It has been nearly 20 years since Scottish Enterprise, then a fairly new economic agency, launched an inquiry into Scotland’s comparatively low business birth rate.
In 1993 the talk was all about improving access to finance, encouraging university spin-outs and challenging a culture that was seen to be risk averse and over dependent on jobs from big employers, public and private.
Soon afterwards, Scottish Enterprise’s then chief executive Crawford Beveridge – a Silicon Valley veteran and expatriate Scot – launched another inquiry examining the commercialization of university-based research.
Both inquiries were landmark events in terms of public economic policy, but it says something about the practice of government intervention that the issues facing Scotland are not very different today, two decades on.
All of this has sprung to mind recently as we cope with the ongoing economic recession. Oddly, given that Scotland is preparing for an independence referendum in 2014, economic strategy has not yet taken centre stage during the political debate.
Scottish Enterprise, which has a remit to deliver a stronger economic infrastructure to the biggest population area of Scotland (covering most of the country’s population of 5.1 million), recently held its annual “commercialization showcase” in Glasgow.
More than 100 investors, advisors and government types saw a range of presentations from companies that have spun out from some of Scotland’s 13 universities, or from corporate backgrounds. It is a sign of the times that many of them are engaged in technology solutions for the energy sector, rather than the electronics and software disciplines that have dominated such events previously. More of that in a future post.
During the event I reflected on whether much has changed since that business birth rate inquiry in 1993. In truth, it has. And, although there remains much to be done, there is a healthier interest in Scottish technology from investors, especially among angel syndicates.
The private sector infrastructure is also stronger. Initiatives such as GlobalScot – which reaches out to expatriate talent in Silicon Valley and other tech-based economies – are making some difference. The biggest change is probably in the attitude within Scottish universities toward collaboration with industry and commercialization of research.
We have a long way to go before that latter trend approaches the success of Stanford, Harvard, MIT, and the rest. But the approach of universities such as Edinburgh, Strathclyde and St. Andrews has changed for the better. The informatics department at Edinburgh, for example, is the biggest of its kind in Europe and is distinctly pro-enterprise.
It is good to have goals, and Scotland has had many of them since the creation of Scottish Enterprise and the establishment of a devolved Scottish parliament eight years later. (That parliament has responsibility for micro-economic policy but not fiscal policy in Scotland.) The test is whether they can be achieved, long term.
For a long time Scottish politicians simply wanted micro policy to help create a “Scottish Microsoft.” The mantra was jobs, jobs, jobs. Enormous effort (and cash) went toward subsidizing U.S. and Japanese corporations seeking European locations to locate hardware assembly plants.
As that kind of manufacturing has virtually moved en masse to low-cost labour centres in China, Taiwan and Singapore, Scotland and its European rivals for multinational investment – such as Ireland – have had to move on. The language today is about collaboration. We want research centres, not manufacturing plants, that will drift toward the lowest cost labour markets.
It is easy to forget that Silicon Valley owes much of its origin to the massive U.S. defence industry, from software and communications to silicon chip design. In a modern parallel, two of the more fascinating tech solutions I’ve seen in recent weeks both originate from Israeli research.
In addition, Silicon Valley wasn’t created in a decade, or even two. It has become the information technology behemoth of today over a period of around 60 years.
Scotland is at least making an effort. Frustratingly, some of the skill shortages remain, and most of them are in the “soft” areas of sales and marketing. While the nation has had a disproportionately large influence on research and innovation – Scots claim to have discovered everything from television to penicillin – there is a real weakness in areas such as sales and marketing.
Right now, Scottish and U.K. policy trends are favouring innovation in alternative energy, including wave and wind power. Investment is drifting towards these areas, and we are witnessing significant innovation as a result. It could be that Scotland is about to find its new opportunities are firmly in the engineering sector rather than in binary code. The implications could be significant.
Maurice Smith is a journalist, consultant and entrepreneur based in Glasgow, Scotland.
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