of Scotland s universities into jobs and profit in Scotland. 03. Working with its enterprise agencies, business networks and universities, the Scottish Government must drive up the innovative capacity of businesses in Scotland, both large and small, and increase the demand for university services. 04. Businesses want better visibility of the research being undertaken in universities. 04. Universities, research institutes and public funders must ensure more and simpler visibility for the research they undertake and for the consultancy and contract services they offer. 05. Innovation pathways vary by sector. 05. Policy, funding and practice must support the innovation styles of different sectors. 06. It is vital that businesses can access investment finance. 06. Businesses need access to risk capital, and government should use its devolved fiscal powers to support such access. 07. Small firms are not major contributors to the R&D stock in Scotland. 08. One of the most important contributions that universities can make to Scottish businesses is to refresh the pool of talent by developing business-literate and enterprising graduates and postgraduates. 09. In a knowledge-based economy, it is vitally important that the Scottish Government, businesses and universities focus on supporting and promoting skills in sectors such as the creative industries, design, IT and finance, which rely on high-value human capital. 07. Scotland s small firms need guidance from business schools, enterprise agencies and Innovate UK on how to grow and scale up. 08. Universities must help to refresh the pool of enterprising and business-literate graduate talent by better collaboration and sharper focus. 09. Graduates in the humanities and social sciences have much to contribute across the innovation spectrum. There needs to be better articulation of the business need for such graduates.
10 11 The Evidence The Growing Value Scotland Task Force released its findings through a series of linked reports, including Capability, Culture and Change: Growing the Value of R&D in Scotland 4, and The Innovation Edge: Business Innovation and University Collaboration in Scotland 5. Evidence from the Harris review to the Task Force 6 At 1.6% of GDP, Scotland spends significantly less on R&D than the leading EU countries, which are mainly in Northern Europe. Its R&D spend is above those seen in Eastern Europe, although some of these nations are increasing their R&D spend rapidly. Scotland s R&D to GDP ratio is declining, whereas it is increasing in some English regions. The Innovation Edge A review of the issues of clustering, innovation capacity, infrastructure and relationship building, derived from a series of deep-dive interviews with business, academic and policy leaders in Scotland s key industrial sectors and four business sector workshops in Aberdeen, Edinburgh, Dundee and Glasgow. Evidence from the BiGGAR Economics review to the Task Force 7 Issues relating to businesses and business groups Be willing to participate. Take a strategic approach to working with universities. Business sector organisations can take a lead on innovation strategy. Issues relating to universities Be open to a wider range of university-business interaction. Learn to speak the same language. Regard business interaction as a long-term relationship. CAPABILITY, CULTURE AND CHANGE GROWING THE VALUE OF R&D IN SCOTLAND Growing Value Scotland Task Force THE INNOVATION EDGE BUSINESS INNOVATION AND UNIVERSITY COLLABORATION IN SCOTLAND Growing Value Scotland Task Force Businesses in Scotland contributed only 3.1% of the 24.1billion invested in business R&D in the UK in 2012, compared to over 9% of both population and Gross Value Added, making Scotland the third worst performing area of the UK on this measure. Help to disseminate best practice. Issues relating to government and its agencies Focus on economic impact rather than income generation. Make more use of alumni connections. Provide appropriate incentives for academics to work with business. First Report by Richard Harris and David Docherty 2015 Second Report by David Docherty March 2016 Capability, Culture and Change R&D undertaken by Scottish universities is significantly above the UK average, and much of it is linked to Science, Technology, Engineering and Maths (STEM). Consider a wider definition of innovation and broaden the scope of innovation policy. Celebrate and communicate everyday successes. De-clutter the landscape. Invest additional resources in business development and technology transfer offices. A detailed econometric analysis of the innovation and R&D capabilities of Scottish firms and universities. The research report explored cultural and fiscal challenges that might act as a drag on their capacity, and pointed forward to potential areas of change to increase the coherence and simplicity of the overall system. The level of innovation cooperation between businesses and universities in Scotland is much lower than for the rest of the UK, as is the innovative capacity of business for absorbing research knowledge. This is a major challenge, but also a significant opportunity, for the Scottish economy. Incentivise universities to work with businesses, and vice versa. Recognise innovation spending as investment. Explore new fiscal incentives for innovation. Consider new open innovation structures. 4 Docherty, D. and Harris, R., (2015) Capability, Culture and Change: Growing the Value of R&D in Scotland ; NCUB Publications. www.ncub.co.uk/reports/capability-culture-and-change-growing-the-value-of-r-d-in-scotland.html 5 Docherty, D., (2016) The Innovation Edge ; NCUB Publications. www.ncub.co.uk/reports/innovation-edge-business-innovation-and-university-collaboration-in-scotland.html 6 Harris, R., (2015) Phase I Research Report submitted to the Growing Value Scotland Task Force ; NCUB Publications. www.ncub.co.uk/gvs1-full.html 7 Blackett, G. and Glenn, S., (2016) Phase II Research Report submitted to the Growing Value Scotland Task Force ; NCUB Publications. www.ncub.co.uk/gvs1-full.html
12 13 Evidence from the business sector workshops to the Task Force The Task Force reviewed the general conditions needed to improve innovation, derived from business sector workshops in Aberdeen, Dundee, Edinburgh and Glasgow with a total of sixty-nine business and sector leaders who guided the Task Force on sector themes, issues, solutions and good practice. A number of cross-sector commonalities emerged from these discussions: The Final Report Conclusion Scotland s business sectors should clarify their R&D needs and communicate them more effectively to universities. Academic researchers should be encouraged to work with their colleagues in business schools to package up industry-ready projects Scotland has the opportunity for a transformational step change in its innovation system. Graduate talent is vital to innovation. Businesses and universities should work together on curriculum development. Student placements are key to producing industry-ready graduates. There are significant information gaps between higher education and business. These can be filled by publicising successes and developing robust sector-based forums. There is an obvious and well-documented pressing need for economic levers to attract inward investment into Scotland s business sectors. Higher education plays a crucial role here. The sector communities also cited a number of emerging opportunities and specific themes facing their industry. A summary of these can be found in the full report 8. The Growing Value Scotland Task Force s research and consultation, and the extensive experience of the members of the Steering Group, indicated that this step change has to be rapid and focussed if Scotland is build its competitive appeal as an innovative centre of excellence. It explored the particular role of university-business collaboration. This is a much trawled area, particularly with regard to technology transfers and spin-outs. The Task Force believes that the innovative capacity of firms and their demand for university research, consultancy and technology is the most important issue, and must be supported by enhanced mechanisms to encourage business engagement with universities. If such support is allied to a rise in enterprise and entrepreneurial thinking among graduates, an open and receptive culture among academics, and a step change in university external engagement, then universities and businesses can help drive Scotland forward into a new era of innovative success. 8 Docherty, D., (2016) The Innovation Edge ; NCUB Publications. http://bit.do/ncub-the-innovation-edge
14 15 The Task Force would like to gratefully acknowledge generous support from: the issue is not about isolating the impact of publicly-funded research or about determining its optimum level in isolation. It is about how best to understand and manage connections between differentlyfunded and motivated research efforts in a system of knowledge production and innovation. Hughes and Martin (2012) 9 9 Hughes, A. and Martin, B. (2012) Enhancing Impact: The Value of Public Sector R&D ; page 13. www.ncub.co.uk/impact. Quote based on findings taken from Metcalfe, S. (2010).
16 National Centre for Universities and Business Studio 10, Tiger House, Burton Street, London, WC1H 9BY info@ncub.co.uk +44 (0)207 383 7667 @NCUBtweets www.ncub.co.uk