From research to market: Bridging innovation gaps in Scotland
Melfort Campbell examines why demand-driven innovation policies is key to turning Scotland’s research into global business success.
While the enterprise sector forms the backbone of the Scottish and UK economies, there appears to be limited understanding among policymakers and political circles about how this sector leverages innovation and technology development to compete, grow, and survive.
Moreover, a persistent issue within both the Scottish and UK economies is the inability to translate academic and scientific research into tangible economic value. We seem to have lost our way in converting excellence in research, academic, and scientific innovation into world-leading companies, products, and services. Where our innovative and technology-leading businesses once showcased our academic and scientific excellence, it now seems to be the reverse.
The main policy focus is on academic and scientific R&D as well as applied corporate R&D. However, there is little support for market-led innovation and product and service development, which are essential for startups and the competitive advantage of our enterprise sector. Indeed, much focus is on the small and medium-sized businesses (SME) base without distinguishing between those that primarily serve local markets and those in the enterprise sector – companies that invest in growth, internationalisation, innovation, and product and service development.
Where we do have innovation and technology leaders, they are world-class. The issue is not with the quality of our output but with the scale. The number of world-leading technology businesses is far below what it should be if we were fully utilising our research excellence.
How can collaboration between enterprises and universities drive innovation?
For example, when building Imes Group in the B2B engineering sector, we excelled at identifying new market opportunities. However, these often came with significant cost implications, typically involving engineering challenges with no ready solutions. In most cases, we did not initially have the complete technical solutions required to meet market needs.
With a clear understanding of market opportunities and requirements, we engaged with multiple universities over time, using them as our R&D department to develop innovative solutions for clearly identified and articulated market needs. Rarely was new research needed. Adaptation and teamwork often meant it took less than ten weeks from concept to deployment and value generation. For instance, one development with Heriot-Watt University, which cost us less than £200,000, saved our customer £35m with a single deployment.
At a policy and political level, there is a prevailing attitude that we need to grow what we already do. In the new energy discussion, the policy aim is to match existing industrial capability to new energy demand. This approach should be more endemic. While it is important to improve existing capabilities, we must also encourage innovation in new areas. We need to promote those who seek market opportunities, identifying gaps and outdated or expensive offerings. Innovators are problem solvers, meeting challenges posed by inadequate supply.
What lessons can Scotland learn from Norway’s approach to demand-driven innovation?
Focusing on building this demand pull on our academic and scientific base would not only achieve greater value generation and impact from our research but also dramatically increase the competitive advantage of our growth-focused enterprise sector. Successive UK governments, for example, thought it was oil companies that developed technology and banned government spending on oil and gas R&D. Norway, on the other hand, supported supply-side investment in R&D, setting up its indigenous oil company to drive and support investment by the supply side in technology and industrial capability.
In our work on industry innovation, we discovered that converting R&D into value-generating products and services typically takes 16 years. However, market-led innovation can achieve value generation in just 16 weeks. To enable our enterprise sector to grow and to effectively bring research outputs to market, especially as we transition to new energy sources, we must seize the opportunity to have our enterprise sector collaborate with our academic and scientific research base to identify and pursue opportunities. This approach should complement, not replace, our current efforts.
We must use demand as an opportunity to drive innovation, technology development, and the foundation for building our industrial base. For instance, while the North Sea oil and gas industry provided significant economic opportunities, less than 20% of the value-add landed in Scotland, compared to over 60% in Norway. Norway’s success stemmed from its strategy to support supply-side investment in R&D, demonstrating the impact of effective demand-driven innovation policies.
Melfort Campbell OBE FRSE, Director of Imes Group Ltd; RSE Economy and Enterprise Committee member
This article originally appeared in ReSourcE summer 2024.
The RSE’s blog series offers personal views on a variety of issues. These views are not those of the RSE and are intended to offer different perspectives on a range of current issues.
