Enterprise and skills review phase two report: supporting papers

Summary of Phase 1 Call for Evidence with Reference to the Themes of Business Support, Innovation and International

Introduction

1. This document is a summary of key themes surfaced during the Phase 1 Call for Evidence of the Enterprise and Skills Review relating to Business Support, Innovation and Internationalisation. Respondents included individuals, individual businesses, organisations representing collective business interests, and universities and colleges. It should be noted that the scope of the Call for Evidence covered Scottish Enterprise, Highlands and Islands Enterprise, Scottish Development International, Skills Development Scotland and the Scottish Funding Council. It did not cover Business Gateway.

Enterprise and Business Support

2. A significant number of respondents described the current support landscape as being too cluttered. A closely related observation was that there was inadequate alignment between the policies and operations of the different agencies. Respondents frequently stated that - from the perspective of the user - it was difficult initially to understand how to access support services and identify the correct agency to access them from. This was noted as being particularly acute for start-up and smaller businesses. The current support system was often referred to as favouring existing, high-performing Scottish businesses and those businesses that had been identified as having the potential for significant growth. This was occasionally considered to be detrimental to smaller, micro-businesses and start-ups. This contributed to a narrative that the provision of support was inconsistent.

3. Many organisations argued for better alignment between the agencies. A common suggestion was for a clearer articulation of national strategy, which was sympathetic to and supported by a network of regional expertise and delivery. Several organisations cited the need for the development of an overarching organisation or strategic board to have overall responsibility for the enterprise agencies.

4. It was frequently stated that there should be a clearer and simpler pathway for businesses that were new to the enterprise agencies, so they could understand what support was available and from which agency it could be accessed. Respondents saw a need to simplify the process of identifying which enterprise and skills support agency is of most value to a business' needs, along with grant funding applications and requests for skills support. While some considered that understanding the precise source of support was less important than receiving the right support (implying that complexity might be maintained behind the scenes), others considered it valuable to exercise greater transparency in terms of advertising the full suite of support products available, and making clear at what stage a business would be able to access them. While many responses favoured allocating support services more equitably among smaller businesses, several urged that greater resources be focussed more intensively on a smaller number of high-potential businesses. There was therefore a tension between some respondents in terms of favouring one-to-many or one-to-few services.

5. Accessing business support services was often criticised as overly bureaucratic, slow and laborious. The 'red-tape' associated with accessing certain services or products was perceived as a major barrier to support for several organisations. This frustration was frequently expressed in relation to accessing grant funding. A small number of organisations indicated that projects and initiatives had failed due to lack of funding caused by bottlenecks in the system. A limited number of respondents also considered that there was an over adherence to following set 'rules', which could prove restrictive if a business did not fit a particular model. One business indicated that the provision of support by an enterprise agency had been delayed due to a failure by the agency to develop tools appropriate to their sector.

6. While the scope of the Call for Evidence did not include Business Gateway ( BG), a small number of respondents answered in relation to their experiences of support from local government. The availability and quality of services delivered by BG was identified by some respondents as inconsistent. One business described it as able to "be either delivered extremely well or more of a tick box exercise with very limited effort or resource to make a difference". Regional variation was a primary concern. A number of respondents expressed frustration both at the administrative burden imposed when applying for BG grant funding, and at delays experienced during initial engagement with the organisation. For example, one firm provided a generally positive account of the advisory support that had been received from BG but noted that the system's drawn out grant funding application process hampered their progress at times. Another questioned the remit of local authorities in economic development in general, and whether this extended beyond simply delivering Business Gateway. Others highlighted the availability of local access to Business Gateway as a positive, with one suggesting moving the provision of support to SMEs exclusively to BG, arguing that this would avoid service duplication with the enterprise agencies.

7. Praise was regularly given to the account management model, with organisations repeatedly feeding back on it as a strong point of access to the support that they required. The importance of the quality of relationship between a business and the relevant agency account manager emerged as a strong theme. Comments suggested that a business' experience of the enterprise agencies was commonly determined by the perceived proactivity and responsiveness of individual account managers. Those who were cited as possessing a deep understanding of a business and its unique needs were recognised as providing invaluable support. The best account managers were cited as being experienced (often in terms of having spent requisite time in the private sector prior to joining the agency) and / or connected ( i.e. able to swiftly and effectively diagnose, navigate and access the landscape of available support). They were often referred to as an excellent way for businesses to maintain a working relationship with the enterprise agencies in terms of receiving regular advice and support. Account management was frequently described as having had a transformative effect on a customer's journey through the support system. One company noted, "The current systems in place are the best they have been". However, another highlighted the perceived discrepancy between account managed and non-account managed services, describing the support process as being "much more difficult" for businesses that are not account managed.

8. Where mentioned, businesses broadly expressed satisfaction with the networking opportunities provided by the enterprise agencies. However, a small number of respondents indicated that these could be improved. This included a specific suggestion that the network of account managed businesses should be better utilised, for example via organised introduction sessions. A networking forum or online listing of companies, contacts and services was also mooted as potentially beneficial. It was suggested that establishing a peer to peer mentoring service for businesses might be useful, as several organisations expressed frustration at not being able to learn from others' mistakes. Respondents frequently requested that individuals with relevant industry experience be recruited into the enterprise agencies.

9. While respondents acknowledged the challenges of the existing system, a large number still praised the enterprise agencies for adding significant value to their businesses. The value of the service was regularly described as "terrific", "very good" or "excellent", and many businesses credited their success to enterprise agency support. Frequently, the value of the service was recognised because accessing support required a negligible financial investment on the part of the business. Indeed, many businesses noted that the only significant investment was in business time. Several respondents indicated that any changes or improvements to the existing system should be incremental. One stated, "The last thing we need right now is a major overhaul".

10. Confusion was expressed regarding the enterprise agencies' defined performance measurement. Respondents variously suggested this could be gauged via economic measures such as growth in GDP; growth in Gross Value Added; job creation and reduced unemployment; foreign investment into Scotland; or export growth. A minority of respondents suggested less 'hard' measures, such as more positive feedback being provided in regard to businesses' experience of the agencies; or by measuring the success of agency-engaged businesses compared with counterparts that did not seek support. One university argued that there was currently too great a focus on agency activity as a measure of success in itself.

Innovation

11. The subject of innovation was raised by a number of respondents. Submissions from universities and colleges in particular tended to discuss the theme at greater length. Organisations had mixed satisfaction in terms of the level of support for innovation currently offered. Several organisations referred to specific support products which effectively encouraged innovation. The Scottish EDGE Awards; the Knowledge Transfer Partnership scheme; the Royal Society of Edinburgh Enterprise Fellowship scheme; Scottish Enterprise's High Growth Spinout Programme ( SE HGSP); the Scottish Funding Council's Innovation Voucher scheme; the Scottish Crucible; the Interface Knowledge Connection; and the CONVERGE Challenge were all highlighted as being especially valuable by different respondents. A minority of respondents described their innovation support as having been excellent. The Innovation Centres were also commonly identified as value adding, including the suggestion that more of these should be developed and introduced to different regions.

12. However, current innovation support was also frequently challenged as insufficient. Inadequate or inflexible funding support was a common frustration, with delays to projects cited as businesses waited on the provision of innovation grant funding. One company described the value of an innovation grant being diminished due to an enterprise agency's insistence on regular progress reporting to determine how the grant was being deployed. Organisations also suggested that the enterprise agencies lacked entrepreneurial leadership capacity to drive forward the innovation agenda. Further criticism was leveraged that the enterprise agencies did not have sufficiently agile mechanisms in place to support emergent sectors.

13. Various recommendations were proposed to potentially improve the position of Scotland's innovation landscape. Several organisations suggested that this could be partly achieved via the enterprise agencies performing more of a 'match making' service to connect high potential Scottish start-ups with global angel investors, or by facilitating access to transformational global business leaders. A more strategic approach to enterprise support across Scotland was highlighted as necessary by various organisations. One firm also urged closer alignment between the Scottish Investment Bank and the agencies, specifically so that a business can be given written support in advance of the actual provision of funding to help endorse its feasibility to other potential investors. A university stated that greater funding support should be provided for businesses in the £1m - £3m range to de-risk innovative technologies. Further investment into private sector accelerators was stressed more widely, including a call for the creation of more business accelerators aimed at fostering high growth start-ups.

International

14. A common theme among responses was that both Scottish Government and the enterprise agencies could do more to promote both foreign investment into Scotland and the international expansion of Scottish businesses. The Scottish Government was repeatedly encouraged to look outwards in order to capture methods of best practice used in other countries. Ireland's economic development plans as well as Belgium's current approach were cited as examples of an efficient way to explore international potential. It was suggested that the agencies lack adequate export support for service orientated businesses, with too heavy an emphasis placed on the export of products. Some responses also suggested that the agencies lacked capacity for internationalisation. One company, while praising international development support, recommended that the role of account manager should merge with the role of international expert to ensure that businesses and organisations are fully exploiting international markets. Some respondents also addressed a culture in Scotland which militated against international expansion. An international expert in entrepreneurship was critical of the overly "homogeneous" perspective in Scotland which inhibited the ability to compete globally. This feedback was not in isolation. Other organisations believed that current attitudes in Scotland can be too insular and that there is a misplaced focus on internal trade which can be detrimental to international ambitions.

15. However, many responses were highly positive about the international support currently being provided by the enterprise agencies. This included some that credited the agencies with enabling their organisation to successfully re-orientate towards international markets. For example, one business stressed that the support they had received from an agency had enabled them to research new export markets and, as a result, they now export to Europe and North America. International Trade Missions provided via Scottish Development International were praised as helping to identify global markets for Scottish businesses and their products. The enterprise agencies were also identified as having a strong ability to help businesses understand international markets, including through the provision of relevant language support and local labour market expertise. One company operating in the oil and gas sector spoke of "volumes" of "good news stories" with respect to an agency's assistance in developing access to the markets of ASEAN countries.

16. Against this, the current uncertain global climate was considered by some to be of concern. There was feedback that Brexit and other world developments had caused businesses to focus on internal markets rather than risk international expansion.

Digital

17. A number of respondents requested the creation of a business database so companies do not have to expend time repeatedly submitting duplicate information for separate applications. This request was closely related to the recommendation that a digital portal be created as a single point of entry for businesses trying to access support services. A suggestion from one business organisation included the development of a new (or more accessible) 'hub' for information, which would act as a single access point guiding businesses to the relevant agency. A similar focus was shared by many of the submissions, where the desire for ease of digital access was stressed.

Women and Enterprise

18. A small number of respondents raised the specific issue of encouraging greater uptake of enterprise activities among women. One included recommendations to mainstream a gender-appropriate approach into all enterprise and growth policies. Another spoke positively about Muslim and BME women's experiences of Skills Development Scotland. However, this response also noted that a lack of childcare support prohibits many women from attending appointments provided by the enterprise agencies. It suggested that services from these organisations could be better marketed to women, and that facilitators/mentors could be used to encourage more women to believe that 'self-generated income' was sustainable.

Scale Up

19. While scale up was not often referenced explicitly, when it was mentioned individual businesses expressed broad satisfaction with the support offered. For example, the responsiveness and speed of scaling account managers was praised. However, some universities or university representatives offered a more measured response. One considered that there is currently too narrow a focus on existing companies of scale or those that fit a particular mould of projected growth trajectory. Given the predominance of micro and small companies in Scotland that have limited organisational capacity and levels of investment into research and development, it was felt this might limit the effectiveness of support. One organisation suggested that the agencies should ensure they are sufficiently 'joined up' with other organisations operating in this ecosystem, while another respondent argued that the role of the agencies should be in facilitating this strong ecosystem. A further respondent acknowledged that while the current system of business plan competitions, knowledge transfer vouchers and enterprise competitions are useful; they do not lead to adequate company scale up. They concluded that Scotland therefore requires more investment in Innovation Centres for scale up to be globally impactful. For another, the talent pipeline provided by the Saltire Scholar and Fellowship programmes was highlighted as important for scale up.