Innovation report reveals Scottish cities “could improve significantly”

Scotland’s seven major cities “could improve significantly” on key technology, innovation and entrepreneurship growth indicators, according to a new report.

The CITIE Partnership has made 13 recommendations aimed at improving future technological driven growth in Aberdeen, Dundee, Edinburgh, Glasgow, Inverness, Perth and Stirling.

The organisation – a partnership between between innovation agency Nesta, Accenture and the government’s Future Cities Catapult – cites “good average performance” among the cities.

Whilst the report recognises that the cities have all benefited from a range of government and European funding pledges to boost innovation and growth, it states they should focus “especially” on leadership and infrastructure.

The report used 35 different measures of innovation along with qualitative data from interviews to assess cities’ progress. It says whilst the Scottish cities as a cluster are currently “outpace” a group of their European counterparts on six out of nine key policy areas, they are behind a similar group of North American cities in all but one measure.

Scotland’s biggest cities, Glasgow and Edinburgh, already display performance rivalling that of leading cities from the CITIE global analysis, including places like Paris and Tel Aviv, the report said. And while smaller cities expectedly register lower performance, they also “punch above their weight”.

The report states: “Taken together, Scottish cities’ performance compares with many of the 40 global leading cities from the 2015 CITIE analysis. Compared to international peers from previous CITIE analyses, Scottish cities as a group outpace European counterparts in six of CITIE’s nine policy roles, with clear strengths in the Openness and Leadership dimensions.

“The reverse is true for North American peers, which Scottish cities trail on all but one of the nine roles. Still, relative strength in the Leadership dimension reflects Scotland’s evident and growing commitment to augmenting cities’ digital capabilities, capacity to engage citizens and businesses in decision-making, and, skills to develop better policy insights using data.”

The report goes on to recommend that by “actioning policy tweaks and amplifying existing initiatives on an individual basis, and by recognising where important opportunities exist for collaboration across the region, Scottish cities have the potential to take the lead in their innovation capability.”

 The report cites the importance of the £1.5bn City Deal pledges for Aberdeen, Edinburgh and Inverness unveiled in the last year, and also £10 million of European Regional Development Funding secured by The Scottish Cities Alliance for Scotland’s 8th City – The Smart City programme. Once match funded that will rise to £24m and will be invested in making Scotland’s cities smarter, using technologies to transform the delivery of services.

The CITIE framework is a diagnostic tool that captures over 35 individual data points per city region. It is supplemented by qualitative data from interviews, to generate a snapshot of the areas of relative strength and weakness in a city region’s capabilities for stimulating innovation and entrepreneurship.

The report says whilst Scotland’s cities have been accommodating of new disruptive business models and technologies, more work could be done. For example, more than 20 city mayors around the world have recently agreed a joint approach to challenges presented by the likes of Uber and AirBnb. It encouraged the Scottish cities to deploy a “similar approach”. In its first recommendation it urged the cities – possibly through the coordination of local authorities’ body COSLA – to undertake periodic reviews of emerging business models, to better understand the regulatory challenges as well as opportunities.

The report also focused on individual cities. Aberdeen was said to be the only Scottish city in the UK top ten rankings for start-up rates and is ranked second for patents per 100,000 of the population. The city was also praised for its focus on helping companies win contracts from the public sector; the city is also in the process of opening three new digital innovation hubs. The city was, however, advised to become a “better advocate for the region” and to have more of a focus on helping international investors. Investment opportunities via Aberdeen City Council and Business Gateway websites should also be made clearer.

Dundee was praised for increasing its digital turnover by 129 per cent in the last several years with its world-renowned gaming and broader digital tech cluster the third fastest in growth terms in the UK. Good local support is offered with two grant programmes also in place in the city to help entrepreneurs to grow their businesses domestically and expand overseas. There are also good links between universities and schools to encourage digital innovation through engaging competitions.
However, the report indicated that the city should do more to engage SMEs in local problem-solving through hackathon events, and also noted that Dundee lacks a current digital strategy or permanent senior leadership (i.e. a CIO or CDO) to take its ambitions forward.

Innovation is thriving in Edinburgh, according to the report, with “excellent” links between business and education. Events like the Turing Festival and Design it Build It help to give the city an international profile, and local schemes operate to build business links with China. Large ‘unicorn’ companies like Skyscanner also support awareness-raising schemes to promote the city as a tech destination. The city was, however, encouraged to update short-term let regulations to collect tourist taxes. It was urged to follow Paris, Amsterdam and San Francisco, who have successfully engaged with AirBnb to develop ‘new rules that allow it and similar businesses to operate while maintaining a more even playing eld with traditional hospitality organisations and generating a new revenue stream for the city’. The city was also urged to establish a city-wide gigabit Wi-Fi network.

Glasgow has the strongest leadership of any city, according to the report, and has invested heavily in becoming a smart city through demonstrator projects including intelligent street lighting, household sensors for energy conservation, and a demand-driven system of social transport, backed by a new data analytics infrastructure, including the Glasgow Operations Centre, an integrated traffic and public safety management system, and the City Observatory, an analytics centre located inside the new Technology and Innovation Centre (TIC). The city was urged, though, to use this status to help SMEs develop expertise in that area and tap into global markets. It was also encouraged to use its new capabilities to develop a “truly integrated public transport strategy”.

With just 56,000 residents, Inverness is the smallest city of those surveyed but through the support of Highlands and Islands Enterprise (HIE) is bridging connections between local companies and global tech giants. The new Inverness Campus is emerging as a digital centre of excellence, research, and hopes to overcome the city’s previous lack of available incubator space. HIE is also praised for its advocacy role in helping promote the region, and also through its support for emerging businesses. It was noted the city does need “stronger leadership” and more well-resourced teams to drive its digital agenda.

Over the next 20 years, Perth will become one of Scotland’s fastest-growing cities and is set to grow its population by 25%. Since becoming a university city  in 2011, the status has allowed Perth to better train and retain its workforce and its Angel’s Share programme – connecting businesses with investors – has attracted over £1m in investment since 2012. Digital connectivity rates are among the best in the country and the Smart Perth strategy is helping to launch city-wide wireless, an open data platform and intelligent street lighting. To underpin that strategy the city was therefore encouraged to make all new city contracts ‘open by default; it was also urged to create a ‘signature tech event’ to attract outside interest into the city.

Compared to the national average the chances of successfully launching a business are higher in Stirling.  In fact it was recently announced as the best Scottish city in which to start a business, based on criteria such as broadband service, energy costs, and quality of life, and entrepreneurs have a greater chance of succeeding than elsewhere. The Stirling Enterprise Park (STEP) is recognised as a key local asset for the business community. Despite that the city still struggles with low business creation rates and has a lack of incubation, accelerator and co-working spaces. The city is about to embark on a major infrastructure investment phase and plans to build a digital hub and incubation space. The city was criticised, though, for its poor Wi-Fi facilities and has the slowest broadband speeds in the CITIE analysis.

 The key recommendations are listed below:


RECOMMENDATION 1: Undertake collective analysis of emerging business models and develop a ‘play book’ for Scottish cities

RECOMMENDATION 2: Develop best practice soft-landing packages for business relocating to Scottish cities

RECOMMENDATION 3: Ensure start-ups and SMEs are represented on trade missions

RECOMMENDATION 4: Design a Scottish cities challenge prize series

RECOMMENDATION 5: Engage in ecosystem matchmaking to complement hard infrastructure investments

RECOMMENDATION 6: Support venture capital trade missions to connect local start-ups to funding

RECOMMENDATION 7: Establish city-wide IoT platforms to stimulate digital infrastructure innovation

RECOMMENDATION 8: Ensure success of transformative digital and smart city strategies through dedicated teams and champions

RECOMMENDATION 9: Open-source strategies to promote regional learning and innovation

RECOMMENDATION 10: Experiment with open source citizen engagement tools

RECOMMENDATION 11: Engage citizen and city employees to generate real-time insights

RECOMMENDATION 12: Establish Offices of Data Analytics

RECOMMENDATION 13: Make all city procurement contracts ‘Open by Default’