business plan 2013-2016 - scottish enterprise business plan is focused on nurturing and ... energy,...

Business Plan 2013-2016

1

CONTENTS

1 CHAIRMAN’S FOREWORD

2 CHIEF EXECUTIVE’S FOREWORD

3 RESpONDINg TO THE ECONOMIC OppORTUNITY

6 gLOBALLY COMpETITIVE COMpANIES

19 gLOBALLY COMpETITIVE SECTORS

29 A SUppORTIVE BUSINESS ENVIRONMENT

32 DELIVERINg THE LOW CARBON ECONOMY

33 FINANCIAL SUMMARY

36 MEASURINg OUR pERFORMANCE

Front cover image used with kind permission of the SECC.

Scottish Enterprise: Business Plan 2013~2016

1

CHAIRMAN’S FOREWORD

In times like these, it’s natural for businesses to focus on weathering the storm. Our mission over the next three years is to shift that focus. Now, more than ever, it’s time to think about growth.

We’re not dismissing the challenges Scotland’s businesses are facing. But it’s time we started facing those challenges positively. There are many Scottish companies who have seen – and who continue to see – real growth in the face of the worst recession in more than 20 years. That’s something we should be celebrating and emulating. It’s something that is very much within reach.

Our Business plan is focused on nurturing and developing growth in Scotland’s companies. To make sure our approach is as effective as possible, it’s built around those sectors identified by the government Economic Strategy as offering particular opportunities for growth – creative industries, energy, financial and business services, food and drink, life sciences, tourism and universities, including the significant opportunities from Scotland’s science, technology and advanced engineering assets.

Between them, these sectors account for around 45% of our gVA and about 30% of employment, which makes their importance to the Scottish economy very clear. Our strategy must, however, also recognise that each sector contributes in a different way and we need to ensure that our input is tailored to add the greatest impact.

We are determined to focus our efforts on what works. That means prioritising our activities within sectors according to the areas we have identified as being key to progress: growth companies,

innovation, international trade and investment and low carbon.

We’ll be working with companies to seek out and respond to opportunities – including opportunities they might not have considered before. We will help them make the robust decisions that will give them the determination and confidence to make maximumimpact on their markets.

Our work will also focus on responding quickly to key events like ownership change or innovative new products, services or business models, to capitalise on a period of renewed activity. So we’ll keep recognising the importance of leadership and organisational development and of innovations that carve out a clearer route to global markets.

We’ll be seeking increased international trade and investment in global markets where our companies and their services have a high chance of success. Digital technologies, for example, are going to be crucial to the future success of Scotland’s companies, so we’ll maintain a focus on making use of them to help our companies grow.

We won’t lose sight of the fact that many companies are held back by lack of finance – we’ll keep helping them find the support they need; whether through our direct funding products or through services like the financial readiness initiative from the Scottish Investment Bank. providing that initial support helpscompanies leverage additional help from private sector partners, banks, and more.

Over the next three years, we will deliver a clear and robust business plan focused on opportunity and growth. There’s no denying the difficulties still to be faced, but early indications of lessening internationaluncertainty; together with confidence in our work, our partnerships and our determination, will help us keep fostering investment opportunities, supporting ambition and expansion and, above all, focusing on Scotland’s economic growth.

Crawford Gillies Chairman

2 3


CHIEF EXECUTIVE’S FOREWORD

Our aim is to make Scotland a more globally competitive nation.

That means helping Scotland’s businesses seek out and make the most of international trade opportunities; helping them make their product or service offering robust enough to stand up to an increasingly competitive international marketplace.

We’ve already seen some significant successes in the past 12 months. We’ve led trade missions to the US, Asia, the Far East and Australia, along with turning our attention to emerging opportunities offered in South American countries like Brazil and West African nations like ghana. We want Scottish companies to know where to find global opportunities, and we want to offer them the support they need to exploit those opportunities to their fullest advantage. A significant part of our planning for the next three years involves building on the successes we’ve already achieved and enabling Scottish companies increasingly to see themselves as global players. In the face of the worst global recession in more than 20 years, it’s imperative that they seek out every possible new opportunity, and that means looking outwith traditional business practices and borders.

In the years to come, we’ll maintain a focus on developing that global thinking, ensuring everything we do helps Scotland’s businesses adopt the outward-looking mindset and culture that is so crucial to their future success. We will help them develop export activities and identify markets in which they have the best chance of success.

perhaps most importantly, we will help them to see possibilities in international markets that they might never have considered before, and to gain the confidence, skills and expertise they need to make the most of them. That doesn’t mean we won’t also be looking at barriers to businesses closer to home. By listening to our customers and understanding the issues affecting their business, we can maintain a focus on the things that really matter - growth, productivity and employment. We will keep supporting the companies and sectors with the greatest capacity and desire for growth, and working to increase and improve our own offering to help them realise their ambitions and their potential. We must focus our efforts on what we know will work. Our plans for the next three years are being shaped by the evidence we’ve gathered through talking to businesses and partners and through monitoring and evaluating our own performance. That evidence has helped us prioritise those activitieswe know will deliver the biggest return. We’ll continue actively to seek new and better ways of working with Scotland’s businesses to transform our economy, increase long-term sustainable growth in key sectors and explore and develop cross-sector opportunities. That means we must also look at our own operations to develop what works well and improve in areas where we know we can do even better. We are constantly keeping one eye on the longer term, always seeking sustainability in the work we do. Economies, at home or abroad, do not stand still; we must keep moving and developing with them if weare to continue helping to make Scotland one of the most ambitious, innovative and successful countries in the world. The next three years will move us even further towards that goal.

Lena Wilson Chief Executive

2 3


RESPONDING TO THE ECONOMIC OPPORTUNITY

Our ambition is to help make Scotland more globally competitive.

Our Business plan for 2013-2016 sets out what we are doing to achieve that ambition and how we are responding to the economic challenge. The plan sets out how we will stimulate investment and action through a balance of short, medium and long term activity that will help to rekindle Scotland’s economic growth.

The rolling nature of our business plan allows us to build continuity into our operational activity and at the same time, reflect changes in the economy and new market opportunities. As such, we continue to concentrate on our strategic priorities and maintain a firm focus on the framework provided by the government Economic Strategy with its emphasis on growth sectors, growth companies and growth markets.

Economic contextglobal growth continues to be weak, compounded by continuing uncertainties caused by the eurozone crisis, cuts in government spending, rising commodity prices and difficulties in accessing finance.

As a small open economy, Scotland is not immune to these global trends and there is no doubt that economic conditions remain tough. However, we have seen enough successes over the past few years to know that Scotland can respond to whatever new challenges emerge and ensure that the Scottish economy remains competitive.

At the start of 2013, there are also signs of a more promising picture emerging with exports increasing and sectors such as food and drink, energy and life sciences all showing signs of growth.

That does not mean we are not alive to the challenges that still exist, especially around business and consumer confidence, which is holding back investment and recruitment decisions.

Unemployment in particular, is still at high levels compared to pre-recession levels and around 20% of Scottish 16-24 year-olds are out of work. Now, more than ever, we need to help companies to invest in new growth projects that will help to sustain and create employment and respond to new opportunities that will improve their long term competitiveness.

Through programmes such as Regional Selective Assistance and through our work with growth companies, we have a direct opportunity to encourage companies to consider recruitment and employment, particularly among young people, as part of their growth plans and ensure their business is ready to respond when the global economy improves.

Our response To help us respond to these conditions, we need to retain an unstinting focus on growth over the next three years. That means a focus on areas where Scotland already has competitive advantage and where we know we can have the biggest impact, both in the short and longer term.

We can take great confidence from what this focus has helped us to achieve over the past few years and from our track record in helping companies and sectors achieve success both at home and in overseas markets. As the economy begins to pick up, we expect to deliver even bigger and better results for the Scottish economy.

Through our connections at home and in global business networks, we can help companies access the latest market insights and intelligence that will help them respond to changing market conditions and new opportunities that emerge. The changes we have made to our organisation in recent years will also make it easier for us to respond and flex our support as appropriate.

In responding to the economic challenge and in order to meet the aims of the government Economic Strategy, two key areas of work form the core of our Business plan for 2013-2016:

Supporting the development of more globally-competitive companies by offering an integrated business support model where companies with ambitions to grow can access the right type of support at the right stage of their growth.

Supporting the development of Scotland’s growth sectors by supporting positive and transformational change and providing opportunities for Scotland in global markets.

4 5


This dual focus is our primary response to the current business challenges of reduced demand, slow forecast global growth and constrained investment whilst simultaneously, pushing the development of more bold and longer term sector interventions to potentially transform the economy.

To help us realise the potential that exists amongst our companies and sectors, we also need to help create a supportive business environment in which they can thrive.

Working with partners, we will help to ensure that our infrastructure and connectivity is smart enough and competitive enough to ensure the long term sustainability of Scotland as a place to do business and that individuals and companies across Scotland benefit from the jobs and opportunities we help to create from our investment.

Our strategic prioritiesFor our Business plan, the Board of Scottish Enterprise has identified five strategic priorities to guide our response to the economic opportunities we face, and to ensure we allocate resources where we know we can have the greatest impact on Scotland’s economy. These are:

Renewable energy – this is a significant transformational opportunity for Scotland which will also play an essential role in supporting the transition to a low carbon economy. We will continue to focus our investment where there is clear market potential, based on existing competitive advantage.

By 2016, we will

• initiate significant actions to develop commercial manufacturing in offshore renewables, including the development of supply-chains and attract up to £350 million of additional private-sector investment.

Growth companies – in order to drive economic prosperity and employment, we will continue to prioritise our support to companies in Scotland with the strongest growth ambitions. Our support will be increasingly tailored to help companies achieve scale, stimulate trade in overseas markets and help build the competitiveness which can support growth in Scotland’s key sectors.

During 2013 – 2014, we will

• help our account managed companies to achieve turnover growth of up to £1.3 billion.

Innovation – company and sector innovation is a key driver of productivity and competitiveness. With our partners, we will take a more integrated approach to stimulating innovation, knowledge transfer and commercialisation, with a focus on getting more new products and services into global markets.


• help companies to achieve additional revenues from innovation, worth up to £100 million over the next three years.

International trade and investment – by identifying and responding to significant global opportunities, we will support more companies to start exporting and help more experienced exporters to enter new overseas markets and grow their international sales. Within an increasingly competitive investment market, we will also target strategic inward investment which develops the competitiveness of Scotland’s sectors and helps to create employment.

By 2015, we will

• achieve an increase of up to £1.7 billion in international sales from supported businesses.

• deliver up to 35,000 planned jobs through the attraction of foreign investment, of which up to 12,000 are planned high value jobs.

Low carbon – by helping companies to improve resource efficiency and adopt new low carbon business models, we will help them to increased productivity and growth. We will also help sectors to identify and respond to new low carbon business opportunities as they emerge.

During 2013 - 2014, we will

• identify up to 100,000 tonnes of CO2 savings arising from our projects and company support that improves efficiency.

In all these priority areas, we will work with business to stimulate demand and optimise the use of digital technologies to help Scotland become a world-leading digital economy.

4 5


How we will deliver our prioritiesPartnership

A strong partnership approach is vital to achieving the goals set out in this business plan.

Through the Strategic Forum1, the Economy Board and the Community planning National group we are seeking to align our collective efforts to deliver greater impact. By working closely with Local Authorities, and as active members of Community planning partnerships, we will help to progress Single Outcome Agreements and support the development of local and regional economic strategies to bring new investment, new jobs and new opportunities for communities throughout Scotland.

We are already making a strong contribution to economic development planning and delivery with our partners across Scotland. This includes our support for bodies such as glasgow Economic Leadership, Ayrshire Economic partnership, South of Scotland Alliance, Aberdeen City and Shire Economic Future and others across Scotland. We know that a strong partnership focus can deliver transformational projects, such as the Dundee Waterfront, Fife Energy park and Edinburgh Bioquarter and we will be maximising these partnerships to their fullest extent in the coming years.

Through Industry Leadership groups and Regional Advisory Boards, we are able to engage directly with the private sector and get input from over 400 individuals and organisations across Scotland to help us tackle strategic priorities and help develop and deliver industry strategies.

Internationally, 680 members of the globalScot community continue to work with us to promote Scotland overseas, bringing expertise and opportunities for Scottish businesses. This Team Scotland approach will ensure that we can make the biggest difference to the competitiveness of Scotland with the resources we have available.

Evidence of impact

The activities and priorities set out in our business plan continue to be based on the evidence we have gathered about the effectiveness of our interventions. This allows us to measure the potential and actual

impact on the economy of our investment and ensure we are allocating resources where it will make the biggest difference.

Assessment shows that our investment proposals and interventions have an important impact on the Scottish economy over the short and longer terms. They also contribute significantly to job creation with analysis projecting 12,000 to 18,000 additional jobs by 2017.

Equal opportunities

There is a strong business case for embedding equality into the work of Scottish Enterprise. We are committed to realising Scotland’s full economic potential by embedding equal opportunities across our wider policies and practices as an employer and service provider. We are also encouraging the companies we work with to embrace the equality agenda, recognising that it makes good business sense.

We are further guided by strong legislative drivers and will continue to apply our successful equality impact assessment methodology to all projects and policies. This, along with activities outlined in our new Equality Strategy, will help us to demonstrate that we have eliminated discrimination, promoted equality and fostered good relations between the different groups that we employ and serve.

Improving our operations

We have made great strides in recent years to look at our structures, streamline our operations and generate efficiencies, and this has allowed us to put more resources into frontline delivery. We will improve our professional development and build our evidence base to add more value to our engagement with customers and stakeholders. For example, we will support our account managers to build deeper relationships with companies, helping them to achieve growth at scale, particularly in international markets.

We also aim to exploit the full value of the increased investment we have made in recent years to expand our field offices overseas and embed an international mindset across the organisation, to ensure we can target the huge opportunities that exist for Scotland in key growth markets such as China and India, Africa and the Americas.

1. Scottish government, Scottish Enterprise, Highlands and Islands Enterprise, Skills Development Scotland, VisitScotland and Scottish Funding Council.

GLOBALLY COMPETITIVE COMPANIES

To help drive sustainable economic growth and create and sustain new jobs, we work with Scottish companies to raise their ambition and productivity, invest more in high value innovation and plot their route into global markets.

6 7


The critical importance of high growth companies

Evidence shows that ambitious high growth companies hold the key to job creation and wider prosperity in Scotland. It is this group of companies that we focus on, because their success will drive the growth that can transform the economy. We will work more intensively with companies with the ambition to grow internationally and to achieve significant scale, targeting those that will make the biggest difference to Scotland’s economic performance, both in the short term and in the future.

We know from evaluation evidence that our approach is working. Our portfolio of around 2,000 account managed companies (where each company has a dedicated relationship manager) is performing better than the wider Scottish business base. These companies employ around 300,000, including 2,000 modern apprentices. We also know that the package of direct support we provide to these companies yields high returns on investment. Through our focus on issues such as leadership development, innovation, export development and access to finance, we help companies to plan for long term strategies for success in global markets.

We will continue to target our support to companies at all stages of growth, from start-ups with the potential to become the next generation of high growth entrepreneurial firms, to larger companies which are important to the local economy or a particular sector. We will also target companies that are ambitious to achieve higher rates of growth as a distinct segment of our evolving account managed company portfolio, reflecting the additional benefits that such firms bring to the economy in terms of jobs and prosperity.

.

Scotland’s Business Landscape

2,250 companies with 250+ employees

Exports4,682 companies

selling 50%+ outside Scotland and overseas

Business start-up15,000 start-ups

55 high-growth start-ups341,360 businesses in Scotland

(339,110 with 250 employees or less)

102,275 firms with employees

2,700 growth Firms

Growth CompaniesSE’s Focus825

14,000 SMEswith turnover £1m+

5,219

239,080 self-employed(businesses with no employees)

What we will deliver during 2013-2014

• We will secure a substantial increase in activity by account-managed companies to achieve significant turnover growth of up to £1.3 billion, particularly in international markets. This will help to boost the growth of sectors like oil and gas, food and drink and engineering. We will also co-ordinate our investment, innovation and company growth support in the areas where Scotland has global competitive advantage, as well as in sectors with significant opportunities, such as renewables, life sciences and the digital technology elements of the creative industries.

• We will ensure a single contact point to help every company access the best source of support, regardless of location or sector. This service will be enhanced with the launch of the Business portal for Scotland. This will make it easier for businesses to find information about the range of support available from government and the public sector in one place. The portal will pull information from the websites of Scottish

6 7


Enterprise, Business gateway, Highlands and Islands Enterprise and Skills Development Scotland, meaning businesses don’t have to spend time navigating around individual organisations’ websites to find what they’re looking for. The portal also supports the Scottish government’s drive to deliver more services online, where it makes sense to do so.

Customer feedback shows that we add considerable value through the connections we make and the intelligence we can provide. We will help to identify and develop new business opportunities, particularly overseas where we broker valuable business relationships through our events, our network of international offices, and through our links to national and global business networks such as globalScot.

Underpinning our approach is the need to add value to the businesses we work with, helping to drive customer focus and build leadership capabilities. The majority of growth companies we target are small to medium sized enterprises and many are at early stages of development, a point where external support can be particularly effective.

Improving entrepreneurship

Within a global marketplace where competitive advantage is realised through innovative products, processes and business models, fostering an entrepreneurial and ambitious culture is essential for Scotland to thrive. We require more people with an entrepreneurial mindset and ambition, with an appetite for risk, who can create and grow companies of international scale.

As part of our more focused approach to supporting growth companies, we need to address the challenges of building Scotland’s enterprise culture. Working with the Scottish government and alongside our partners in local authorities, Business gateway and in our universities and colleges, we will seek to create an environment which nurtures and supports the development of entrepreneurs. This applies both to supporting individuals and business start-ups to grow, as well as to improving entrepreneurial thinking and ambition within existing companies.


• deliver two further rounds of the Scottish EDgE (Encouraging Dynamic growth Entrepreneurs) competition to provide funding and support for up to 30 entrepreneurial companies to realise their growth potential.

Our focus during 2013-2016

We know that the process through which firms achieve high growth is complex. Key events or changes within a company often act as a trigger point to go through a period of rapid growth. This can include a change in ownership, an innovation or a major new product, the injection of new investment, major new orders, or a shift into new markets, particularly overseas.

These are all areas where we have a successful track record of working closely with Scottish companies to exploit. As a result, our focus over the next three years will be:

• Leadership, tailoring our offer to high growth firms and recognising the role leadership and organisational development can have in driving positive change.

• More market-led innovation, where there are clearer routes to global markets and in response to sector opportunities.

• Improved access to finance for Scottish companies, increasing the supply of investment finance and doing more to help companies unlock funding.

• Increased international trade and investment in global markets where Scottish sectors and companies have greatest opportunities to export and attract investment and jobs to Scotland.

• Using business efficiency as a platform for building competitiveness and growth, helping to deliver Scotland’s low carbon opportunities, for example through the Scottish Manufacturing Advisory Service and the business support delivered by our team of sustainability specialists.

• Increased exploitation of digital technologies to improve innovation, growth and competitiveness in partnership with Scottish government, Highlands and Islands Enterprise and Business gateway.

8 9


8 9

• Greater access and awareness of the support we provide in partnership with Business gateway and Highlands and Islands Enterprise and through our work with business organisations and industry groups.

Our support in these areas is explored in greater detail in the next sections.

Leadership and organisational development

Dynamic leadership is a key characteristic of ambitious, high performing companies, from high growth start-ups to more established firms. Leadership and ambition are important drivers of business growth as they stimulate internationalisation, talent management and innovation. Successful leaders are also open minded to new opportunities. They are proactive, willing to take risks and provide staff with autonomy, building their confidence to respond to opportunities and challenges.

We plan to target our leadership offer at high-potential growth firms in line with our approach to developing high impact globally competitive companies, recognising the role that improved leadership has in instigating positive change in the Scottish economy.

In order to increase our leadership offering to Scottish companies over the next three years, we will:

• support more new companies with significant growth potential through our intensive support programmes such as Leadership for growth and Developing International Strategy.

• deliver our Leadership Essentials programme to give companies at an earlier stage of growth access to leadership training and advice.

• extend our traditional marketing channels to include social media and encourage companies to access our on-line Leadership Lab tool with its case studies, videos and podcasts.

• deliver a wider package of tailored activities including a customised leadership learning journey, specialist master classes and international executive education.


• help 250-350 account managed companies develop their leadership and strategy.

Establishing a mindset of ambition and entrepreneurial behaviour in an organisation often requires a change in organisational culture. This can be a challenging and long term process and a focus on leadership is not enough in itself.

Our work in this area is underpinned by encouraging business leaders to be open to reviewing their organisational structure, developing the skills of their staff, and ultimately improving their business competitiveness.

• We will continue to deliver management development support to maximise the potential of key managers and encourage the progression of organisational culture and communication through effective employee engagement and good job design.

• We will further design bespoke and wide ranging interventions to tackle key issues such as succession planning, provide executive development, coaching solutions and advice on implementing an effective performance management system.

We recognise that bringing about major change requires close collaboration with our partners in the public and private sectors and we do this through Scotland’s Framework for Action for Ambition and Leadership which brings together key public partners to coordinate activity and awareness-raising. To illustrate our commitment to partnership in this area, we are working with others including our subsidiary body, Investors in people Scotland to find ways to encourage and harness the ideas, skills and enthusiasm of people within business to help achieve their goals.

8 98 9


photograph: Brian Connell, Production Director, Brodie Engineering Ltd.

Brodie Engineering

Kilmarnock based Brodie Engineering Ltd provides innovative design, installation and general repair solutions to both main and light railway sectors. Since 2009, the company has grown rapidly, but this growth has presented the management team with a number of challenges and has put pressure on their site and its ability to support the business expansion.

Along with site sourcing introductions and an RSA grant, we have supported a strategic review of leadership and management to support the ongoing business expansion. With a focus on company growth and development, this review entailed a series of group and individual reviews alongside profiling of the company and roles within it.

Identifying what the MD and his senior team needed to do differently or better, was key to freeing up the MD and allowing him to be less hands-on. Substantial development support was provided by us during this period consisting of intensive coaching support for the MD, coaching support for key managers, support to improve the effectiveness of the management team and bespoke management development support.

The benefits of this work and planning became apparent very quickly with the result that the MD is now much more strategic and less operational. A further development opportunity has been the MD joining our Leadership for growth programme and one member of the management team has recently been put forward for the Emerging Leadership programme.

“We saw immediate positive impacts

resulting from the Leadership

Development activity. We know that the

company needs to continue to develop and change in order to keep

growing as part of its business strategy. The support from

SE has helped me to adopt an increasingly

strategic role; building my senior team and

their skills and roles; as well as helping me to create the time and

space to do this.” Gerry Hilferty, MD, Brodie Engineering Ltd

10 11


10 11

Innovation

Innovative companies and sectors are key drivers of productivity and competitiveness. By improving Scotland’s innovation performance, we can make a considerable difference to the long term growth of our economy.

Whilst we have key assets and strengths in our universities (Scottish Higher Education R&D expenditure is well above UK average), Scotland’s investment in business innovation and entrepreneurship activity lags behind other small Northern EU regions. For instance, to reach the top quartile of EU economies, we need 5,000 more Scottish companies to be active in terms of innovation, developing new products, new processes and new ways of doing business.

We know from evaluation that returns from our mainstream innovation support are significant. In order to achieve even more, however, we need to align our activities with those of our partners in orderto help companies generate stronger revenues from their investments in innovation. In doing so, we can help companies to improve competitiveness, achieve success in international markets and increase growth.

Our approach to company innovation is well developed through our Innovation Support, SMART and R&D grant programmes. We also provide specialist support in areas such as life sciences, renewable energy, oil and gas, engineering and food and drink, reflecting the different innovation requirements across our sectors.

Scotland is now an active participant in the EuropeanCommission’s Smart Specialisation platform which is driving excellence and specialisation in regional innovation. As a result of our participation in this, there will be a refresh of the Scottish Innovation Strategy.

We will take forward a number of actions to boost Scotland’s innovation performance. This includes a more collaborative approach to better align activity in knowledge transfer, innovation and commercialisation, which is already underway in conjunction with the Scottish Funding Council, the Scottish government and Highlands and Islands Enterprise. This will see the development of sector

Innovation Centres in Scotland, to improve links and knowledge exchange between universities and businesses, particularly SMEs.

Our Team Scotland approach also focuses on maximising the potential offered by the current programmes supported by the European Union, Technology Strategy Board and the planned Horizon 2020 programme which will commence in 2014. An important element of this work will be to make more of the key assets and strengths we have in our universities, in order to boost the innovative performance of companies in Scotland.

• We are supporting the Technology and Innovation Centre at the University of Strathclyde to encourage engagement between business and academia. This will become a hub for technology development in the energy and enabling technologies sectors, and is scheduled to be operational by June 2014. The Centre will house the City Observatory, as part of glasgow’s City of the Future initiative to demonstrate how providing new integrated services using new technologies across health, transport, energy and public safety, can improve the local economy and increase the quality of life of glasgow’s citizens.

• Our support will help accelerate the commercialisation of products and processes with a strong market opportunity, to help grow new companies of scale. We will also encourage more collaboration between businesses to facilitate significant investments in R&D, targeting opportunities in global markets.

We are also exploring how we can better utilise high levels of public procurement from bodies such as the NHS, to help stimulate more demand-driven company development. Through our key partnerships with other government agencies, we can help business to develop new products and services that can reach domestic and global markets.

10 1110 11


Integrated Magnetic Systems

We have supported Dundee based biotech company, Integrated Magnetic Systems (IMS), since its inception, helping to build understanding of the market and commercialise its innovative work in magnetic proteins.

After reviewing the team’s initial funding and product roll-out plans, we identified an opportunity to modify the technology development programme to bring products to market earlier, changing the investment profile to a realistic and achievable level. A SMART: Scotland award allowed IMS to speed up its R&D programme and bring forward the launch date of its first commercial product.

An investment of £1 million by a Scottish biotech investment group, Biolink has helped IMS to move forward in leaps and bounds with the development of its magnetic proteins. IMS is also in discussion with several potential customers, following trips overseas to meet and engage with our networks, via Scottish Development International (SDI).

“SE provided us with the matched funding that enabled us to attend conferences, meet important industry contacts and arrange introductions with the people who became our main investors. We wouldn’t have been able to progress as quickly or as successfully without the advice and funding provided by SE.” Dr Jamie Love, Chief Operations Officer, IMS

photograph: Dr Eddie Blair, Chief Executive Officer, IMS

12 13



• help companies achieve significant additional revenues from innovation, worth up to £100 million over the next three years and secure up to £150 million of additional commitments in R&D investment through SE-assisted projects.

By 2015, we will

• support 15 to 21 entrepreneurial companies capable of achieving £5 million turnover growth within five years of trading, or attracting £10 million investment.

The digital economy

growth in the digital economy has the potential to make a significant impact on improving Scotland’s innovation performance. Our focus is on helping companies to exploit digital technologies to help them develop new products and reach more customers in new international markets.

We will also deliver new activity as part of our contribution to Scotland’s Digital Future Strategy, including demonstration projects in sectors and a new Digital Excellence programme involving our account-managed companies. The Digital Future strategy recognises the potential that digital technologies have to transform markets and businesses, across all sectors of the economy. We will increase our collaborative work with our partnersto help achieve the ambition of Scotland becoming a world-leading digital economy by 2020.

Access to finance

As a consequence of the global financial crisis, there have been significant changes in the scale and nature of the funding markets, particularly for small and medium sized companies (SMEs) with growth and export potential. Borrowing levels for companies continue to contract as firms seek to reduce debt while waiting for better or more certain trading conditions.

As a result, we know companies are putting off investment decisions and delaying projects and unless this is addressed, it could hold back Scotland’s long term economic recovery.

We will look at new ways to unlock demand for finance by Scottish companies and work with banks and other investment partners to increase the range of finance available. Key to this will be ensuring Scottish businesses are aware of the funding options available from Scottish Enterprise as well as clear signposting to information on other lending options. This will include a series of joint events with banks, focussed on topics of greatest importance to realising Scotland’s economic potential.

We also need to ensure that companies are ready to seek investment. We understand that the levels of ‘financial literacy’ which companies are required to display are higher than ever before, as are the responsibilities of due diligence and compliance. This will require increased access to comprehensive financial expertise for more companies in order to stimulate and fulfil untapped demand for funding for growth.

Through the Scottish Investment Bank, we will tailor products to realise significant sector opportunities, supporting both early stage and established companies with growth potential and SMEs that are focused on international markets. An important role for the Scottish Investment Bank is to improve the functioning of the Scottish risk capital market, working with banks, business angels and global venture capitalists to help early stage companies to achieve their high growth potential.

12 13


We have established, in partnership with the Scottish government, the Scottish plastics Loan Fund and the Renewable Energy Investment Fund (REIF). Designed to complement existing public and private sector finance schemes currently available in Scotland, REIFprovides innovative interventions tailored to individual project requirements. It is expected to significantly accelerate access to finance for key projects in the renewables sector that have demonstrable funding gaps. These complement the suite of more established funds such as the Scottish Seed Fund, the Scottish Co-Investment Fund, the Scottish Venture Fund and the Scottish Loan Fund.


• Deliver specialist Financial Readiness support to up to 400 companies to improve their attractiveness to potential investors and lenders, as well as specialist support for export finance.

• participate in new specialist funding sources to unlock funding for companies in key sectors. This will include the Scottish Life Sciences Fund managed by Rock Spring Ventures.

• Develop a single, searchable source of finance for companies, which will form part of the new Scottish Business portal.

• Maximise leverage from new and untapped sources of investment into Scottish projects, such as the green Investment Bank.

International trade

The importance of international markets has never been more important for Scotland’s future economic success.

Changes in global trading and investment patterns means there are vast opportunities for Scottish companies to grow their business but we need to act quickly as we know many of our competitors are chasing the same opportunities.

While Scottish Development International (SDI)continues to be on the frontline in delivering support to Scottish companies overseas, we are committed to embedding an international mindset across our entire organisation.

This will help us to ensure that we deliver a seamless approach to helping Scottish companies and sectors identify the substantial opportunities that global markets still present.

From our staff based around the world, we are able to gather real-time and in-depth market intelligence about the evolving and changing conditions in specific overseas markets. By exploiting this intelligence, we can help to identify opportunities early and support our companies and sectors to respond.

We also recognise that we need to do more to build the capacity of Scottish companies to operate in international markets. This includes the important task of increasing the number of Scottish companies becoming new exporters.

We will continue to target the markets that have the greatest opportunities for Scottish companies and sectors, responding to changes in markets and the emergence of new opportunities in different geographical areas. For different sectors (and sub-sectors) and different companies, we recognise the need for flexibility and innovation and we aim to develop a bespoke approach for each company, reflecting the unique nature of the opportunities and the capacity and capability of the company.

14 15


14 15

Despite challenges within the Eurozone, Europe still offers significant and growing export opportunities in a wide range of markets for Scotland. It continues to be the main export market for Scottish companies and a key market for new exporters. The faster growth in emerging and maturing Asian, South American and Middle East countries, alongside steady growth forecast for North America, also offer a diverse set of export opportunities for Scottish companies, particularly for those already exporting and looking for further growth. However, each of these markets requires a different approach and specificity is important for success.

We will provide a range of support to companies, from identifying new markets through international strategy development, sales and marketing skills

and in-market intelligence, to providing access to international networks and on the ground support from our overseas field offices. We have expanded the presence of our overseas field offices in key geographies and will continue this process in 2013.

We will work with Scotland’s Industry Leadership Groups to help turn their positive sector export growth ambitions into reality through individual Export Action Plans for each sector. Through these, we will help develop an industry approach to increasing exports, including both company level support and industry-wide initiatives, working with partners to build leadership capabilities and overcome barriers to exporting such as innovation and access to finance.

Stavanger • Copenhagen

Glasgow (HQ)• • • Moscow London • •Düsseldorf Calgary • • Toronto Paris • Brussels• § Boston Seoul Chicago •

San Jose • § New York • Beijing • • Tokyo New Delhi § Houston Dubai • • Shanghai

• Middle East w Shenzhen •• • TaipeiMumbai • • Hong Kong

Hyderabad West Africa w

• Singapore

•Rio de Janeiro

• Sydney

• SDI overseas offices or locations with representation¡ Serviced SDI offices for rent® Proposed SDI office locations

14 1514 15


Cocoa Black

Cocoa Black, based in the Scottish Borders, manufactures and retails a range of luxury handmade chocolate, cakes and patisserie. The company also operates a school which provides instruction in chocolate making and baking, from beginners to professional chefs.

The company was considering the complexities of exporting and asked us for support. We quickly saw that the business had huge international potential and identified opportunities for their niche chocolate products. There was also a recognition that the company needed to be very selective about which international markets to target.

With our support, Cocoa Black undertook an International Strategy Workshop to identify business expectations around exporting and what the potential risks might be. Our research also helped to determine what the key criteria should be for evaluating potential overseas markets and where the business would stand the best possible chance of export success.

Having agreed an international strategy, Cocoa Black is now actively working to deliver it. Much work is also going on behind the scenes to ensure that the business can grow to meet overseas demand, for instance, ensuring that all manufacturing processes are as efficient as possible.

“SE has given us the opportunity to adopt a structured approach to market selection and has also uncovered commercial opportunities which would otherwise have been missed. There remains a lot of work to be done, but SE’s intervention has certainly allowed us to develop this aspect of the business with much greater confidence”. Ruth Hinks, Owner/MD, Cocoa Black

16 17



• Undertake significant trade promotion activities to drive export growth in oil and gas, with a particular focus on new markets, in Norway, Brazil, Canada and West Africa.

• Initiate agreed actions with industry partners in the food and drink sector to deliver the step change needed in international export growth. This will deepen the impact of the Asia food and drink strategy as well as our strategies in the Americas, Europe and the Middle-East.

• Develop growth in exports through e-commerce to capitalise on global opportunities in Digital Connectivity.

• Support up to 330 companies projecting turnover growth from exporting, including between 150 and 210 projecting significant turnover growth of more than £1million.

By 2015, we will

• Support up to 10,000 companies to develop their capacity for exporting through initiatives like Smart Exporter. We will work more intensely with those new exporters who have the most export potential (that is, £500,000 of export sales).

• Achieve an increase of up to £1.7 billion in international sales from supported businesses.

In delivering this activity, we will also contribute meaningfully to the government’s International Trade and Investment Strategy and its target to deliver a 50% increase in international exports by 2017.

Inward investment

Inward investment is a major component of economic growth. Inward investors account for over a third of Scottish private sector employment and turnover and this has risen over the last ten years. Foreign direct investment also contributes to government growth objectives including: increased exports; regional equity; access to finance; and connectivity. Foreign owned companies also carry out 60% of Scottish business research and development.

We have established a very strong track record in attracting foreign direct investment, maintaining a consistently strong performance in comparison with other parts of the UK and the EU. We have maintained this position even in the very tough investment climate of recent years, with many global and multi-national companies delaying investment decisions as they look to strengthen balance sheets. There remain, however, significant opportunities for further expansion and new investment and we know that our specific skills, research excellence, natural assets and value for money are crucial in winning inward investment projects.

To stimulate investment, we continue to develop a world class approach to sales and marketing with specific propositions which are developed, based on demonstrable Scottish competitive advantage. In the face of highly competitive and shifting global markets, we will take a more strategic approach to attracting new investment, encouraging those investors already operating in Scotland to consolidate and expand their business while encouraging new investments. In order to achieve this, a number of steps will be taken:

• We will maintain a long term approach to relationship building with existing and prospective investors and customers based on future prospects, even if it does not bear short term returns.

• We will focus on aftercare to maximise new investment and employment opportunities by further developing and deploying our high performance account team approach across the business.

• We will use intelligence from foreign investors to inform where Scotland can improve its proposition and positively influence partners to make Scotland more competitive.

16 17


To win investment, Scotland has to be more competitive than other locations globally and this needs to be based on a deep understanding of our assets and sector strengths and how we compare to others. However, if Scotland is to continue to perform well, we also need to remain innovative in our approach to winning new inward investment projects.

The primary focus of our efforts will be to deliver strategic investments which build the long term competitiveness of our growth sectors such as offshore renewable energy and life sciences. This will be delivered in a way which ensures that shorter term economic gains are optimised including jobs, capital investment and regional equity whilst simultaneously developing longer term strengths. We will seek to maximise the economic potential of foreign direct investment and our focus will be on building supply chains to allow sectors to compete and grow.

At the heart of our success is collaboration with others. We are working closely with the Scottish government and Highlands and Islands Enterprise (HIE) to optimise the contributions of partners and other stakeholders such as UK Trade and Investment. We are bolstering our presence in international growth markets and are making greater use of prominent Scottish companies and individuals, including the globalScot network to further enhance the perception of Scotland as a prime business and investment location.

We are also working with partners in industry, our cities and the wider public sector to strengthen the underlying competitiveness of Scotland to make it more attractive for investors to locate and expand. This has occurred through developments in, for example, port infrastructure, engineering skills and high speed broadband. As part of the preparation of Scotland’s strategic framework for international air connectivity, we will also work with partners to attract direct air routes that will encourage further international trade and investment.

By 2015, we aim to

• support delivery of up to 35,000 planned jobs through the attraction of foreign investment, of which up to 12,000 are planned high value jobs.

Business efficiency as a platform for growth Through our company growth activity, we help companies to become more competitive by increasing their resource efficiency.

Efficient management and reduction of energy, water and raw materials, makes good business sense because it saves bottom-line costs, boosts productivity and competitiveness as well as conserving the environment. Over the next three years, we will continue to encourage more firms to be even more ambitious in their efforts to manage and reduce their resource inputs, working in partnership with Resource Efficient Scotland.

Our focus on business efficiency is delivered through two routes: • The Scottish Manufacturing Advisory Service

(SMAS) provides expert advice, one-to-one support, training and events for manufacturing businesses of all sizes throughout Scotland. The practitioner team consists entirely of hands-on experts in process improvement, lean manufacturing, innovation and allied disciplines. The starting point for companies is the free manufacturing review which will identify ways to improve the productivity and competitiveness of a business.

• Our team of sustainability specialists uses its expertise to deliver bespoke advice to companies in the areas of energy use, waste reduction, water utilisation and renewable energy technologies. Their advice helps Scottish companies achieve sustainable growth by reducing costs, improving productivity while minimising their impact on the environment.

By 2016, we will

• help companies to generate significant productivity and efficiency improvements, worth at least £70 million to £85million.

Mainetti

Mainetti is a multinational garment hanger company which manufacturesand recycles hangers for dispatch to a number of well known high street customers. The company’s Jedburgh site focuses on manufacturing and currently employs around 185 staff.

As part of Mainetti’s ‘plan M’ policy, the company constantly looks at new ways to increase productivity and reduce resource use. One of the mainways it does this is by recycling and remanufacturing old hangers back intproductive use. The SMAS team has been working with Mainetti, helping to develop optimum site layouts and training employees in lean tools and techniques.

In order to reduce production costs and CO2 emissions, Mainetti has also recently been working with our sustainability specialists to review current energy consumption and identify opportunities to make use of renewable resources.

The company’s commitment to sustainability was acknowledged at the 2012 VIBES Awards where they were announced as winners of the management category. This award recognises businesses whose management systems deliver continuous improvement in environmental performance.

o

“SE support has added considerable value to our “Plan M” process of sustainability and continuous improvement. It has helped to improve our productivity by adding structure and lean principles into the culture of the organisation. This has also highlighted the need for leadership and management training for line leader.”

Graham Wilson, Production Director, Mainetti UK

18 19


18 19


GLOBALLY COMPETITIVE SECTORS

In responding to the challenges and opportunities of the current economic climate, we are working with industry to engineer a transformation in Scotland’s competitiveness and performance, facilitating change within our sectors and addressing opportunities for Scotland in global markets.

The government Economic Strategy identifies the sectors which offer particular opportunities for growth due to existing comparative advantages, or through the potential to capitalise on Scotland’s unique natural assets and world class infrastructure. In addition, the government Economic Strategy recognises the importance of Scotland’s technology and engineering capabilities and their importance in underpinning the supply chain for other growth sectors.

Together, growth sectors account for a significant and increasing proportion of Scotland’s economy, responsible for around 45% of our gross Value Added and around 30% of employment.

• Established sectors such as oil and gas, food and drink, financial services and engineering are trading successfully in global markets, are significant employers and are driving Scottish productivity and export growth.

• Emerging sectors such as life sciences, offshore renewables and digital media (within creative industries) have the potential to accelerate new growth and to scale up in order to secure an international market position.

• Meanwhile, sectors such as tourism and construction are important contributors to employment and to the vibrancy of the business environment in Scotland.

We know that our growth sectors contribute in different ways to Scotland’s short and longer term economic performance and that the drivers of productivity vary across them. We are also aware that significant future growth will come from exploiting the capabilities which lie between our growth sectors and as such, our input will be tailored to where we can add the most value and impact.

We are also continuing to develop our understanding of new opportunities emerging across sectors, such as big data, industrial biotech, enhanced health, premium and provenance, and high-value manufacturing. For instance, analysis of Scotland’s energy cluster shows the highly inter-connected nature of the sector with linkages between oil and gas, advanced engineering, data management, renewables and chemical sciences. This highlights opportunities for new growth in international markets, building on expertise that has been developed in the North Sea and by firms involved in the reduction of locally sourced hydrocarbons in the chemicals industry.

The digital economy is also becoming a major driver of sector growth, likely to be crucial in Scotland’s future competitiveness in areas such as data analytics. It underpins important areas such as innovation, export growth and the transition to a low carbon economy, both for companies and sectors.

20 21


Our work with sectors is led by Industry Leadership Groups, made up of senior figures from industry, the public sector and academia. These groups have a crucial role in shaping Scotland’s economic ambitions, leading the development of sector strategies and highlighting where Scotland has niche strengths in global markets. In responding to these strategies, Scottish Enterprise produces delivery plans which set out the range of activities we undertake alongside partners to help deliver the sector opportunities.

A key concern for all Industry Leadership groups is the need to improve skills and develop a strong workforce across our sectors. In response, Skills Development Scotland (SDS) is leading the development of Skills Investment plans and Skills Action plans. We are supporting our colleagues in SDS and other bodies in this work to ensure that Scotland’s skills support system contributes to the achievement of our shared ambition for sectors, and that people in all areas can benefit from the job opportunities resulting from sector growth. We are also working with SDS to ensure effective integration between the national web-based service for employers – Our Skillsforce – and the business support provided through the new Scottish Business portal.

Scotland also needs to be a globally competitive location for international talent which can bring a global perspective along with niche technical, commercial and management expertise. Our TalentScotland project will continue to ensure that Scotland is promoted internationally as a career destination of choice. It will work closely with our industry teams, employers and partners to help identify and address the key skill shortages impacting company growth.

Our sectors will also benefit from our approach to delivering a more supportive business environment. For instance, through the Scottish government’s Enterprise Area policy, there is an emphasis on some of our most dynamic sectors such as renewables (at Leith and Dundee port) and life sciences (at Bioquarter, Biocampus and Irvine), where there is the greatest potential to create new employment opportunities, stimulate private investment and boost economic growth.

.

Our sector delivery, 2013-2016 What we will deliver across our sectors, during 2013-2016.

Oil and Gas

Oil and gas remains one of our most important economic sectors and we have world class capabilities and existing competitive advantage in areas such as: subsea, safety and asset integrity. The industry’s skills and capabilities also offer the unique potential to diversify, transferring skills and knowledge to other related industrial sectors such as offshore renewables and carbon capture and storage.

Through the new Oil and gas Strategy 2012-2020, the strategic focus of the Scottish Oil and gas Industry Leadership group is on maximising resource recovery. It aims to do this by accelerating and increasing industry-led innovation and building the Scottish supply chain (to £30 billion by 2020) both domestically and internationally.

Enhanced levels of recovery will require new technology development and we will therefore increase the level of company-based support for sector innovation and R&D activity, working with partners to issue a series of innovation calls for technology priorities including asset integrity, subsea and imaging.

As part of our efforts to support development of the supply chain, we will recruit a further 100 oil and gas companies to our account managed portfolio over the next three years. We will also develop deeper relationships with a number of larger companies.

It is estimated that oil and gas will play a crucial role in helping to meet the Scottish government’s target of a 50% increase in exports by 2017. We will continue to support those companies that are already operating internationally and encourage others to internationalise. We will also look at new and existing inward investment opportunities, working with the Scottish based management teams and the headquarter bases of potential investors. This includes targeting opportunities in new fast-growing markets, such as West Africa and Brazil, as well as established markets such as Australia and North America.

20 21


Food and Drink

The food and drink industry has an ambitious agenda for growth, based on opportunities in UK and international markets where Scotland has real competitive advantage through our strong premium brands, a reputation for naturally healthy products and excellent quality and provenance credentials. By 2017 the industry aims to have a global reputation as a Land of Food and Drink, to be generating £12.5 billion through exploiting growth markets, with exports reaching £7.1 billion. The exports target has just been increased by £2 billion reflecting the industry’s outstanding performance in premium overseas markets.

Our role is to continue to work with Scotland Food and Drink, the industry leadership organisation, and partners, to fully exploit these opportunities. We will work with individual food and drink businesses to help them grow, for example through productivity improvements and market development. We will support companies to increase sales in international markets, focusing on opportunities in North America, Europe and Asia, helping to build the reputation of Scotland’s strong brand on the world stage.

Our flagship Food and Health Innovation Service will help businesses develop new products for the rapidly expanding health and nutrition sector, worth around £350 billion globally. This will be delivered as part of an integrated approach to innovation, working with Scottish Funding Council and other partners. Our involvement in the routemap to 2014 will also help companies exploit the opportunities around the Commonwealth games, Ryder Cup and Homecoming 2014.

Technology and Engineering

The technology and engineering sector accounts for £10 billion of Scotland’s annual gVA and is a significant contributor to Scotland’s export activity, with around £5 billion of high quality products and services exported to global markets each year. Scotland’s Technology Advisory group now has a wider remit, covering a diverse range of engineering, manufacturing and technology companies, acting as an enabler of the development of a range of other industry and market sectors.

Our support is directed towards the acceleration of strong technical capabilities such as data capture and informatics and the exploitation of deeper market penetration in areas such as smart mobility, digital health and care, the low carbon built environment and big data, all of which are underpinned by our strength in digital technologies. Our integrated approach to enhanced company competitiveness across the supply chain will bring together direct company support through account management, the Scottish Manufacturing Advisory Service and Scottish Development International. Our support will also be delivered through sector specific interventions such as bespoke R&D calls, complementing the activities of partners such as the Scottish Funding Council through the new Innovation Centres.

Renewable Energy

Scotland has significant offshore wind, wave and tidal resources. If these can be more fully harnessed, building on expertise from other sectors such as oil and gas, there is considerable long term potential for Scotland to become a major player in global offshore renewables markets and to create significant and sustainable long term economic growth.

As a key delivery partner in the Renewables Industry Advisory group, we will help to drive the implementation of the Routemap for Renewable Energy in Scotland. Through the Routemap, we aim to establish competitive advantage for offshore wind and marine energy industries in Scotland, with ambitious long term targets for the development and deployment of offshore technologies.

We will work intensively with growth companies in the sector, supporting industry innovation requirements to lower the cost of offshore renewable energy and helping to access finance. We’ll also ensure that Scotland’s business infrastructure is globally competitive and working alongside industry, we will help to build investor confidence and understanding of the Scottish supply chains for both wind and marine energy. Our focus will be on crucial components and services and helping companies to internationalise and tap into key market opportunities.

22 2322 23


We will maintain the level of targeted investment and support in the following crucial areas:

• Innovation support – we will continue to identify areas that can accelerate research and development and deliver the necessary industry cost savings, for example, we support prototype development through the funding provided by the prototype Offshore Wind Energy Renewables Scotland (pOWERS) Fund. We will continue to support the Scottish Energy Laboratory and work with partners to develop further test facilities for turbines, both on and offshore.

• Supply chain development - we will continue to support a globally competitive Scottish supply chain through the attraction of inward investment and through support for indigenous companies to grow and diversify into offshore renewables. We will also provide support through the European Offshore Wind Deployment Centre for manufacturers to demonstrate their turbines. Our Offshore Wind Expert Support programme will also help companies build appropriate strategies to enable them to win business in the offshore wind sector.

• Infrastructure development - targeted investment in infrastructure is needed if Scotland is to take advantage of the opportunities it has in offshore renewables. We are investing in strategic locations and projects, to help unlock barriers to growth and attract significant private investment, for example at the ports of Leith and Dundee, as well as Fife Energy park. Our £70 million National Renewable Infrastructure Fund will support the development of strategic supply chain facilities at targeted locations in Scotland.

• Project and company finance - getting the required levels of finance into renewables and other low carbon technologies such as energy efficiency and low carbon heat is a key priority. We will also work alongside partners to help build a strong pipeline of investor-ready projects, seeking finance from potential sources such as the Renewable Energy Investment Fund (REIF) and the green Investment Bank. REIF can provide loans, equity investments and guarantees (but not grant funding) for projects that will either accelerate the growth of the marine renewable energy sector in Scotland, increase community ownership of renewable energy projects, or provide finance for district heating networks that utilise renewable heat technologies. During 2013 – 2014, we aim to

• secure the first tenants into our Inovo building to encourage engagement between businesses and academia, as an important part of the International Technology and Renewable Energy Zone (ITREZ) in glasgow.

By 2016, we aim to

• achieve leverage of up to £350 million of additional private investment into offshore renewables, including £130 million - £150 million through REIF.

22 23


22 23

Albatern

Based in Midlothian, Albatern’s focus is on finding a highly efficient, low cost method of producing electrical power from waves. These cost savings are based on the company’s ground-breaking WaveNET device, a modular wave energy array system using building blocks called ‘Squids’. The initial smaller Squid modules can provide energy for users who are off the grid, such as salmon farms, or have only poor grid service in remote or island communities. The WaveNET can also be scaled up into larger arrays - based on 100kW Squid modules - and could provide up to 10MW of electricity from one array for mainstream grid connection.

We have supported the company through SMART: Scotland awards which have funded the proof of concept and related feasibility work on the initial Squid device which has generated electricity. This was combined with a founder seed round matched by the Seed Fund of the Scottish Investment Bank. Albatern has also been successful in attracting WATERS2 grant from us; supporting significant equity investment from a high net worth investor. In 2013, this funding will enable the deployment of the first WaveNET array at 45kW to demonstrate performance in stronger waves and progress low cost marine energy devices towards commercial application in the offshore aquaculture market. Here, Albatern has also been successful in winning a feasibility study funded jointly by DECC, DEFRA and BIS UK government departments.

Our High growth Start Up Unit has also assisted the company in refining its business plan, in order to get them in front of prospective investors and stimulate an accelerated growth path. Engagement with Scottish Development International (SDI) and promotion through its networks has also led to early product interest from global aquaculture markets such as Chile. SDI are also supporting Albatern’s plans to attract skills and funding to enable the scale up to grid connected WaveNET array devices.

“SE is helping us to achieve our objective of developing an economically viable wave energy system. It has brought us a high degree of strategic help and focus, supporting our commercialisation costs and giving us access to different routes to address the investment marketplace.” David Campbell, CFO, Albatern

photograph: John Findlay, Chief Executive Officer, Albatern

24 2524 25


Life Sciences

With Scotland’s competitive advantages in areas such as medical devices, pharmaceutical services, stem cells and translational medicine, we are focused on growing the company base in Life Sciences, working with companies and creating the environment for growth by, for example, enhancing access to specialist finance, property and connections. We are also working on developing a strong pipeline of investments across Scotland by major companies. planned investment by three companies alone – gSK, Life Technologies and Lifescan Scotland – totals £130 million.

The sector is driven by innovation within academia, health and the company base. The strength of the research base is the foundation for success, and work with Scottish government and NHS colleagues is underway to increase the flow of innovative ideas from the company base to the health service, opening up a key market.

Development of the first business space at Edinburgh Bioquarter is enabling the growth of Scotland’s newer companies, including i2eye Diagnostics, Fios genomics and Calcivis and prospects for business growth will be significantly enhanced by the launch of a new Scottish-based life sciences fund, managed by international venture firm, Rock Spring Ventures.

.

Tourism

With around 13,000 businesses and 185,900 employees, tourism is a key contributor to sustaining wealth and jobs across both urban and rural Scotland. It also supports the growth of other sectors such as food and drink, retail, transport and construction.

Tourism Scotland 2020, the new industry strategy, aims to drive growth by translating Scotland’s rich and diverse tourism assets into quality, authentic visitor experiences at every stage of the customer journey. The strategic ambition by 2020 is for the industry to realise its full potential by increasing overnight visitor spend by at least an additional £1 billion. The new industry led market-focused approach aims to generate increased value from our distinctive tourism assets such as our natural environment, heritage and destination towns and cities, increasingly reaching out to new visitors and tailoring the offer to Scotland’s future tourism markets.

Supported by our key partners, VisitScotland and Highlands and Islands Enterprise, our contribution to growing the tourism industry is focused on supporting the development of industry leadership through the Scottish Tourism Alliance and helping to deliver growth opportunities within the new industry strategy. Through Tourism Intelligence Scotland, we will support tourism businesses to understand future market opportunities and the needs and expectations of Scotland’s visitors.

Through our continued work in destination development, we will play a key role in driving a focussed effort to improve quality and the customer journey through greater collaboration, improved networking and project delivery to develop Scotland’s assets into experiences.

Forthcoming major international events such as the Ryder Cup in 2014 also provide a focus for our engagement with those businesses which can help to build on Scotland’s international reputation as the Home of golf.


• launch a new drive to encourage tourism companies to grow by developing new customer experiences through increased use of market intelligence, taking advantage of Scotland’s world-class tourism assets.

24 25


24 25

The Hydro

Our work with the tourism sector seeks to maximise the economic return on major infrastructure investments such as the new Hydro Arena in glasgow. As part of the Scottish Exhibition and Conference Centre (SECC), the Hydro will provide Scotland with a state of the art 12,000 spectator arena, as well as a purpose built exhibition centre, conference centre and auditorium, all on one site.

Very few destinations in Europe can offer the same quality and mix of facilities that the expanded SECC complex will provide. As such, glasgow will have the ability to compete in new growing markets, including international conferences and events, particularly the ‘mega-conference’ market of more than 5,000 delegates.

The Hydro will greatly enhance Scotland’s competitiveness in the business tourism market and will boost glasgow’s competitiveness as a leading destination. part funded by £25 million from us, it will potentially inject an additional £131 million into the economy and create over 2,000 jobs. The development will also contribute to the ongoing regeneration of the Clyde Waterfront and will support the Creative Clyde initiative at pacific Quay, which aims to grow the digital media and creative industries sector.

“SE has been a really important partner in the delivery of the Hydro. Whilst the financial support has been essential, the SE team is always looking at ways to provide support beyond the construction phase so that our business plan delivers. We look forward to a continued relationship which is focused on success and partnership.” John Sharkey CEO SECC Ltd

26 2726 27


Creative Industries

Our activities in the creative industries remain focused on the growth areas of digital media, such as interactive media, software and games, TV production and publishing where Scotland has significant international competitive advantage. The digital media sector generates £3.2 billion of gVA for Scotland per annum. Our work complements the support for the wider sector that is provided by our partner organisation, Creative Scotland.

Our principal objectives are to: drive company competitiveness through increased levels of investment, innovation and support for international trade and investment, helping to develop Scotland’s digital media asset base through significant developments like Creative Clyde in glasgow and Seabraes Yard in Dundee. We are also seeking to promote the exploitation of digital and mobile technology capabilities across other sectors such as food and drink and tourism.

Financial and Business Services

Despite the economic changes that have happened in recent years, the financial and business services sectors continue to make a significant contribution of around £17 billion gVA to Scotland’s economy through a large and highly productive workforce, including significant numbers of young people employed.

We play a vital role in supporting the Financial Services Advisory Board to deliver its vision of a highly productive industry. We focus on addressing niche opportunities in finance and business services, supporting companies with the greatest potential to grow, building on Scotland’s strengths and capabilities in areas such as wealth creation and management.

The finance and business sectors are major contributors to inward investment in Scotland and make an important contribution of around £3.2 billion to our export activity. However, with more competition for increasingly scarce mobile investment, we will reinforce our efforts to build Scotland’s global reputation for prudent investment through improved marketing of our infrastructure, technology, capability and cost of services.

Technology, in particular, plays an increasingly important role in industry and we will help to facilitate collaboration between universities and research institutes, to clarify the sector’s technology requirements and make more of Scotland’s capabilities in areas such as data analytics. We will also work with our partners in the financial sector to help improve access to finance for growth companies and exporters.

Universities

Scotland’s universities are an important part of our economy, vital to our economic competitiveness. We will continue to work closely with higher and further education institutions to boost the contribution they make to increase Scotland’s sustainable economic growth. Our focus includes helping universities and colleges grow their international revenue streams.

Reflecting the important role that universities and colleges play as part of the business environment, we will also be looking at increasing the contribution that these institutes can make to the growth of the Scottish economy. This includes the contribution they can make to Scottish company innovation and improving the commercialisation of Scottish research. This is exemplified by our work to support the Scottish Funding Council-led Innovation Centres, which will improve links and knowledge exchange between universities and businesses.

26 27


26 27

Rockstar North

grand Theft Auto V used with kind permission of Rockstar North

Rockstar North, the internationally recognised video game development studio based in Edinburgh, has been awarded a Research and Development grant from us. The grant of just over £1 million is a 15% contribution towards an £8 million R&D project, and has, to date, created 25 new high value jobs in the Edinburgh and Scottish video game sector.

As the largest game development studio in Scotland, Rockstar North invests considerably in development talent and currently employs approximately 300 people. The R&D award has supported Rockstar North’s work on a game engine that is used by all Rockstar games development studios worldwide. This project further cements Rockstar North’s position as a leader in innovation within the game development community.

The first title developed by Rockstar North in 2001, grand Theft Auto III, was a worldwide breakout success, and was hailed as a turning point in the evolution of video games. At the time of its release in 2008, grand Theft Auto IV became the biggest entertainment launch of all time in any format, selling approximately 6 million units in its first week of sales.

games developed by Rockstar North currently hold the highest critics’ ratings of all games in the last two generations of gaming console hardware. The studio is currently working on the highly anticipated grand Theft Auto V.

“By supporting Rockstar North in our ongoing commitment to research and development, SE is helping to keep the studio and Scotland at the forefront of games innovation. Rockstar’s future titles will benefit for years to come.” Leslie Benzies, Head of Rockstar North

28 29


Chemical Sciences

Chemical Sciences Scotland’s strategy sets out the ambitions for this high productivity sector to boost manufactured exports by 50% by 2020, and to contribute to the growth of the Scottish economy over the next 20 years. There are opportunities for transformational change in the sector, exemplified in the National plan for Industrial Biotechnology in Chemicals and related sectors. An important element of this is to strengthen the dynamic sector hub located around grangemouth.

Our contribution is focussed on increasing exports and attracting new international businesses to Scotland. We are also encouraging innovation within the sector, for example, increasing competitiveness by reducing emissions over the product lifecycle, and by increasing collaboration within the sector.

Construction

Construction is another industry that is changing considerably in the current economic climate. The refreshed Scottish construction strategy looks to build an industry which recognises and exploits its areas of competitive advantage, becoming a recognised leader and providing solutions in areas such as the low carbon built environment. It aims, by 2016, to increase gVA by 10% to £9.62 billion and increase exports by 10%. The Strategy highlights the industry as an enabler for other sectors, with potential to make a significant economic and environmental contribution to the low carbon economy.

Our focus will be on improving innovation capability and applying this across the sector, strengthening leadership and encouraging collaboration between companies.

Forest and Timber Technologies

Scotland’s Forest and Timber Industries possess significant growth potential, particularly in areas such as solid wood products and processing. This naturally low-carbon sector plays an important role across construction, renewable energy and tourism, all of which capitalise on the inherent sustainability and strengths of timber. The industry vision is to sustain the current 4% annual growth rate, resulting in its doubling by 2025. This would add a further £1.1 billion gVA, and create up to 10,000 new jobs.

We will work across the company growth spectrum, encouraging better and deeper engagement and developing a stronger pipeline of growing companies. Through our subsidiary Co-operative Development Scotland (CDS), we will support the creation of consortia to help companies achieve scale, using employee ownership to help sustain companies within Scotland.

Textiles

The textiles sector plays a particularly vital role in the rural economy. The Scottish sector has notable strengths in technical and traditional textiles such as cashmere, tweed and tartan and also has applications in medical and construction markets. It has proven its resilience despite the economic downturn, with a sustained focus on export growth, reflected in a target to increase export sales by 50% by 2016.

Our focus will be around opportunities to generate additional industry growth through increased exports, building on the sector’s reputation and product strengths.

28 29


A SUPPORTIVE BUSINESS ENVIRONMENTInvesting in business infrastructure

We have an important role to play in delivering the Scottish government’s objective of creating a supportive business environment. We are investing, alongside others, in the infrastructure and connectivity needed to attract and retain investment and talent and to help companies and sectors to realise opportunities for growth.

Capital investment itself creates short term opportunities. Appropriately focussed, it also lays the foundation for longer term transformation. With resources under increasing pressure, we need to prioritise our capital investments and maximise private sector leverage, making sure we get the best economic return. This also entails close partnership working across the private and public sectors in the design and delivery of projects to ensure timely delivery and achievement of identified objectives. We will use globalScots, inward investors and our overseas staff to gather intelligence on where Scotland can emphasise and, where necessary improve its offer relative to competitor nations.

During 2013 – 2014, we aim to

• deliver up to £350 million of additional capital investment in planned projects supported by us.

We will continue to invest in business infrastructure where opportunities are clearly identified in sectors. For example, through the Creative Clyde programme in glasgow, our investment will help to build on the successful regeneration of the riverfront, providing a vibrant community for creative industries.

Across Scotland, there are particular locations with strong economic assets in growth sectors, such as Fife Energy park and grangemouth, that can help build sector capacity, supply chain opportunities and connectivity. We have been working closely with our industry partners - primarily through Scotland’s Industry Leadership groups - and the public sector to share our knowledge and understanding of these growth opportunities. We will also continue to work with the Scottish government and its agencies, for instance through initiatives such as Enterprise Areas, to target capital investment even more closely in support of economic development priorities.

As part of our commitment to a low carbon economy, we will ensure that we build our infrastructure developments to the highest environmental standards. As well as supporting our existing company base, it will also help position Scotland as a low carbon location of choice for inward investment.

Additional priorities for growth

Connectivity – we will help to deliver improvements in Scotland’s connectivity, particularly in terms of international air routes and helping businesses make the most of digital and broadband connections.

Sustaining and growing air connectivity (both direct and indirect routes) is critical for all sectors to help access new markets and to improve Scotland’s overall competiveness. With around 40% of international passengers travelling to Scotland via Heathrow and Schipol, our connectivity through these hubs will remain vital. We are working together with partners to attract and retain viable international services that will have the greatest impact on Scotland’s sustainable economic growth, targeting particular market areas.

30 31


30 31

Energetica

Energetica is a flagship programme of activities being taken forward by the Aberdeen City and Shire Economic Future (ACSEF), a partnership of local public agencies, including us, and private sector companies.

The programme has a long term vision to help anchor the energy sector in the area, attracting investment and talent and creating a global hub. It builds on the area’s rich oil and gas heritage and infrastructure, alongside emerging opportunities for carbon capture and storage, hydrogen and onshore and offshore renewable energy.

Through Energetica, partners expect to see the development of a 30 mile energy corridor, thriving in a high quality natural environment and with critical infrastructure in place which attracts and connects world class companies and communities. The area will also become a leading destination for innovation, knowledge, learning and skills in energy generation and will host the companies, organisations and research institutions that will collaborate to meet the world’s energy challenges.

As a key partner in Energetica, our role is to help develop a high quality business environment which can attract and retain companies operating across a number of key supply chain activities. We are also supporting delivery of projects which encourage and support cutting edge research, ensuring that the region becomes world renowned for advancements in new technologies.

We estimate that Energetica has the potential to create hundreds of jobs and add considerable economic value to the area. The programme has already been successful in attracting £260 million investment in its first 5 years.

30 31


30 31

Scotland’s Digital Future; A Strategy sets out four action areas; how information and communication technology can support public sector delivery, the digital economy, digital participation and broadband connectivity. Working with our partners we are raising awareness and stimulating demand amongst Scottish based businesses of the opportunities represented by the digital economy.

We will contribute to this agenda in a number of ways, for instance through our support for growth companies. Our digital specialists work with companies to identify how smart use of technology can stretch the ambition of businesses and become a driver of competitive advantage. The step change that is likely in next generation broadband coverage across Scotland will be critical and we look forward to playing our part in turning this into increased economic growth for Scotland.

In addition, Supercomputing Scotland, a partnership between Edinburgh parallel Computing Centre at the University of Edinburgh and Scottish Enterprise, supports companies to be more innovative and gain competitive advantage through access to high performance computing technology and expertise. The project is targeting companies from the Energy, Life Sciences and Financial Services sectors, but will consider engaging with any company on a case-by-case basis.

Delivering across Scotland

The government Economic Strategy seeks to ensure that all of Scotland can maximise its business and employment growth potential and correspondingly reduce disparities in economic performance. Working with our partners, we will also seek to address the challenges faced by companies and sectors in areas that have suffered most from the current downturn.

Our cities and their regions are home to many of Scotland’s greatest assets and have the potential to make a disproportionate contribution to Scotland’s economic growth. As our contribution to the Agenda for Cities, we will work with the Scottish Cities Alliance to identify and develop complementary city region assets and strengths across our growth sectors, including links to the cities’ collective academic research expertise. We will work alongside others to package our key investment opportunities in order to attract interest from global investors to support sector growth.

We will also work to address rural opportunities and challenges around leadership and business capacity-building. Examples of this are the highly successful Rural Leadership programme and our technical support to the South of Scotland Alliance on their broadband development programme. Economic assets in rural areas make a vital contribution to Scotland’s prosperity, including growth companies with particular concentrations in, for example, the food and drink and tourism sectors. Our strategic approach to unlocking the potential of these assets is demonstrably helping companies exploit additional opportunities.

In delivering our regional equity priorities, we will be advised by our Regional Advisory Boards, made up of representatives from industry, academia and the wider public sector.

An important part of this is to develop a more diverse economy, reflecting the opportunities being presented by demographic changes such as the ageing of the population, increasing ethnic and gender diversity, and wider changes in markets and localities. This includes encouraging the growth of different types of business organisation and ownership, such as co-operatives, employee-owned businesses and social enterprise, as an important part of having an entrepreneurial and dynamic business base.

DELIVERING THE LOW CARBON ECONOMY

The transition to a low carbon economy is now firmly established as a strategic priority in the refreshed Government Economic Strategy and is one of our five business plan priorities.

But reducing the carbon footprint is only one aspect of the fundamental transition which is starting to re-shape the Scottish economy. Achieving genuine sustainable economic prosperity implies much more far-reaching change involving:

• a move to a more circular economy where resources and waste can be fed back into the business cycle rather than permanently flowing out of it;

• exploiting low carbon business opportunities, focusing on areas where Scotland has niche strengths within national and global contexts; and

• creating a supportive business environment that helps firms and sectors adapt to a changing economy and climate.

A truly sustainable economy is one that lowers its resource take by re-circulating the materials and other resources that already exist. We will identify opportunities to apply these circular economy models to Scottish firms and supply chains to help realise the economic benefits that these bring, working with Zero Waste Scotland, SEpA and other partners. A circular economy offers a route to greater economic resilience to withstand price volatility and supply disruptions, new opportunities to increase product value through innovative design, re-manufacture and repair, together with strengthening customer relationships.

We are also making good progress in identifying a wide range of low carbon business opportunities across the sectors and we support Industry Leadership groups to address these growth opportunities through their industry strategies. Our focus will be on accelerating the exploitation of low carbon opportunities in those markets where Scottish

firms have a global comparative advantage and where the greatest economic and environmental benefits exist. Supporting our priorities on renewable energy and business efficiency, we will also prioritise market opportunities in relation to:

• low carbon built environment, for instance, timber-related products and retrofit technologies

• smart mobility, including intelligent transport systems and hybrid/hydrogen transport

• water technologies, in particular, water efficiency, purification and waste water treatment

• carbon capture and storage

• low carbon heat, for example, district heating and heat recovery

• cross-cutting technologies such as advanced materials, sensors, industrial biotechnology and smart grids

In these and other areas our approach is to use Scotland’s stretching climate change targets to adapt quicker than competitor economies, developing lower carbon products, services and technologies that serve global markets and help transform the Scottish economy, generating new sources of job and output growth.

Internally, we have achieved much over the last few years. For instance, we have embedded our low carbon business plan priority across the organisation and have introduced mandatory carbon assessment of activities.

During 2013-2014, we aim to

• secure between 80,000- 100,000 tonnes of CO2 savings arising from SE projects and company support that improves efficiency.

32 33


32 33

FINANCIAL SUMMARY Over the next three years, we will invest over £1 billion in the Scottish economy. This is a significant amount and we are determined to achieve excellent value for money and impact through this expenditure. In recent years, we have been able to make significant efficiency savings. We have done this by streamlining our operations and management structures, reducing our accommodation costs by sharing office space with other organisations, rationalising our office accommodation requirements and reducing expenditure in areas such as IT and marketing.

given the substantial savings already achieved and the improvements we have made to our services, it is proving increasingly challenging to reduce costs whilst maintaining service provision and the impact from our activities.

Our planned investment for the 2013-2016 Business planning period is set out below. The budget allocations are indicative only. We manage our budgets in a flexible manner to allow us to react to opportunities and threats that may arise from developments in the global economy.

32 33


32 33

Planned Investment2013/14

Indicative Resource Allocation

2014/15 Indicative Resource

Allocation


Allocation

£m £m £m

Globally Competitive Business

Strategy, Leadership and Organisational development

Domestic Market Development

Business Efficiency 14.5 14.7 13.5

Innovation and R&D Support 29.1 43.0 25.5

RSA and SMART Support 35.0 36.4 36.4

Enterprise Support Programmes 4.5 4.0 3.0

Internationalisation, including export market development & GlobalScot 17.5 17.9 16.8

Commercialisation - Development & Exploitation of Intellectual Assets 8.0 7.0 7.0

Direct staff costs supporting globally competitive businesses 31.2 32.0 32.7

TOTAL 139.8 155.0 134.9

Globally Competitive Sectors

Industry Sector project support 13.6 15.1 15.1

Direct staff costs supporting globally competitive sectors 8.4 8.6 8.8

TOTAL 22.0 23.7 23.9

34 35


Planned Investment2013/14

Indicative Resource Allocation


Allocation


Allocation

£m £m £m

Globally Competitive Business Environment

Business Infrastructure Projects 41.3 35.2 46.1

Equity Investments and Loans (inc Scottish Loan Fund) 36.1 39.2 31.5

Equity Investments and Loans - Renewable Energy Investment Fund 31.5 69.8 0

Property Portfolio Operational Costs 8.1 7.6 7.1

Direct staff costs supporting a globally competitive business environment 6.2 6.3 6.4

TOTAL 123.2 158.1 91.1

Marketing, Research & Stakeholder Engagement

Domestic 2.3 2.0 2.0

Overseas, including promotion of Scotland 4.6 4.6 4.6

TOTAL 6.9 6.6 6.6

Running The Business

Support staff costs 12.7 13.0 13.4

Premises and Facilities Management

Domestic 13.3 13.0 12.7

Overseas 6.3 6.3 6.3

Corporate services, including ICT, Legal, Travel etc 12.2 10.9 9.0

TOTAL 44.5 43.2 41.4

TOTAL CASH INVESTMENT 336.4 386.6 297.9

34 35


2013/14 2014/15 2015/16 Income Analysis Indicative Resource Indicative Resource Indicative Resource

Allocation Allocation Allocation

£m £m £m

Grant in Aid - Resource Allocation (baseline) 210.7 225.2 225.2

Anticipated reduction to base-line budget -10.8

Anticipated in-year transfers from Scottish Government (net) 3.2 3.1 4.7

Total anticipated Grant in Aid - Resource Allocation 203.1 228.3 229.9

Grant in Aid - Capital Allocation (baseline) 20.4 3.9 3.9

Anticipated in-year transfers from Scottish Government (net) 41.0 92.9 7.0

Total anticipated Grant in Aid - Capital Allocation 61.4 96.8 10.9

Total anticipated Grant in Aid - Resource and Capital 264.5 325.1 240.8

EU Funds 7.3 8.2 8.3

Property Disposals 16.5 4.0 4.0

Property Income 6.5 6.0 6.0

Co-Investment Fund 10.0 10.0 10.0

Scottish Loan Fund 15.0 16.0 10.0

Other Business Income 16.6 17.3 18.8

TOTAL INCOME 336.4 386.6 297.9

INDICATIVE CAPITAL EXPENDITURE 130.0 to 155.0 175.0 to 200.0 95.0 to 120.0

LESS

Anticipated Grant in Aid - Capital Allocation 61.4 96.8 10.9

Capital Receipts 41.3 38.4 33.3

ANTICIPATED NET TRANSFER OF GRANT IN AID REVENUE TO CAPITAL BUDGET 27.3 to 52.3 39.8 to 64.8 50.8 to 75.8

The budget allocations are indicative only. SE manages its budgets in a flexible manner to allow us to react to opportunities and threats that may arise from developments in the global economy.

Delivery costs include services we provide on behalf of partners and across the whole of Scotland, including: Scottish Development International; Business Gateway website and enquiry service; Scottish Manufacturing Advisory Service; Co-operative Development Scotland and the Scottish Investment Bank.

Notes1. Excludes Ring-Fenced DEL and Annually Managed Expenditure non-cash allocations.2. Planned capital expenditure over the business period.3. The actual figure transferred from Grant in Aid Revenue to Capital budget will be dependent on a number of factors including

progress with planned capital expenditure projects and programmes and the amount of capital receipts actually received.

36 37


MEASURING OUR PERFORMANCE

The Government Economic Strategy sets out high-level targets for increasing Scotland’s sustainable economic growth and the contribution that we make to the national outcomes and purpose targets of the National Performance Framework.

As a public agency, we need to be able to demonstrate the impact we achieve from our investment. Recognising the inter-connected nature of what we do, we apply a comprehensive measurement framework that shows how our activities feed through to the achievement of our objectives, reflected in the impact we have on the Scottish economy, focussed on the longer-term strategic goal of the government Economic Strategy – to raise Scotland’s long-term sustainable economic growth rate.

We also make a direct contribution to the objectives reflected in the National performance Framework that supports the government Economic Strategy – with a direct or indirect contribution to 14 of the 50 National Indicators:

OUR CONTRIBUTION TO NATIONAL PERFORMANCE FRAMEWORK

Indicators with direct contribution Indicators where we make an indirect contribution

Increase exports Increase the number of businesses

Improve Scotland’s reputation Improve digital infrastructure

Increase R&D spending Improve the skill profile of the population

Improve knowledge exchange from university research Increase the proportion of young people in learning,

Reduce Scotland’s carbon footprinttraining or work

Reduce waste generatedIncrease the proportion of graduates in positive destinations

Increase renewable electricity production Improve people’s perceptions of the quality of public services

Widen use of the internet

36 37


OUR ACTIVITIES: LINKS TO SCOTTISH gOVERNMENT OUTCOMES AND TARgETS

The government Economic Strategy sets out high-level targets for increasing sustainable economic growth. These targets, along with 16 national outcomes, have informed the development of our Business plan. This diagram highlights the areas where our activities contribute to National Outcomes and purpose Targets as part of the National performance Framework.

NATIONAL OUTCOMES OUR ACTIVITIES LINKS TO 7 pURpOSE TARgETSOUTCOME AND TARgETS

1. We live in a Scotland that is the most attractive place for doing business in Europe

1. Supporting globally competitive companies with growth & internationalisation

Increase To match the growth Scotland’s rate of small Economic independent EU

2. We realise our full economic opportunities growth (gDp) countries by 2017

potential with more and better employment opportunities for 2. Building globally competitive productivity To rank in the top our people sectors utilising Scotland’s quartile for productivity

3.

4.

We are better educated, more skilled and more successful, renowned for our research and innovation

Our young people are successful learners, confident individuals, effective contributors and responsible citizens

3.

existing capabilities

Establishing a globally competitive business environment

amongst our key trading partners in the OECD by 2017

participation To maintain our position on labour market participation as the top performing country in the UKTo close the gap with

5. Our children have the best start the top five OECD in life and are ready to succeed economies by 2017

6. We live longer, healthier livespopulation To match average

7. We have tackled the significant European (EU15) inequalities in Scottish society population growth over

8. We have improved the life chances for children, young people and families at risk

the period from 2007 to 2017. Supported by increased healthy life expectancy in Scotland

9. We live our lives safe from crime, disorder and danger

over the period 2007-2017

10. We live in well-designed, sustainable places where we are able to access the amenities

Solidarity To increase over-all income and the proportion of income

and services we need earned by the three lowest income deciles

11. We have strong, resilient and supportive communities where

as a group by 2017

people take responsibility for Cohesion To narrow the gap in their own actions and how they participation between affect others Scotland’s best and

12. We value and enjoy our built and natural environment and

worst performing regions by 2017

protect it and enhance it for Sustainability To reduce emissions by future generations 80 per cent by 2050

13. We take pride in a strong, fair and inclusive national identity Key:

14.

15.

16.

We reduce the local and global environmental impact of our consumption and production

Our people are able to maintain their independence as they get older and are able to access appropriate support when they need it

Our public services are high quality, continually improving, efficient and responsive to local people’s needs

Major contribution

Support contribution

38 39


In the current economic climate, we are also giving more consideration to the impact of our activities on employment, by tracking the number of jobs being created and safeguarded as a result of our work. This includes the creation of higher value-added jobs that add most to Scotland’s global competitiveness. There is an important regional dimension to this, where creating and sustaining jobs will help ensure economic growth is shared across all parts of Scotland.

Our performance framework, used to monitor the progress of our entire range of activities, is illustrated by the diagram on page 39 which flows from our priorities and objectives, through the activities we undertake and the outputs and outcomes these achieve. The diagram shows how, over time, these contribute to our ultimate objective of achieving a significant economic impact, realised through the growth of companies and sectors growth. This includes the impact we have in terms of reduction in CO2 emissions, reflecting an important goal of the government Economic Strategy.

Listed on pages 40 and 41 are the performance measures and targets we use to track our progress and manage our business, including the milestones we aim to deliver, across the strategic priorities set out in this plan.

The target ranges proposed in our 2013-2016 plan reflect our strategic priorities and also take account of key documents such as the International Trade and Investment Strategy. It also takes account of the need for us to respond to the continuing difficult economic and business conditions – including issues relating to access to finance.

Our measures take account of the evidence on performance and impact, including planned improvements in delivery and increased operational alignment, both within SE and with our strategic partners. This includes building on the significant progress in capturing the CO2 impact of some of our company-specific interventions.

38 39


OB

JEC

TIVE

SP

RIO

RIT

IES

(FO

R 2

012-

15)

AC

TIVI

TIES

OU

TPU

TSO

UTC

OM

ESIM

PAC

TS

SCOTTISH ENTERpRISE MEASUREMENT FRAMEWORK

TS growth in productivity, gVA and employment

IMPA

C

Reduction in C02 emissions

Performance by supported businesses: Performance of target sectors:

• Forecast/actual increase in turnover/revenue • Economic growth• Forecast/actual increase in international • Employment growth

turnover/revenue • Increased turnover/revenues• Forecast/actual jobs created/sustained • International revenues

S • Amount of capital raised • Inward investment

E • Resource efficiency/reduced CO2 emissions • Revenues from innovation

CO

M • Research & development growth

OU

T

• Resource efficiency/reduced CO2 emissions

Indicators of competitiveness:

i) productivityii) Wage rates

Assessment of how much differential growth can be attributed to policy

iii) Levels of innovation action, both in terms of iv) New firm formation specific policies and more

generically.

Improved company Investment leverage in Improved sector The transition to the

O

PAC

TIMperformance: terms of: performance: low-carbon economy:

• Increased turnover/ • Capital investment • SE contribution to • Low-carbon impact of revenues (incl risk capital) sector growth SE actions S

T

TSU • International revenue • R&D (including via • Contribution to sector • Contribution from

OU

TP growth collaboration) performance from SE projects that address

RO

UTE

• Employment growth• Capital raised

• Inward investment/FDI projects

• Infrastructure • International revenue investment growth

major low-carbon opportunities

• Value of SE-backed • Employment growth resource efficiency

actions

AR

IOV

US

Helping businesses to Helping to increase Helping sectors to grow, Helping to build a low-

ES increase growth, by investment to increase through: carbon economy across

TIVI

TI improving: economic growth, through: • Increased productivity and Scotland

• Strategy & leadership • Risk capital (SIB) competitiveness • Addressing the

AC • Exports & • Inward investment • Increasing and sustaining economic development

internationalisation • Investment in R&D employment opportunity and • Innovation • Capital investment • Improving investment and challenge across • Investment • Investment in infrastructure all aspects of SE’s • Business efficiency, infrastructure operations

including reduced CO2 impact

Strategic Priorities The Sectors we focus on Our contribution to the ‘Equity’

Developing Scotland’s lead position in offshore renewables

Improving the performance of

Energy – Renewables

Energy – Oil and gas

Creative Industries

agenda of the Government’s Economic Strategy

Regional equity

TIO

JEC

VES

growth companies

Developing Scotland’s international

Financial Services

Food and Drink

Co-operatives and social enterprise

Equal opportunitiesB

trade & investment Life Sciences

promoting innovation as a driver Technology and Advanced Engineeringof growth Tourism

Transition to a low-carbon Also: Chemicals, Construction, Forestry & economy Timber, Textiles, Universities

40 41


LIST OF MILESTONES AND MEASURES

RENEWABLES

Milestones for 2013-2014• Initiate significant actions to develop commercial manufacturing in offshore renewables, including the development

of supply-chains and the attraction of significant private-sector investment to key locations• Help secure significant new investment into the Scottish renewables sector though the Renewable Energy

Investment Fund• Secure the first tenants into our Inovo Building, to encourage engagement between businesses and academia,

as an important part of the International Technology & Renewable Energy Zone (ITREZ) in Glasgow

Measures

Offshore Renewables

By 2016, achieve leverage of £300 million – £350 million of additional private investment into offshore renewables, including £130 million – £150 million of additional private investment through NRIF

COMPANY GROWTH

Milestones for 2013-2014• Secure an significant increase in activity by account-managed companies to achieve significant turnover growth in

international markets

• Deliver a deeper engagement with companies in the oil and gas sector, including an increase in the number of companies from this sector in our account management portfolio

• Help deliver significant investment into Scottish life sciences companies through the new Scottish life sciences fund managed by RSV

• Launch a new drive to encourage tourism companies to grow by developing new customer experiences through increased use of market intelligence and leveraging Scotland’s tourism assets and major infrastructure developments such as the Hydro at the SECC and the EICC.

Measures

Account In 2013-14, £1 billion – £1.3 billion turnover growth achieved by account managed firmsManagement In 2013-14, help 250 – 350 account managed companies develop their leadership and strategy

InvestmentIn 2013-14, achieve £70 million – £85 million of leveraged investment from the provision of growth finance through the Scottish Investment Bank

In 2013-14, help 350 – 400 companies secure growth finance by improving their financial readiness

Capital & efficiency

In 2013-14, deliver £250 million – £350 million of additional capital investment in planned projects supported by us

By 2016, help companies generate significant productivity and efficiency improvements, worth at least £70 million – £85 million

INTERNATIONAL TRADE & INVESTMENT

Milestones for 2013-2014

International Trade• Undertake significant trade promotion activities to drive outcomes on further export growth in oil and gas,

with a particular focus on new markets, in Norway, Brazil, Canada and West Africa• Initiate agreed actions with industry partners in the food and drink sector to deliver the step change in international

export growth, deepening the impact of the Asia food and drink strategy our strategies in the Americas, Europe and the Middle-East

• Develop growth in exports through e-Commerce, to capitalise on global opportunities in digital connectivity

Inward Investment • Maintain Scotland’s relatively strong globally competitive position on attractive high-value inward investment

through a range of benchmarking and comparative analysis mechanisms• Attract significant inward investment to support the growth strategies of Scotland’s sectors

40 41


Measures

**Over 2011-15, achieve a £1.2 billion to £1.7 billion increase in international sales from supported businesses

Exports In 2013-14, 220 – 330 companies projecting significant turnover growth from exporting, including 150 – 210 projecting turnover growth of £1 million +

**Over 2011-15, 8,000 –10,000 companies assisted to develop their capacity for exporting through initiatives like Smart Exporter

Inward Investment

**Over 2011-15, 25,000 – 35,000 planned jobs through the attraction of foreign investment – of which between 8,000 and 12,000 planned high value jobs

In 2013-14, 5,000 – 9,000 planned jobs through the attraction of foreign investment – of which between 1,800 – 2,500 are planned high value-added jobs

INNOVATION


• Initiate a significant step change in our approach to innovation and entrepreneurship in collaboration with the Scottish Government, Scottish Funding Council, and Highlands & Islands Enterprise

• Initiate agreed action with industry partners and with HIE, the Scottish Funding Council and Scottish Government to maximise the contribution to innovation and R&D from the EU Horizon 2020 programmes

• Deliver new activity as our contribution to Scotland’s Digital Strategy – including demonstration projects in sectors and a new Digital Excellence programme involving our account managed companies

• As part of our commitment to improve entrepreneurship in Scotland, deliver two further rounds of the Scottish EDGE competition to support up to 30 companies to accelerate and achieve their growth potential

Measures

Innovation Support

In 2013-14, help companies achieve significant additional revenues from innovation, worth between £70 million – £100 million over the next three years

R&D Support In 2013-14, secure £110 million to £150 million of additional commitments in R&D investment through our assisted projects

Commercialisation ***By 2015, generate 15 –21 entrepreneurial companies capable of achieving £5 million turnover growth within five years of trading, or attracting £10 million investment

THE TRANSITION TO A LOW – CARBON ECONOMY


• Initiate actions to address significant market opportunities for Scotland in clean technology, the low-carbon built environment and low-carbon transport

• Develop significant actions to help Scottish companies use low carbon as a major driver of innovation, in terms of new products, processes and business models

Measures

Transition to a Low carbon economy

In 2013-14, identify between 80,000 – 100,000 tonnes of CO2 savings arising from our projects and company support that improves efficiency

** Measures under this theme set against the Targets set for the 2011-15 International Trade & Investment Strategy

*** Three-year target, established last year.

If you require this publication in an alternative format and/or language please contact the Scottish Enterprise Helpline on 0845 607 8787 to discuss your needs.

Scottish EnterpriseAtrium Court50 Waterloo StreetGlasgowG2 6HQ

Helpline: 0845 607 8787E-mail: [email protected]

www.scottish-enterprise.com

business plan 2013-2016 - scottish enterprise business plan is focused on nurturing and ... energy,...

Documents