Innovation data baseline: final report

1. Introduction

This report has been prepared as part of a programme of work to examine methods for measuring the impacts of investment in innovation support by the Scottish Government and its Enterprise and Skills agencies (Scottish Enterprise, Highlands and Islands Enterprise and Scottish Funding Council).

The work was commissioned by the Scottish Government on behalf of the Enterprise and Skills Strategic Board (ESSB) and the objectives were to:

• identify the baseline data and methods required to better evaluate innovation support interventions in terms of both short and longer term outputs and impacts on the Scottish economy;
• review the existing data and methods used by the agencies to monitor and evaluate innovation support activities; and
• make recommendations for new approaches that will address gaps in current data collection and encourage consistent measurement and evaluation across all agencies.

1.1 Innovation Support

The proposed framework is aimed at measuring the impacts of investment in innovation related interventions as defined by the Scottish Government Enterprise and Skills Analytical Unit (ESAU). In particular, this focusses on investments made by:

• Scottish Funding Council (SFC);
• Scottish Enterprise (SE); and
• Highlands and Islands Enterprise (HIE).

Each of the agencies has a different role in supporting innovation, which can be summarised as follows:

• SFC provides funding and support to universities and colleges in Scotland. Its primary roles in the innovation system relate to supporting research capability and activity in higher education (HE) and supporting and encouraging engagement between HE, Further Education (FE) and external actors in the innovation system (e.g. firms, public sector agencies etc.) for the purposes of advancing innovation;
• Scottish Enterprise (SE) also has some involvement in funding and delivering programmes that support the interaction between the academic knowledge base and the wider economy, but also has a strong focus on developing innovative capacity and supporting innovation activity within Direct Relationship Managed (DRM) and Non-Relationship Managed (NRM) firms; and
• Highlands and Islands Enterprise (HIE) has a broadly similar focus to that of SE, but reflects the characteristics of the company base across the region. There are fewer large companies and fewer innovation active companies and thus HIE's support tends to be smaller in scale and more focussed on capacity building. There are, however, a number of internationally significant research based projects such as; Scottish Association for Marine Science (SAMS), Orkney Research and Innovation Campus (ORIC) and (Wave Energy Scotland (WES). HE in the region is mainly limited to UHI which has a developing capacity for supporting innovation activity, although others including the Glasgow School of Art also have a footprint in the area.

Initial work by the Scottish Government collated the various investments in innovation made by the three agencies.^[10] In total, it is estimated that the Scottish Government contributed around £479m in 2018/19 to supporting innovation interventions across a diverse range of project, programmes and schemes.^[11] Of this total, £349m is accounted for by the activities of the three agencies, as set out in Table 1.1, over.

The remaining expenditure is via the Scottish Government, and includes:

• Innovation funding including the Climate Challenge Fund, Decommissioning Challenge Fund, Energy Investment Fund, Low Carbon Infrastructure Programme, Low Carbon Innovation Fund, R&D Grants to Businesses, Wave Energy Fund and Unlocking Ambition (inter alia);
• Capacity building and peer support, including Scotland Can Do, Women into Enterprise, Scale Up, Hydro Nation, Space Technology and Vanguard Initiative; and
• Infrastructure and facilities including the Lightweight Manufacturing Centre, National Manufacturing Institute for Scotland, MMIC, the Oil and Gas Technology Centre and Charging Points for electric vehicles.

Within the £349m in agency spend, the Research Excellence Grant that SFC administers to Scottish universities is by far the largest single programme by value (£238m, 76%).

A breakdown by total funding is as follow, with the detail in Table 1.1, over,

• SFC - £308m (88%)
• SE - £37m (11%); and
• HIE - £4m (1%).

Table 1.1: Agency Innovation Support Activities

HIE		SE		SFC
Programme	£	Programme	£	Programme	£
Northern Innovation Hub	£1,300,000	Large R&D Awards	£11,700,000	Core Grants (Research Excellence Grant)	£237,807,000
R & D Grant (HIE)	£1,265,863	SMART	£7,000,000	Post Graduate Research Grant	£35,183,000
Aquaculture Innovation Fund	£311,816	R & D Grant (Under £100K)	£4,866,809	The Innovation Centre Programme	£13,924,000[12]
Scot Grad-Graduate Placement	£304,815	Innovation Project Support	£4,795,311	University Innovation Fund	£15,896,784
The Innovation Centre Programme-HIE	£250,000	Workplace Innovation Funding (AM)	£2,447,246	Industry/ Academia Links Fund (formerly SEEKIT) [13]	£2,268,000
Co-Innovate	£195,000	High Growth Spinout Programme	£1,749,970	Research Pools	£940,000
Innovation advisor support	£164,435	By Design Grant	£942,911	Strategic Funds KE	£544,000
Small Innovation Grant Scheme	£82,065	SE/RSE Enterprise Fellowships	£718,482	Interface	£778,000
MIT LIP	£65,000	Advisor Support	£525,722	The Innovation Voucher scheme	£542,000
Advanced Innovation Voucher Scheme	£63,048	Development Support	£316,714
Innovate your Business	£49,522	Workplace & Organisation Development Review	£300,823
Scot Grad Student Placement	£33,274	Scottish Co-Investment Fund	£280,509
Make Innovation Happen	£23,160	IP Audit	£259,292
Disrupt Aqua	£775	Companies of Scale	£222,882
		Innovation Services Expert	£204,616
		INT532 ScotGrad Innovation Support	£198,804
		Workplace Innovation Funding (NRM)	£133,920
		Early Team Development	£98,059
		Succession Expert Support	£82,434
		Make It to Market	£72,334
		Leadership for Growth Programme	£39,330
		Employer Engagement (Masterclasses & Workshops)	£30,783
		Consortium Expert Support	£24,286
		Managing People for Growth programme	£12,965
		SDT265 Offshore Wind Expert Support	£12,382
		Winning Through Innovation Workshops	£3,432
Total	£4,108,773		£37,040,016		£307,882,784

Source: Scottish Government (data provided by the Agencies)

1.2 Study Method

The study was conducted in two phases as described below.

Phase 1: Developing the 'Ideal' Data Framework

The first phase focussed on developing an ideal world framework for measuring the impact of innovation support, building on a conceptual model of innovation processes and taking account of existing work in this field, including work by the Scottish Government around a theory of change model for innovation support. This first phase comprised the following stages:

Stage 1: Inception: initial discussion with the Scottish Government client team to agree the scope of the work and arrange access to relevant background research and contacts;

Stage 2: Desk Review and Initial Consultations: review of the 'Theory of Change' model and other relevant literature on innovation measurement to inform the development of the proposed 'ideal' data framework and consultation with the Scottish Government and the agencies to seek their input on the kinds of measures that should be considered. The latter comprised semi-structured interviews conducted face to face, where practical, covering:

a. views on the nature of innovation and the ways in which innovation leads to economic benefit

b. views on the most useful measures to assess innovation support in a general sense

c. more specific thoughts on the most useful measures for the programmes under review

d. issues and constraints regarding the practicalities of collecting relevant data and how these might be addressed;

Stage 3: Framework Development: development of the 'ideal' data framework in draft form, drawing on the previous desk review and consultation work. The framework defined measures in line with the theory of change and logic chain principles and formed the basis of a Working Paper setting out the conceptual model for discussion with the Scottish Government and the agencies.

The Working Paper also presented a suggested list of innovation support interventions to be examined in more detail in Phase 2; and

Stage 4: Workshop: a workshop with the Scottish Government and the agencies at which the study team presented the draft framework (also issued in advance of the meeting), facilitated discussion on the framework and discussed any amendments and the next steps. The Working Paper was also circulated to relevant contacts within the Scottish Government and the agencies as required.

Phase 2: Review and Recommendations

The second phase of the study focussed on reviewing current practice across the three agencies in relation to measuring the impacts of innovation support. It comprised three stages:

Stage 5: Review of Current Practice: further engagement and consultation with the agencies to examine existing methods and formats used to collect data relating to the innovation interventions under review (and more generally). This was an iterative process involving: initial discussions with relevant personnel within the agencies; provision by the agencies of relevant materials and information relating to impact measurement and data collection; and review of these materials and further contact with each of the agencies to clarify any queries and discuss the underlying data collection and reporting processes. The study team also consulted with the University of Edinburgh (Edinburgh Innovations) to discuss data collection processes and the developing CRM system;

Stage 6: Summary and Analysis: Stage 6 focussed on summarising the data collated in Stage 5 and mapping this against the ideal data framework developed in Phase 1 with a view to identifying gaps and areas of overlap.

Stage 7: Recommendations and Reporting: the final stage involved the production of a Draft Report which was circulated amongst the agencies and Scottish Government contacts for comment prior to the production of the final study report.