National innovation strategy 2023 to 2033

3. Executive Summary

Our vision is for Scotland to rank alongside Denmark, Norway and Finland in being recognised as one of the most innovative small countries in the world. Innovation and the ecosystem of businesses, organisations universities and talent that promote and deliver it, will drive future national and regional economic success.

Following an in-depth data-led exercise and an extensive and inclusive engagement programme, the Strategy identifies four programmes of action which, taken together, are designed to shift the dial on our innovation performance elevating our performance to a world-class level. We will also initiate a new approach to measuring and evaluating our innovation performance which we will benchmark against other comparator nations.

1. Building successful Innovation Clusters

Scotland has a competitive advantage and a strong research and business base in a number of key markets. These give rise to four broad innovation themes on which future activity will focus:

Energy Transition: where we will look to harness Scotland's natural capital, regional expertise, internationally leading energy research and innovation capabilities and business activity within energy transition, with a particular focus on Hydrogen Generation, Storage and Transport, Floating Offshore Wind, Built Environment Transition and the Decarbonisation of Transport.

Health & Life Sciences: where we will capitalise on one of the biggest current life sciences clusters in Europe and a track record of research excellence and cross sector collaboration, prioritising opportunities in Digital Health, Future Medicines Manufacturing and Precision Medicine. Scotland's abundant natural assets also present innovation opportunities within the Industrial Biotechnology, Animal Health, AgriTech and Aquaculture sectors.

Data & Digital Technologies: where we will build on the impetus of the STER Review^[6] and national Techscaler network to support horizontal innovation of digital, data and Artificial Intelligence in areas such as Fem Tech and Gov Tech and with a particular future focus on Quantum Technologies, Photonics and FinTech / Financial Services.

Advanced Manufacturing: where we will work through our enviable infrastructure of support including the National Manufacturing

Institute Scotland, the Medicines Manufacturing Innovation Centre and the National Robotarium to promote innovation across our manufacturing base and focus on vertical sectors such as Small Satellite Space, Robotics and Autonomous Systems.

These opportunities will be pursued through a systematic, European-style national cluster building approach that will see the development of a Scottish Cluster evaluation and facilitation process that will provide tailored packages of support to stimulate growth and innovation. The process will be aligned to the current EU cluster management accreditation scheme - EUCLES. This will be supported by a Scottish Cluster Network that will provide national representation for priority areas and enable international collaboration.

2. Innovation Investment Programme

To support the growth and scaling of our priority areas we will recalibrate our innovation investment and support landscape to ensure it aligns with our innovation priorities and maximises all appropriate sources of funding. We are determined to embed an investor mindset that maximises leverage, closes capital supply gaps and balances risk/return to ensure the maximum impact of the funding available through the public sector.

The public sector remains the most frequent investor in business innovation through our enterprise and skills agencies, the Scottish Funding Council, Skills Development Scotland and the Scottish National Investment Bank (the Bank). Private Equity and Venture Capital is the next most active investor type whilst Scotland also enjoys the benefits of well-established Business Angel Networks.

Our Innovation Investment Programme will ring-fence a significant proportion of public sector innovation funding to be spent and invested in the priority areas and enable a coordinated approach to increasing Scotland's share of UK and EU innovation funds including the opportunities provided by Innovate UK and Horizon Europe.

We also recognise that the current landscape of the public sector is complex and we will review this approach, consolidate funding streams where possible, improve information and simplify access. We will also introduce new models of investment to better support R&D investment.

3. Innovation-led Entrepreneurship and Commercialisation Programme

The Commercialisation Programme is focused on three key elements – supporting our universities in their ambitions for a new Investment Fund, developing a Research Commercialisation Action Plan, and delivering existing commitments on entrepreneurship in universities.

Scottish universities will consider the creation of a co-invested new Scottish Innovation Fund to attract additional private sector funding to support the development of an investment ecosystem for late-stage R&D, with a particular focus on patient capital for spin-outs in deep science and deep tech. We will work with our universities to help secure cornerstone investment for the Fund.

A Research Commercialisation Action Plan will be published as an addendum to this Strategy. This will consider and set out new national guiding principles on how we make a step change in the commercialisation of research. It will be developed to deliver improvements against our key metrics and will focus on three key areas – how we can facilitate greater collaboration between industry and academia, support the creation of more scalable spin-

outs, and ensure we have the necessary infrastructure, funding and talent to retain our most successful spin-outs in Scotland. We will also publish a comprehensive treatment of the actions necessary to stimulate more staff and student-led start-ups.

The Commercialisation Programme will complement and align with existing commitments (from STER and NSET) to develop and build an entrepreneurial mindset and culture across our higher education and research system through Entrepreneurial Campuses.

4. National Productivity Programme

We will introduce an innovation themed National Productivity Programme which diffuses the benefits of innovating for productivity gains. It will make full use of our Innovation Architecture to support more of our SMEs to innovate to increase their productivity. This will be designed and developed to deliver an increase in the number of our businesses who are 'innovation-active', and over the ten-year timeframe of the Strategy we will look to close the gap with comparator nations.

We will link the Innovation Productivity Programme into the development of our Cluster Network, so that the wider supply chain of current and potential SME customers and suppliers can be brought into our success in our identified priority areas.

We will introduce an innovation adoption referral charter to ensure that any business being referred from one part of government or agency to another experiences a warm and effective handover.

We will establish Scotland as a global leader in adoption and diffusion evidence and practice, testing new thinking and gather new evidence.

5. Innovation Scorecard

To demonstrate progress and guide future action we will develop and publish an

innovation scorecard which will rigorously measure and assess the strength and performance of each level of Scotland's innovation ecosystem. This will monitor activity at the triple helix of innovation – industry, academia, and the public sector. Whilst some of the data required to participate in internationally recognised benchmarks is not available, our scorecard will provide visible metrics within each of the key stages of innovation:

• Concept –the generation of new ideas both within universities and the private sector which will be tracked through Patents Granted and Income from Collaborations. We will also track innovation between higher education and the wider economy through monitoring data on academic income from business and community interactions
• Convert –the conversion of early-stage research into commercial products and services. This will be assessed on the basis of early-stage risk capital and university spin-outs accessing equity finance
• Commercialise – the realisation of the economic benefits of innovation. This will be assessed through the number of BERD jobs, the number of high growth businesses in the economy and Value of late-stage investment (over £10 million) in the economy.

The scorecard will also assess the Adoption and diffusion of innovation by measuring the percentage of innovation-active businesses in the economy and expenditure on research and development from the private sector, higher education, and the public sector. We will also develop suitable metrics to capture and assess participation and impact in the innovation ecosystem including data on equalities, diversity and inclusion. This will include access to finance, funding, jobs and opportunities.

Taken together, these actions will enable us to develop and scale Scotland's innovation ecosystem and create the conditions for a world-leading innovation nation.

Case Study – Advanced Manufacturing Innovation District Scotland (AMIDS)

Manufacturing innovation is in Renfrewshire's DNA. From textile production of the famous Paisley Pattern to spitfire engines and steam boilers, so much capability and technology came from Renfrewshire and was exported worldwide.

Today Renfrewshire remains right at the forefront of cutting-edge manufacturing with Rolls Royce, Howden, Thermo Fisher and Terumo Aortic, just some of the companies based there. The future looks bright too, through development of the Advanced Manufacturing Innovation District Scotland (AMIDS).

AMIDS is a collaborative project led by Renfrewshire Council with strategic support from Scottish Government, Scottish Enterprise, Skills Development Scotland and academic partners University of Strathclyde and West College Scotland. Together, they're creating Scotland's home of manufacturing innovation. Located next to Glasgow Airport, the innovation district aims to attract manufacturers to locate here and support the sustainable growth of manufacturing in Scotland.

Advanced manufacturing combines game-changing technology like automation, data and cyber-systems with world-leading research to make new products and develop new processes that support a net zero world.

The district's central 52-hectare Netherton site has been carefully designed as an exemplar for innovation, a green, welcoming environment which fosters collaboration. Boasting excellent connectivity and a scenic riverside setting, companies who choose AMIDS benefit from access to Scotland's first fifth-generation heat network providing heating and hot water in a method which is 90% greener than a gas boiler.

Manufacturers can also access the expertise of its two anchor tenants. There's the University of Strathclyde-operated National Manufacturing Institute Scotland (NMIS) whose headquarters at Netherton comes complete with a skills academy, digital factory and publicly accessible collaboration hub. And the Medicines Manufacturing Innovation Centre, led by CPI, which launched in 2022 and is forecast to generate £200 million in technology innovation in its first five years as it accelerates state-of-the-art solutions in medicine development and manufacturing.

More than £185 million of investment has been attracted into AMIDS so far, including Boeing choosing the district for its first-ever research and development (R&D) project in Scotland, part of plans to double their supply chain and create 200 new, quality jobs.

New products for a new world are being made in Renfrewshire, the success of AMIDS could provide a major boost to Scotland's manufacturing sector, to the country's economic prosperity and to a net zero future.