The economic challenges facing Scotland are very similar to those facing Northern Ireland. For Scottish Enterprise’s Managing Director for Strategy and Sectors, Linda Hanna these are some of the “toughest times in memory” as Scotland is also suffering due to the fall in prices in the oil and gas industry. In spite of these difficulties, Scottish Enterprise is determined to work with businesses to help them through these challenging times and help those with growth potential to realise it.
Formed in 1991, Scottish Enterprise was established to tackle the challenges in the economy at both a national and local level. 24 years later, this non-departmental government agency is still supporting businesses. According to Hanna, the agency’s prime focus is now increasing “international competitiveness.” Scottish Enterprise aims to work with Scottish businesses to create a step-change in the economy, understand the economy both locally and globally, identify global opportunities and connect Scottish companies and sectors to these opportunities.
Most of Hanna’s working life has been spent dealing directly with businesses from small start ups through to helping more established companies realise their growth plans. In Scotland, small start-up support was transferred to local authorities in 2008 so there is a real need for good partnership working across agencies to support Scottish businesses. She now also has responsibility for Scottish growth sectors (e.g. food and drink). “Scotland like Northern Ireland is a very small open economy,” said Hanna. “Everything Scottish Enterprise does is focused on thinking about Scotland in a global context. We try to look from the outside in and think about how everything we do interfaces with Scotland. In all that we do we take a ‘One Scotland’ approach.”
Both Scottish Enterprise and the Scottish Government are focused on driving international competiveness, not just in terms of exports but also encouraging businesses and sectors to think with a global mindset. “For us it is all about international competiveness,” said Hanna. “We need to think strategically about where we prioritise, how we link Scottish companies to the most promising international opportunities and how we target potential investors to encourage them to come to Scotland to fill some of the gaps in our market.”
Looking at the challenges facing her team, Hanna acknowledges that Scotland’s business innovation and its export growth can be improved. Hanna feels this is because Scotland’s export market is “focused on too few companies, too few markets and too few sectors.” However despite these challenges, Hanna is quick to point out that Scotland has world class academic research capabilities, with five of the country’s 19 universities and higher education institutes ranked among the top 200 in the world. Similarly, Scotland’s foreign direct investment is also strong, with 91 projects heading to Scotland as a result of investment attracted last year. These projects plan to secure 9,500 jobs, 3,000 of which will be high value. Hanna also feels that Scotland’s investment portfolio, despite having strong equity capital is failing to provide enough direct investment to companies resulting in the broader business base not achieving what it could.
Currently, of the 330,000 businesses based in Scotland, less than one third of these businesses employ staff and only 20,000 employ ten or more staff. Hanna and her team have identified 6,000 – 10,000 of these businesses that they believe have “real growth potential.” Hanna believes it is vital to segment the business base in this way to ensure that Scottish Enterprise targets companies with the most growth potential and works intensively with them to ensure they grow as desired and that Scotland as a whole benefits from their growth.
“We want to have not just a partnership between us and the company but a true collaboration across the public and private sector,” said Hanna. “With a focus on how we want to grow the economy and the changes required to tackle inequality which is an important economic pillar alongside international competiveness. Those are our twin-pillars and tackling them in a mutually enforcing way will, we believe, help us to grow the economy.”
Underpinning Scottish Enterprise’s approach on economic growth are four drivers: investment, innovation, internationalisation and inclusive growth. “We invest around £320 million into the Scottish economy each year,” said Hanna. “And those four drivers of growth are where we spend our time on to ensure we get a return on our investment. We work with about 2,000 account managed companies a year and roughly speaking, for every £1 we invest we get £7 back within three years. We segment the market around companies that are looking to expand globally, those that are looking to scale up and those looking to grow within Scotland. We give them a service linked to their needs, through our offices in Scotland and around the world , so for businesses looking to connect internationally we are able to help them on the ground.
“Scotland’s export market is focused on too few companies, too few markets and too few sectors.”
Looking at the work Scottish Enterprise has achieved to date, Hanna is able to list some impressive examples of beneficial cooperation including, the medical technology company Touch Bionics, industry bodies such as the Scottish honey and beeswax consortium and Scotland Food and Drink and place based development like Dundee Waterfront. However, Hanna is aware that Scotland’s competitive core is making a difference but that it is not sufficient to transform the economy. “We have to ask ourselves why can’t we shift the dial on productivity and innovation,” reflected Hanna. “We are thinking about these things and are keen to work with others. We realise our competitive core needs to be wider to penetrate further into the business base. Ultimately Scotland’s future is about making sure the focus increasing on international competiveness bears fruit. So we need to make sure we work with companies and sectors with opportunity and we connect them to the global markets and networks they need to have access to.”
Hanna and her team realise that their future success will also be dependent on their ability to innovate and develop their approach. “Doing what we have been doing is not necessarily going to be sufficient for us or for many businesses going forward. We realise it is all about reaching more businesses, making sure businesses get the right help at the right time. Embracing digital opportunities and digitising services will be very important.”