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Business Insight Tuesday November 4 2014

Appetite for innovating Route to fast growth and the international marketplace

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Tuesday November 4 2014 | the times

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Business Insight

Welcome

The value of positive thinking Innovation is one of the key ingredients of both micro and macro economic growth. In this issue of Business Insight, we hear from Scottish Enterprise’s head of innovation, Jim Watson, on why supporting innovation is one of its key objectives and also learn about the direct link between it and internationalisation.

Interface’s Dr Siobhán Jordan explains the bridge it provides between business and academia.

Queen Margaret University also tells us about the Scottish Centre for Food Development and Innovation, where pioneering work is being undertaken.

And we take a drive in an electric car around Orkney with Edinburgh Centre for Carbon Innovation and discover why the winds that whip across these islands could inspire yet more innovation on a global scale.

COVER PICTURE: VEGWARE

First crucial steps on The culture of innovation is critical to sustainable growth and internationalisation for ambitious Scottish businesses. Jim Watson tells Ian Cameron how it can be achieved

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wo statistics in particular underline why stimulating and supporting innovation within Scotland’s company base is a key priority of economic development agency Scottish Enterprise (SE).

“The European Commission found that 60 per cent of all sustainable growth for companies over the past five years has come through innovation. That is, the ability to develop and create products and services, new business models and designs. ” said Jim Watson, SE’s senior director of innovation and enterprise.

The prevailing view is that for businesses to achieve sustainable growth they need to embrace innovation. “The key word is sustainable: companies need to be constantly thinking about developing or creating products and service for the market,” Watson said.

Statistic two: a survey in 2013 of Scottish Enterprise’s 2,200 account managed companies, that’s organisations with which SE has direct contact, found that those which innovate and internationalise are twice as likely to grow than those which don’t.

“The correlation between innovation and internationalisation is strong,” Watson said. “More often than not, if you are innovating, you have to look at global markets otherwise you may be limiting growth potential.”

SE has big ambitions when it comes to innovation and is aiming to encourage 5,000 more companies to start or increase innovation over the next five years. Its strategy has four priorities: to foster deeper, wider, and sector innovation and to help stimulate demand for innovation within the company case in Scotland.

The focus on deeper innovation involves helping companies to develop and support a more strategic approach to innovation,” Watson said.

“We want to work with companies that have an ambition to take their thinking to a new level on how they think around

Inside ...

An academic answer

How interface’s collaborative projects boost business Page 4

Bright sparks

SE’s expert team bring new ideas and new markets Page 6

Let’s get technical

University Technology’s door to commercialisation Page 9

Weather patterns

The 2020 Group and our climate change targets Page 11

Jim Watson of Scottish Enterprise says that the key word is ‘sustainable’

developing products, services and new business models. What are they doing, how they compare with others in their sector or size range, and how to make a step-change in innovation.”

Scottish Enterprise’s accredited expert specialists are one strand of support. They help companies to establish an understanding of the baseline from which they are starting using IMP3rov, a European diagnostic tool. “It provides a benchmark of how competitive a company is in innovation terms,” Watson said. It is a diagnostic tool that helps businesses understand how they perform in innovation terms across a number of factors.

This tool has already been used by some 4,000 companies across Europe and beyond. Step two is to construct an innovation plan.

“Creating a plan puts things on a more strategic footing and helps to establish buy-in at senior management level.” Watson said.

Achieving wider innovation involves stimulating interest from a large number of SMEs to implement smaller scale innovative projects.

Scottish Enterprise’s Make it to Market grant, which will be launched in November, will offer SMEs financial support of up to £5,000. “This will encourage them to develop new products or services for overseas markets and take those first step towards innovating and exporting” Watson said.

The aim is also to identify potential for further innovation. “This could lead to us working more extensively over the longer term with companies, some of which may have tremendous unrealised potential to innovate or already have a product or service that is only selling locally but could go global,” Watson explained.

Watson also stressed the importance of partnerships in furthering the wider innovation cause. “There is strength in a joined-up approach with Business Gateway, Interface Scotland and other partners so that using all these channels can encourage more companies to access support to develop products and services for export.”

Efforts to stimulate ‘sector innovation’ are based on awareness of Scotland’s strengths in areas such as food and drink, financial services, life sciences and others.

“There is opportunity for innovation to contribute to the competitiveness of a sector as a whole,” Watson commented.

“Take food and drink, as an example.

People are increasingly health conscious, so there is scope for innovation to help capitalise on that as an opportunity.

Our sector team and Scotland Food and Drink have identified opportunities for Scottish businesses in this area and we can then work with them and help them respond to the market through adapting existing or creating new products and services.”

The fourth part of Scottish Enterprise’s strategy is ‘customer-led innovation’, also known as ‘open innovation’.

HARALD PETTERSEN/STATOIL

SE is in discussion with oil and gas companies, including Norway’s Statoil about working with its account managed companies

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Business Insight

path to growth

Cheeky Chompers cuts its teeth on smart new ideas

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nnovation is in the DNA of Cheeky Chompers, makers of the Neckerchew, which is marketed as the world’s first chewable dribblebib for teething babies. It attaches to the baby, who can dribble and chew in one place, sparing parents the tedium of repeatedly picking up and sanitising dropped teethers.

Since Neckerchew launched in February 2013, Cheeky Chompers has sold more than 100,000 worldwide. It has distributors in 26 countries. Its product is sold by more than 100 independent retailers and 10 UK national retailers including John Lewis, Mothercare, JoJo Maman Bébé and Fenwick. It employs four people directly and five indirectly at its Glasgow factory.

Attention to detail has been vital, said co-founder and director Julie Wilson.

“We identified innovative solutions for every aspect of Neckerchew, making it reversible, and triple-layered so it is absorbent. It has two popper-fasteners so it can grow with baby, and comes in a range of stylish designs to match a variety of clothes.”

For Wilson and co-founder Amy Livingstone, the innovation process involved looking at existing bibs and teethers, speaking to parents, running focus groups, attending consumer and trade shows, and trialling many prototypes on their own teething babies.

“We also invested in a range of Intellectual Property protection such as UK and international patent application, European design registration and trademarking worldwide,” Wilson said.

Since the launch of the Neckerchew, Cheeky Chompers has gained distributors in 26 countries

SE is in discussion with a range of large companies in Scotland, to encourage them to call on Scottish SMEs to fulfil their needs for innovation. Oil and gas is among the sectors being targeted.

“We are asking large companies to sign a memorandum of understanding with us to commit to giving Scottish SMEs the opportunity to bid for innovation projects they want to take forward. SE has committed to working with both the large company and also to support the SME through funding and expertise to help them deliver the project. Statoil (Norway’s international oil and gas operator) has done just that. As Business Insight went to the printer, an announcement was pending that one of Scottish Enterprise’s account managed companies had pitched for and won work from Statoil as a result of this initiative.

“We had some fantastic support through Scottish Enterprise. They helped us understand our IP requirements, supported our product design, market testing and prototyping, and helped us to formulate export development plans.”

Innovation is not just at the start, and not just about product innovation, she adds. “Always look at ways to innovate, from manufacturing to order fulfilment, from marketing to logistics, and ask what innovative adaptations or solutions could change the business.”

Neckerchew evolves constantly.

Cheeky Chompers recently announced a collaboration for the product with British fashion house Joules, and is looking at adapting the product to meet a demand in the special needs market later this year.

A second product, Comfortchew, has just launched. It is an attachable teething comforter combining many baby favourites in one: a comforter, a teether, tags, and the feel of a teddy.

“The Comfortchew is uniquely attachable — to baby, cot, car seat, buggy or dummy — so no more unhygienic dropped teethers or lost comfort blankets,” Wilson said.

Her advice for others considering innovation is: “Really understand the issue you are trying to resolve. What is already available, what added value would you bring, what would make your solution unique, what are all the options?

Is it just an innovative idea or one that has a market? Listen to the users, solicit feedback, challenge, question, improve, and constantly. Be fleet of foot.” www.cheekychompers.com

We want to work with companies with the ambition to take thinking to a new level “We will put in some funding to de-risk the project for the SME, while Statoil gets the innovation,” Watson said.

“It will open up the prospect of sales to other customers for the SME, which will have the early validation and revenue from a large customer, Statoil, while retaining the intellectual property rights over its invention.”

Julie Wilson, left, and co-founder Amy Livingstone stress attention to detail

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Business Insight

Innovation

Portal to academia is resource for business

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academic input can help with innovation — and an increasing number of businesses in Scotland turn to Interface, a central hub offering a free service to connect national and international businesses to Scotland’s higher education and research institutes.

Interface translates the needs of companies into manageable projects for external researchers. Typically, this may involve knowledge exchange, business and product development, process or service improvement, or analysis and testing.

“A huge number of companies continue to approach us seeking academic expertise to help address their business challenges,” said Dr Siobhán Jordan, director of Interface.

In the year up to August, Interface mediated 19 per cent more collaborative projects than in the previous 12 month period. “That is indicative of genuine interest among businesses in taking new innovations forward.”

This demand is evident across all sectors and particularly among SMEs with between five and 10 employees, she added. “Collectively, this scale of businesses will have a significant impact on the Scot-

tish economy if they continue to grow.”

As awareness of Interface’s role as a portal to academia has spread, it receives an increasing number of its enquiries from satisfied companies recommending its services to others or coming back after launching products developed previously with academic input.

This, Jordan said, is “very encouraging” for an organisation that promotes best practice among institutions in collaborating with business and also manages the expectations of companies in their dealings with academia.

The Interface Excellence Awards reward excellence in business/academia collaboration and have been a tool to encourage the promotion of knowledge exchange across Scotland.

The third annual Excellence Awards are being held in Edinburgh at the end of November, and will be the first awards since the announcement of the reshaping of the country’s innovation support system.

“There’s a clear commitment from partners and stakeholders around the Innovation Scotland strategy,” Jordan commented.

“It shows the business community that there is a real appetite to

Dr Siobhán Jordan says being part of a broader network is hugely beneficial

enhance the mechanisms in place and to have a Scotland-wide approach to getting it right for businesses.”

She said there had been a clear commitment from universities, development agencies and the Scottish Funding Council, the national body funding higher education institutions, to do more to support innovation. “More is already being done.”

Interface’s Common Interest Groups meanwhile look beyond its traditional one-to-one brokerage of knowledge exchange to try to make an impact on groups of businesses — in food and drink for instance — seeking expert input around themes such as marketing, technology or emerging sub-sectors.

For example, Scotland’s eight rapeseed oil producers, some of which had been helped individually through Interface Food & Drink, wanted to know how better to market the Scottish dimension of their produce in international markets.

“Olive oil is so well know that getting a foothold in the international market for edible oils is a puzzle for many producers of competing products,” Jordan said.

“Working with academia, the Scottish producers were able to validate their belief that the nutritional value of their oil was enhanced by the climatic and other growing conditions that Scotland offers. That gave them the credibility to grow and to project themselves internationally by forming a consortium to give them more reach and traction in those markets.”

A food and drink Resource Efficiency Energy Advisory Group formed by Interface Food &

Drink in conjunction with Zero Waste Scotland and Scottish Food & Drink Federation involves a wide range of companies from ingredients suppliers through to manufacturers.

“As well as discussing how to cut energy usage and cost, energy efficiency can also include how they deal better with waste and develop more sustainable products,” Jordan said. “It is as much about informing the businesses about what others are doing as bringing in academic input.”

A fledgling group has been established for craft distillers — the Scottish Craft Distillers Association. “Some of the companies involve are micro in scale, so the peer-to-peer value they get in feeling that they are part of a broader network while also being able to gain access to academics is hugely beneficial in helping to develop those businesses quicker and faster,” Jordan said.

Under the Scottish government’s innovation agenda, Interface has assumed the role of promoting universities’ technology assets directly to business. “As well as these assets being posted on universitiestechnologies.com, we also go out to find businesses proactively to interest them in what these technologies could maybe help to develop their company,” Jordan said.

Piloted among 30 businesses, this approach already shows some signs of bearing fruit.

“We have been pleasantly surprised,” Jordan said. “Some of those businesses have already started conversations with the academic institutions about specific areas of interest. We are hopeful that this will lead to deals being brokered.”

COMMERCIAL REPORT: ECCI

Power behind electrifying future for islands ECCI is pioneering electric cars on Orkney – and it is a self-sustaining programme that, it is about to announce, has truly global potential, discovers Rick Wilson

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s a vision of the future, it sounds almost too fantastic to be believable – an Orkney driven, almost literally and totally, by its own legendary winds.

But an electric vehicle takeover of the archipelago’s main island – in which spending on expensively imported petrol will be a thing of the past – is quite viable and will soon be a significant step closer to reality, according to the Edinburgh Centre for Carbon Innovation (ECCI).

And as a report soon to be published by the centre will suggest, this is not just a vision for Scottish islands – such a self-sustaining programme has exciting promise for the whole world, certainly those island parts of it whose tidal, solar or wind power potential could exceed their needs. Think sun and Caribbean surpluses thereof.

Orkney is already pioneering this new ground thanks to early turbine-age exploitation of its breezy location – sometimes unfairly maligned as an ill wind. Not so much now. The 70-island group already generates more wind power than its 100 per cent requirement. “And so, in the absence of a high-cost exporting pipeline, it faces an interesting innovation challenge and is obliged to get creative with the extra that could be up to 20 per cent,”

says Ed Craig, head of enterprise and innovation at the ECCI. “The island’s roads already carry nearly a score of electric cars, and an electric car dealer has been recently established there,” he adds, relishing tangible hints of a possible global revolution starting in Scotland. “This country has a lot to offer the world as a model regarding use of renewable energy and its approaches to heat and transportation.”

Created three years ago as a facilitating hub for the coordination of knowledge, innovation and skills required to stimulate a more low-carbon society, the ECCI – part of Edinburgh University and housed in the ultra-modern interior of the original Georgian home of Edinburgh High School – sits like a benign spider at the centre of an ever-widening web of ideas and projects; and under executive director Dr Andy Kerr, it has already chalked up an impressive range of successes, not least a staffing increase from two to 23.

Another is convincing the Orcadians that their modest proposals of a few cars and buses could be more “electrifying” by far – “Why not think big, we suggested.

Just go for full electrification?”

But what of the farmer with special vehicular needs? “There are issues; it’s not a clear-cut solution, but we have

pathways to funding that can get this on track to a near-100 per cent change,” says Mr Craig reassuringly.

Officially entitled Orkney Electric Future and with its lead partner being Orkney Islands Council – supported not just by the ECCI but by the Scottish Government, Scottish Enterprise, Transport Scotland, Highlands & Islands Enterprise, and the Scottish Cities Alliance – the project is only one of 16 low-carbon proposals identified by the centre as worthy of acceleration and support in the journey towards making Scotland a sustainable low-carbon economy and society.

Laura J Cromarty, transport manager at Orkney Islands Council says: “Orkney’s Electric Future project is considering a large-scale, battery-run electric vehicle roll-out which would have significant impact on the islands and

Exploitation of the hopefully develop a sustainable example plentiful wind power of a mobile ‘living lab’ within an island on Orkney is a boost context.” for electric vehicles The projects, in what is called the Smart Accelerator programme, range from Linlithgow Community Energy through Residential Thermal Imaging (Aberdeen) to Intelligent Street Lighting (Glasgow). The 16 were selected in July by the Smart Cities/Sustainable Islands steering group from a long list of projects.

As well as advice and practical support on funding, management, marketing and communications from industry, academic and international experts, each receives direct support to create fully packaged partnerships ready for investment, Mr Craig expects that when the ECCI’s “viability” report on the 16 is completed and put before interested parties in March, the Orkney project for one will get a “let’s go” message from the government, the council, or private investors. In which case, the project would be getting on the road – literally – by the end of next year.

Yet the Smart Accelerator programme itself is but one several bold themes driven by the ECCI. Others fall under titles like the Low Carbon Ideas Lab, Low Carbon Innovation, green events venue, and skills and learning.

And this month sees its helping hand behind selection of four Scottish lowcarbon companies as finalists in the Royal Bank of Scotland’s Innovation Gateway initiative, a UK-wide search for new ways of reducing energy, water and waste; in which the best ideas will be tested on the Ed Craig, head of enterprise bank’s domestic estate of 2,500 buildings and innovation at ECCI and branches.

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Business Insight COMMERCIAL REPORT: QUEEN MARGARET UNIVERSITY

An appetite for expanding markets Queen Margaret University invites business to benefit from its new centre for food and drink excellence, reports Rick Wilson

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hey know when to pass on the salt, how to create healthier functional food products, and ways to innovate to develop novel foods for new markets. They have even discovered a revolutionary new process to help increase shelf-life without destroying nutrients!

Their specialist know-how is ever more valued in today’s nutrition-conscious society. They are the white-coated Queen Margaret University (QMU) experts about to offer a unique service to food producers in the form of the new Scottish Centre for Food Development and Innovation, a casting in stone of the less formal service they have offered in recent years to small and medium sized businesses in that industry.

Comprising dedicated new facilities within the ultra-modern university complex near Edinburgh – including microbiology and chemistry labs, a development kitchen, a fully equipped sensory evaluation suite, and a specialist testing room for industry to trial new technology – the centre is due to be opened on December 9 by MSP Richard Lochhead, cabinet secretary for rural affairs and the environment.

Aligned to government, Scottish Enterprise and the Food Health Innovation Service national agendas, there is a clear ambition in Scotland for an academic centre to support innovation led economic growth through collaboration with the booming food and drink industry.

Invited launch-day guests will have the chance to talk to the centre’s experts, view its hi-tech facilities and get an in-depth appreciation of the university’s ambitious work in support of Scotland’s food and drink industry. They will also hear from James Withers, chief executive of Scotland Food and Drink, and Siobhán Jordan, director of Interface, the knowledge connection agency, both of which help match businesses to academic expertise and access incremental funding to get projects off the ground.

Of course, the university’s good-forfood reputation goes back many moons; to 1875, in fact, when it was founded to help address society’s most pressing issues and help improve the diet of the urban poor.

Still true to its roots, the institution’s work in food is now focused on research and knowledge exchange and the support and development of Scotland’s SMEs. Its work ranges from supporting local artisan producers such as Black and Gold, an East Lothian rapeseed producer, to its work with Stirling based iQ chocolate and Edinburgh-based Genius Foods. Much of the research activity is helping to bring about a perception of Scotland as “the land of healthy food and drink” through helping indigenous businesses to develop and improve their offerings.

Under the monitoring eyes of hosted

consumer groups and taste panels, specialist academic staff will aim for innovative product development and analysis; reformulation of existing products; the sourcing of raw materials to produce novel ingredients and sustainability; development of leading-edge healthenhancing properties; and nutritional analysis to improve product processing, preservation and shelf-life.

Relevant to that last point, business development manager Miriam Smith cites a case already tackled by the university that shows the centre’s capability. It concerns the commercial firm Advanced Microwave Technologies Ltd (AMT) whose revolutionary use of microwave technology is helping other businesses to extend the shelf-life of products while preserving taste, colour, texture and nutrient content which has resulted, for some, in business expansion plans and a new supply route to global export market.

The technology is the brainchild of Dr Yuriy Zadyraka and Douglas Armstrong, director of AMT, which is emerging as one of the world’s most innovative users of microwave technology. Initial trials held at QMU helped AMT establish a route to market in the food and drink industry with nutritional researchers proving that the new technology is a gentle process of pasteurisation which can extend shelf life of food and drink without destroying nutrients and antioxidants and without altering taste.

“We began working with a team of QMU experts following an introduction

by Interface”, says Douglas Armstrong.

“We developed a unique way of using microwaves to heat liquids, suspensions and semi-solids on a continuous basis, and we conducted a trial with fresh raspberry juice to discover we could very gently pasteurise the juice and retain all of the goodness of the fresh product.”

He recalls how a small Scottish supplier of high-quality fresh fruit drinks, approached QMU with a problem and immediately benefited from the advance:

The modern university complex near Edinburgh has dedicated new facilities for food development

The focus is on research and knowledge exchange

“With only an eight-day shelf-life on its fresh orange juice, it was looking to extend that while keeping the product’s integrity as a healthy, nutritious, flavoursome, fresh juice. By putting it through our gentle pasteurisation process, its life was extended to four weeks.”

“QMU has a unique and hands on approach to engaging with industry, mainly SMEs, coming in for meetings and talking with us about their needs” says Miriam Smith. We are committed to partnerships that are transformative in shaping and leading innovation in the industry. We get companies into our labs and develop new concepts and product development ideas inspired by the latest academic research in a cutting edge state of the art environment. We’ve been successful in developing a community feel to our collaborations; not just working with individual companies on one project but getting them involved with other food producers on mutually beneficial projects and further developing their own research projects.

So how is it funded? “Usually through Interface and the Scottish Funding Council; and if we agree a project plan and implement it, they are involved all the way through and get a report at the end. Many small businesses come in on the innovation programme, which gives £5000 to cover the cost of the initial project – and that goes to the university.

“But generally, the company’s contribution is an in-kind one that matches the £5000 and represents a neat way of starting off a relationship. Going forward, there are follow-on vouchers for enhanced funding. Interface Food and Drink also has a funding method for when companies wish to collaborate. We can then get £10,000 to do a project which meets the needs of several companies.”

There is, of course, a strong moral motive running through the whole exercise. “Of course, universities appreciate that kind of income; but this project is essentially quite altruistic in that it works

two ways – with businesses’ challenges and solutions feeding back into teaching in the spirit of knowledge exchange, and both of us working towards the health of the Scottish people.”

QMU’s insights on the food front are already impressive, even before the centre’s opening. Among projects with business partners so far, it has shown, for example, that:

an artisan chocolate made in Scotland has the potential to increase the reaction times of the country’s toughest rugby players.

honey produced in Portobello is as effective in the fight against bacteria as New Zealand’s famous Manuka honey.

English Breakfast teas produced by eteaket tea company in Edinburgh contain the highest levels of caffeine while Decaf Breakfast contains none or negligible amounts.

For several years now, QMU researchers have conducted research into sea buckthorn, the new Scottish superfruit that grows wild all down the east coast.

QMU scientists confirmed that the berries are bursting with antioxidants, vitamins and essential minerals. The fruit contains high levels of vitamin C and E – the concentration of vitamin C in the fruit is higher than that in strawberry, kiwi, orange, tomato and carrot, and the vitamin E content is higher than that found in wheat embryo, safflower, maize and soybean.

The positive outcome from our initial research has led us to establish the Sea Buckthorn Working Group involving six food producers, who are keen to exploit the nutritional benefits of this littleknown Scottish fruit by enhancing the nutritional content of their products.

To find out more about how QMU’s food specialists can assist with your business development or to view the new facilities within the Scottish Centre for Food Development and Innovation contact Miriam Smith, development manager at msmith3@qmu. ac.uk

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Business Insight

Innovation

Expert help sets the whee

A dynamic team at Scottish Enterprise is working to help bring bright ideas to market. Ian Cameron discovers the strategy for innovation

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cottish Enterprise offers free, independent and impartial advice on innovation for businesses seeking to develop new products and services, investigate more efficient processes, or to improve productivity. Sometimes, it can itself provide enough to get businesses started on the innovation trail and some way along it, or it may signpost them on to others who can help.

A team of innovation specialists works at the sharp end of the agency’s efforts to help companies bring bright ideas to markets in general, and to export ones in particular.

Each year, they work with more than 1,000 businesses in the Scottish Enterprise area, providing advice and support to assist firms to innovate for growth and higher profitability.

Many in the team have worked in industrial roles and have direct experience of product development, design and commercialisation. They offer a wide range of technology and manufacturing experience as well as many years working directly with SMEs to improve their innovation performance. Each adviser is working with the Improve Training Academy achieving accreditation in a system that helps a company explore every aspect of their innovation activity, comparing performance against European innovators.

“Breadth of experience is a real strength of the team,” said Charles Broadfoot, one of its innovation specialists. “We come from different backgrounds and cover every industry. So if one of us is confronted by a question that is new to us, we almost invariably have answers in the team.”

His own curriculum vitae underlines the point. His working life in industry began at Alexander Dennis, the Falkirk based bus and coach manufacturer which is featured on the page opposite as an innovation case study.

An apprenticeship was followed by nearly eight years in the manufacturing and design sides of the business before going to university. He subsequently worked in academia — principally in the manufacturing, computing, and electronic and electrical engineering departments at Strathclyde University — investigating how companies acquired and managed technology.

The late 1990s found him involved in a Scottish Enterprise funded project trying to persuade companies to broaden their focus beyond traditional products to those with a more international appeal using innovation to differentiate their products and services.

10 years of private innovation consultancy work delivering services for private clients, enterprise companies and universities followed. All told, Broadfoot has 15 years’ experience of helping companies to examine their innovation and to structure the way they manage it.

“Most of our team have similar backgrounds that include both industrial and consultancy experience,” he said.

The group uses tried and tested innovation practices. This may include helping a company to use innovation in a more strategic way, perhaps addressing new international markets or developing new business models.

“Traditionally, companies have used innovation practices to identify improvements that lead to new products or new processes, but we now see more innovation focus on the softer management areas which also include the use of culture and organisation, service and business model development,” Broadfoot said.

“A large part of the job is assisting companies to find collaborating partners or suppliers who can help lead to improvement in the business performance.

We will also seek to help the company to structure its management processes to support the management of innovation.”

This may include advice on setting up processes to identify industry trends, monitoring competitor activities and managing the ideas-to-market process to help select the most profitable opportunities, he explained.

“We also assist the company to utilise design practices to build distinct products, and can signpost the business to Intellectual Property experts to help them protect and exploit their ideas.”

The good news, as Dr Siobhán Jordan of the business-academia link organisation Interface explains on page 4 of this issue is that Scottish SMEs appeared to

Charles Broadfoot, who began work at Alexander Dennis, above, uses tried and tested innovation practices

maintain their interest in innovation during the Great Recession and have expanded it in the economy’s recovery phase.

“Scotland has always been an inventive country,” Broadfoot said. “We have not always been good at extracting commercial value out of that, but the kind of companies that are around now are getting much better at developing new products and seeking out international markets.”

He added: “The process of innovation is now on the agenda of lots of Scottish companies. They know that they cannot afford to be always in a position where they have to compete solely or mainly on price. The way to break out of that model is to be different, more agile, responding to markets more quickly and being first into the market with new ideas.

“A key driver for Scottish Enterprise is to increase the number of companies investing in research and development.

If we are to deliver economic growth we need increased investment in R&D and more structured processes to manage innovation.”

The first steps when Scottish Enterprise is contacted by a company planning or undertaking an innovation project to

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Business Insight

els in motion Useful links Scottish Enterprise business innovation support: 0845 607 8787, innovationsupport@scotent.co.uk Business Gateway can help on a business plan: 0845 6096611, www.bgateway.com Scottish Enterprise Research Service can provide market research support: 0845 607 8787, research@scotent.co.uk

develop a new product or service for the market is to organise a review of the business case and implementation plans.

The review, which is not a grant assessment exercise, is conducted by experienced advisers such as Broadfoot, to establish where the company is in terms of its innovation and what is on its agenda.

Working with Scottish Enterprise’s account management team and Business Gateway, the innovation adviser determines the appropriate form of assistance from Scottish Enterprise’s network of support resources. This will include one or more of: providing necessary basic information; signposting the business to another directorate within Scottish Enterprise or its external partners; or inviting the company to attend a free Innovation Surgery of up to two hours with its specialist advisers “The approach often depends on the size of the company and what stage it is at,” Broadfoot explained.

“For early start-up companies, a basic Innovation Surgery can provide help to understand the challenges in taking an idea to market. By way of contrast, a larger, more established SME may want help to understand its innovation management processes. We are trying to get

Alexander Dennis’ Enviro400 bus was introduced after a three year R&D programme involving customer engagement sessions

across how to get to market quicker and cheaper.”

While the products that Scottish Enterprise can bring to bear include research and development grants, the real benefit is in helping to structure that process of innovation, he stressed.

“What often happens is that a business starts out on a fairly small scale led by the owner, a family, or by a small team. As it grows, management’s ability to focus in on a specific area such as innovation can be diluted.

“We can assist to work out how to manage it in a different way now that they have more employees and more people involved in their processes. As a company grows, the original decision makers sometimes become more detached from decision making over these aspects of management.”

So for management, it really can help if some of the practices involved in innovation can be streamlined, he said. “This may apply, for example, to the life cycle of a product. When will it need replacing?

What is happening in competitors’ product life cycles: when will they be coming to an end? If so, then when would be good time to launch a new product into that space, and what kind of product, with what features?”

Organisation of culture is another fertile area for analysis and change that can have lasting benefits on the company’s capacity and speed to innovate.

“We can suggest a number of ways to reward staff for bringing ideas forward to the table. Often, with that kind of approach, rewards may be about someone’s reputation being boosted, or receiving a pat on the back rather than, necessarily, financial rewards. Sometimes, innovation practices cost nothing to deliver but can have a real impact on the business.”

The agency can bring more to the table than innovation advice, Broadfoot emphasised. “To build on my earlier point, Scottish Enterprise’s team of Intellectual Property specialists is aligned to what we do, and we often find that a company can add revenue over time by licensing IP to someone else. That way, the business can attack markets that it has never been able to address by itself.”

Managing IP is vital to companies developing new products and services, particularly in international markets.

Considerations extend to working with third parties when issues of confidentiality, contracts and ownership between everyone involved have to be carefully managed.

Businesses looking for investment to finance product development may need to identify the unique assets that make its proposition attractive to investors and customers. If a new product or service is branded, it may well need protection against copying at home and abroad, to maximise its potential value to the company.

“The integrated Scottish Enterprise system where we work closely with account managers and Scottish Development International adds a lot of value to the offer that we bring to companies,” Broadfoot said.

Scottish Enterprise support on innovation is available to registered companies who have a business or project plan, are able to finance a significant part of project costs, and have conducted basic market research.

New ideas power sales for Scots bus manufacturer

I

nnovation is a huge differentiator in the market for Alexander Dennis, the Falkirk-based bus and coach builder Its Enviro400 double deck bus, the UK market leader, was introduced in June after a three-year development programme involving customer engagement sessions throughout the entire R&D programme.

“Involving customers is critical in our approach to innovation,” said Bill Simpson, group corporate affairs director. “The tagline for our revolutionary Enviro400 was: the bus designed by the industry ... for the industry.”

Among examples of innovation powering exports is the current Enviro500 high capacity, three-axle double deck designed in partnership with KMB and other major operators in Hong Kong.

“It is a phenomenal success with around 1,500 sold in just two years, establishing itself as a market leader and enabling us to open up new markets in Asia and the Pacific Rim,” Simpson said.

Clearly, every product needs to be manufactured to the highest quality standard, priced right, delivered on time and supported comprehensively throughout its life-cycle.

“However, frontier technology brings an added dimension. It invariably raises the bar for the industry and, in our case, improves vehicle performance considerably,” Simpson observed. “This can be through reduced weight, better fuel efficiency, increased seating capacity, or a combination of all these factors.”

Innovation positions the company as a business constantly looking beyond the horizon, he added. “We have worked hand-in-glove with major customers in the UK and overseas to design and engineer the products they want. This is one reason we have grown rapidly from annual turnover of £170 million to in excess of £500 million. We lead the world in midi bus and double deck vehicle production.”

Alexander Dennis seeks out new design and engineering solutions that can improve the product experience for operators, passengers and drivers, Simpson said. “That process is driven by a dedicated new product development team who monitor what is happening across the industry and the broader, global engineering and manufacturing sectors.”

Scottish Enterprise and the Scottish government have worked closely with Alexander Dennis over the past decade, recognising that success will mean it can continue to support around 1,000 jobs in Scotland and enhance the nation’s reputation for engineering excellence.

Such support has played a key role in bringing innovative new products to market quickly, expertly, and ahead of the competition, Simpson said. “In the process, we have introduced extensive apprenticeship and people development programmes that encourage our best and brightest to take on new challenges and progress their careers.” www.alexander-dennis.com

Plant material sowing the seeds of innovation

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egware, the only globally operating manufacturer of compostable packaging and catering disposables made from renewable plant materials, is all about innovation really.

“It is hard to protect ideas in our market so we make sure we stay ahead,” said Joe Frankel, founder Joe Frankel says company helps customers toward and managing director of zero waste by matching businesses with recycling the Edinburgh firm.

His new RCPLA cutlery desirable in the market, we launch it.” range, the first ever made from recycled cornstarch bioplastic, uses up waste, has Innovation is also about how Vegware 90 per cent less carbon than standard supports clients, Frankel said. Its Food plastic cutlery, and reduces cost. It is Waste Network helps customers towards certified compostable. zero waste by matchmaking businesses Vegware’s sales have grown by 919 with food waste recycling. Custom Print per cent in five years as its UK team Café is its in-house custom branding has mushroomed from two founding service. Its Eco Audits provide free, partners to nearly 50 people. It is active tailored carbon reporting. Scottish in five continents.

Enterprise supported the build of the “Innovation sparks internally or is Food Waste Network website and brought back by our field sales team,” provided input to Vegware’s marketing. said Frankel. “We start from how a His top tips? “Have a go! The idea product will be used. So whether it needs for Vegware came to me in California, to be heat-resistant, greaseproof, have where I was inspired by the can-do spirit. visibility and so on informs our choice Second, ask if it has mass appeal: if not, of materials. Once it appears right in make sure of opportunities for margin. theory, we make prototypes to test and Finally, really, really know what else is tinker with design. We then need to out there — and why your product is be sure clients agree. After testing and different.” improving to ensure it is practical and www.vegware.com

Tuesday November 4 2014 | the times

8

Business Insight

Innovation

Collaborating with common aim AIMday sees industry executives presenting academics with intellectually stretching challenges

Academia and business are combining through the University of Edinburgh’s AIMday initiative, writes Rick Wilson

I

t promised to be a stimulating new experience — the staging by The University of Edinburgh of AIMday, a collaborative knowledge-exchange initiative previously presented only in Sweden. And so it proved to be, following the first event held in mid-June; now a further two AIMdays have been scheduled for this December and April, 2015.

The title stands for Academic Industry Meeting Day and the innovative idea is for intellectually stretching challenges to be presented to the university’s experts by industry executives in the form of specific questions that encapsulate a particular company objective.

Each question is analysed before the company’s representatives in small group sessions with university academics with specific competence and research interest in that topic. With both teams striking up

a partnership spirit to discuss their submitted question based on the event’s chosen theme, it is organised as a series of individual workshops within that full-day time frame and so represents a launchpad for fruitful relationships between the parties and opportunities through contacts, ideas and collaborations.

“Specific detailed solutions are not expected within the hour,” says commercial relations executive Alex Cassidy, “as the meetings are relaxed and informal rather than strict question-and-answer sessions.

But they should define a direction of travel towards solving a given problem; in other words, start to find the pathway to a solution. It’s all about sparking fresh suggestions off each other and stimulating follow-up conversations.”

The concept is a borrowing born of the Scottish university’s long-standing relationship with Uppsala University, famed

Alex Cassidy reports success in Edinburgh

for its world-class research and long history. Edinburgh’s oldest higher education institute is the first outside Scandinavia to be an approved host for AIMday — a registered trademark owned by the Swedish university, which launched it six years ago to delighted industry feedback.

Was the Edinburgh exercise equally successful? “A measure of that is the reaction we had from the attendees. The feedback we received from industry, academics and also observers from Uppsala was very positive and this has encouraged us to plan two more future events around the topics of Materials and Fluidics and Flow,” says Ms Cassidy, who sees academia and industry working ever more closely.

A success then? “Definitely, and it looks as if our next event will achieve an even great number of companies attending with a broad range of questions posed to academics from across the colleges.

It went very well. We were very pleased with the response. We had nine questions posed on the day on the dual theme of Modelling and Simulation from five companies, ranging in fields from forestry through technology to manufacturing.”

All local companies? “No, companies attended from across the UK, both those that we had existing relationships with and also companies that we haven’t traditionally worked with. This was particularly positive for the academics as it gave them the opportunity to apply their knowledge to real-life business challenges from a range of different sectors. It also provided a useful platform for developing relationships between the university and industry for the future.

“So that was a positive outcome, not just for the companies but for the academics too. A good opportunity to get to grips with challenges the companies face, discussing how things could go forward. They often had a lot in common; not necessarily always representing business or academia but just being people from their own fields meeting together and sparking ideas off each other. All of which made it a really good networking event in all respects.”

Once the companies have registered their specific questions, academics can sign up for the discussions to which they believe their research could add the most value. And they may take on as many as they want “as long as they can fit it into the timetable”. For the next event, on December 3, they have until November 7 to study the submitted questions and then sign up to address them on the day.

The Swedish AIMday has tackled 20 subjects so far — such as ageing, cancer, diabetes, energy, diagnostics and imaging — and seen the concept continue to flourish, generating conspicuous gratitude and success among business interests. It has also been extended to other “pure” disciplinary areas, like life science, humanities and social sciences.

Any developments planned for Edinburgh’s version? “We have started to plan a series of these events throughout the next year for companies to attend, around specific areas of competence for the University,” says Ms Cassidy. “Once the topic of Materials has been tackled in December, we will turn our attention to the topic of Fluidics and Flow, a topic of which we have extensive academic knowledge here at the university, for companies to draw upon.”

The University of Edinburgh has long had word-class research, expertise, facilities and inventive solutions helpful to the business world, and its challenge now is “to let companies know our expertise is here as an accessible resource which can be transferred successfully from the laboratory to industry — and we believe that AIMday is a good vehicle to help us achieve this”.

Aberdeen to become Scotland’s first Gigabit City

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berdeen based businesses will soon have access to some of the fastest internet connectivity in the world as part of a new digital infrastructure project in the city. From January 2015, CityFibre, a UK builder and operator of pure fibre infrastructure, will begin building a new, state-of-the-art pure fibre network throughout Aberdeen, known as the Aberdeen CORE. The CORE network will deliver gigabit speed connectivity (1000Mbps) to the city and shire’s business community through internet service provider, Internet For Business (IFB).

CityFibre builds demand-led networks and the Aberdeen CORE final network route will

therefore be defined by registrations of interest from the business community. Businesses across the city are now registering their interest via the aberdeencore.com website. The Aberdeen CORE will bring gigabit speeds within reach of over 6,000 companies as well as hundreds of public sector and higher education sites including schools, universities, libraries, hospitals and government agency buildings.

The project is strategically significant for Aberdeen. The city boasts one of the strongest regional economies in the UK, accounts for 28 per cent of Scotland’s GDP and is home to 30 per cent of the country’s top 100 businesses. It has the second highest broadband take-up rate in the

UK, but an absence of cable infrastructure.

Construction will commence in January 2015 and the first users are expected to benefit from the network as soon as March with the first phase of the build due to be Greg Mesch completed in the autumn.

CityFibre chief executive Greg Mesch said: “Aberdeen is poised to benefit from access to gigabit speed connectivity. In such an influential city economy it is vital that businesses have world-class digital infrastructure to support them. The Aberdeen CORE will bring

gigabit speed connectivity to thousands of businesses via a future-proof, purpose-built network.

As we plan the rollout it is essential that the private and public sectors in the city register their demand to ensure that the Aberdeen CORE delivers maximum value.”

Civic and business leaders in the city have been quick to recognise the significance of the project.

Aberdeen City Council leader Councillor Jenny Laing said: “The decision to make Aberdeen a Gigabit City helps us to realise the ambitions laid out in our Accelerate Aberdeen initiative to be at the forefront of the digital revolution.”

See www.aberdeencore.com for more information.

the times | Tuesday November 4 2014

9

Business Insight University Technology is an initiative that directs innovative companies to valuable research resources, writes Ian Cameron

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couting around for smart ideas to improve or launch a product or service, many companies in and beyond Scotland turn to University Technology (UT), a collaborative initiative by 19 Scottish universities and research institutions.

Its portal, the website university-technology.com, showcases new technology opportunities from academic research in one convenient location, and the organisation acts as a single door of entry to this expertise. Companies entering it can be signposted rapidly to research and innovation offices at UT member institutions.

University Technology has been around for more than 10 years and has evolved to become a strong feature of the Innovation Scotland network of public sector support organisations facilitating and promoting technology transfer and commercialisation.

“Its goal had been to present the formalised intellectual property (IP) portfolio for all the Scottish universities,” said spokesman Dr Andy McNair, who is also director of research, innovation and enterprise at Glasgow Caledonian University.

“UT was once unique as a repository of patents from higher education institutions (HEIs), and we are now starting to see other countries and regions around the world replicating what we have done.

They realise that it saves companies time rather than going to each HEI in turn.”

Companies can also sign up to receive alerts about new IP. These messages may be focused on broad or specific themes of interest to them, and can be filtered by using keywords.

“There are patents coming on stream all the time,” McNair said. “United Kingdom universities as a whole generate about one fifth of all patent applications.

It is beholden on us to generate interest to get a return on that investment.

“Including the sale of spin-off companies, UK universities get back around twice what they invest on IP. The figures are generally around £30 million to £35 million spent each year on IP, and £70 million brought in.”

Not that a company approaching University Technology will find the process as easy as buying a tin of beans off the supermarket shelf – and with good reason.

“It’s a relatively complex transaction,” McNair said. “Universities invest heavily to protect the IP of assets that have generally come from research grants, including from the public purse. Some of this represents five to 10 years of research and grants.”

Typically, a company approaching University Technology will already have technology, products and interest in the area that the firm wishes to discuss.

“We rarely find people approaching us on a ‘look-see’ basis,” McNair said. “I have worked most of my life in the private sector, still work with SMEs, and am a board director of one, so I know that you do not simply take IP off the shelf and productise it. It is a complex process.”

McNair, a chemistry PhD, played key

Simedics approached the University of Edinburgh to help develop its training app

Return on investment proves the worth of IP roles at a number of drug development and medical materials companies before moving to the technology networking and business development organisation Connect Scotland, where he became managing director.

One driver behind university efforts in technology transfer, including UT, is to encourage more collaborative research and development.

“It is not simply about spin-out company formation or individual licensing of IP,” McNair stressed. “It is about deepening and sustaining relationships with business. This is rarely based on just a single patent. Behind the IP is a lot of expertise, and access to special equipment and wider research group.”

One of UT’s key aims is to encourage such interaction. “This can involve a complex and lengthy series of negotiations,” McNair advised. “Obviously, a lot of licensing deals emerge from these, but far more result in broader collaboration between a business and a university.”

Companies entering the UT website’s ‘Working With Us’ channel find a suite of documents that are templates for engagement with this process. “It allows them to get a feel for what is involved before contacting us,” McNair said.

This also reflects a drive towards harmonisation between HEIs in dealing with companies. “The idea is that a business approaching a university when it has already been working with another HEI should already have a strong sense of

when documents will appear in negotiations, and what conditions will be included in them,” McNair said.

As well as change stemming from what company’s want and need, and from the universities themselves, there is topdown ministerial guidance urging HEIs to generate more income beyond what they receive from government through the Scottish Funding Council.

“A lot of that non-SFC income comes through collaborative work, so there is a real need for universities to be more open to and engaged in different types of business models,” McNair observed.

“If the simple IP licence transaction ever existed, it has gone far beyond that.

All the universities have professional research and innovation offices with PhD qualified staff, most of whom have been in

Dr Andy McNair stresses deepening relationships with Scottish businesses

business and have done IP transactions.”

Greater business experience in universities means more people in technology transfer offices understand what companies need and, for example, the importance of timelines, McNair said. “I would not claim it is perfect, but we are moving more and more in that direction.”

Most of the organisations such as UT, Interface and individual universities also work with each other behind the scenes to improve the quality and relevance of services offered to companies, he added.

“One consequence is that even if a company approaches the wrong university for its needs, we all get together monthly on various committees, so it is very easy for us to either pass contacts on or to generate multi-university collaboration with businesses.”

Edinburgh and Simedics pioneer diagnosis When Yorkshire company Simedics Limited wanted to develop an app to train medical professionals in early diagnosis of skin cancer, it approached the University of Edinburgh through University Technology.

The app, Dermofit, was conceived in 2005 by Jonathan Rees, professor of dermatology at the University of Edinburgh, as a digital tool to educate GPs to improve their proficiency in diagnosing skin lesions.

Rees collaborated with Professor Bob Fisher of the University’s School of Informatics to further develop the Dermofit app. It contains a photo library of skin lesions to help inform practitioners so they may diagnose more effectively. It also uses advanced search software

programs to group skin lesions of similar appearance The app was licensed to Simedics this summer through Edinburgh Research and Innovation, the University of Edinburgh’s own commercialisation arm.

Simedics was planning to develop and launch a commercial product this autumn. It will be aimed at medical students, dermatology specialist nurses, and general practitioner training. The company has also said that it plans to target global markets following the UK launch.

Fisher hopes for a continuing relationship with Simedics, believing that the app has potential to be developed further as user feedback on its features and use begins to accumulate in commercial use.

Tuesday November 4 2014 | the times

10

Business Insight COMMERCIAL REPORT: CLYDESDALE BANK

Team that gives a crucial helping hand to fast growing companies A small but agile division of the Clydesdale Bank specialises in providing tailored packages to innovative and expanding technology companies

Broadly speaking, many other banks are not prepared to take this approach and our money is less expensive than a debt fund from a non-mainstream lender.

“While the businesses we look after in our Growth Finance area can be more complex than others, we remain conscious of the serious responsibility we have to our depositors when taking a decision to lend. As such, we focus every day on making sure we get the right balance between providing the necessary support businesses need and managing that risk in as robust a way as possible .

The team at Clydesdale has created growth finance packages for a number of exciting Scottish businesses including Touch Bionics, the Livingston-based company spun out from NHS Scotland just over 10 years ago, that produces the advanced prosthetic hand iLimb, and Aircraft Medical, who create the McGRATH® range of healthcare insertion devices that are also fitted with cameras. Sands argues that his team work hard to support this type of company, that may have a significant journey in terms of research and development before being able to benefit from success.

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rowth finance is just one of the corporate services offered by the Clydesdale Bank. It is a level of support that is vital for innovative and rapidly expanding businesses that need specifically tailored packages to support both investment needs and their working capital requirements as they build their future enterprise value.

Clydesdale Growth Finance has provided more than £50 million of funding to 15 of the UK’s leading technology businesses since it was set up in 2011, providing senior debt packages to intellectual property-rich businesses with existing venture capital that are also investing in their future value to the detriment of short-term profit.

Graeme Sands, who heads up the

Graeme Sands and his team believe in ‘getting under the bonnet’ of SMEs

Growth Finance team he established three years ago, says the continuing success of this small, but agile, division is the result of them taking a slightly different approach to their investment portfolio. Sands argues that Clydesdale Growth Finance does not view the businesses simply as a commodity with surface appeal, but is more interested in getting ‘under the bonnet’ of these forward-looking organisations, generally SMEs with an average turnover of around £9 million, that are spending in major terms now in order to prosper later.

“Growth finance looks to support and grow venture capital backed businesses with significant intellectual property, which usually means owning lots of patents,” he says. “They also tend to be export-driven, and if you were to look at

our portfolio where we’ve backed 15 such businesses, you’ll find around 90 per cent of their business is export. We understand when a business takes on venture capital, and then invests in their research and development, or perhaps in overseas sales, then this can involve significant cost, and we have to expect there may well be losses.

“However, we look past the losses at the underlying profit and ask the question: ‘Is this business really growing?

And if the losses are being created by investment, then those losses are not in themselves a barrier to us lending. We provide a debt offering without which a business would need to do all their growth funding through equity, which is more expensive than debt.”

Sands explains that for Clydesdale Growth Finance, it’s about asking the key questions, researching and getting to grips with how a business works, not just assessing its performance now but its market and growth potential.

“When it comes to an overall appraisal of a business, we’re not essentially using any different techniques from any other bank,” says Sands. “It’s that we are able to take the time to make, and are interested in, making those appraisals. When looking at the management team, and the technology, some of the best diligence

The team at Clydesdale has worked on growth packages for companies that include Touch Bionics

can come from asking: ‘Who is buying your product?’ If the answer to that question is large blue chip multi nationals, then that can be pretty persuasive for us. Of course, we’re also asking questions about their product, about why it is successful and what the benefit is, just as it’s important to look at the management, and at the quality of equity in there, along with due diligence on the intellectual property that is driving the business.

Team leadership Graeme Sands, who has been head of the Growth Finance business at Clydesdale Bank plc since it was established in 2011, leads a team that consists of experienced Corporate Finance professionals with funding experience gained both in banking and industry. Sands worked in leveraged finance with the bank, operating mainly in the telecom media and technology sector, and before that he held board level positions at two software businesses, KAL and Graham Technology plc. He recently took part in the Royal Society

of Edinburgh, ICAS and Scottish Financial Enterprise backed Advisory Report ‘The Supply of Growth Capital for Emerging High-Potential Companies in Scotland’ and was quoted heavily in the UK Government’s Intellectual Property Office report ‘The role of intellectual property and intangible assets in facilitating business finance’.

Sands, who was previously working with PwC, is also a member of the Institute of Chartered Accountants of Scotland and holds an MA (Hons) from the University of Aberdeen.

Growth companies feel the pressure for liquidity and Clydesdale’s support allowed us to stay focused and independent “It’s because of this same approach and thinking that we’re prepared to go a little bit further and it’s enabled us to bank some larger and incredibly successful Scottish businesses, such as Smart Metering Systems, which listed not that long ago, plus the Amor Group, and Skyscanner,” he adds.

“These were businesses that were significantly larger, but at an inflection point when we banked them and that’s something I’m very proud of being able to do.”

Gareth Williams, the chief executive and co-founder of Skyscanner, stresses how valuable and timely that proved to be. He said: “Growth companies feel the pressure for liquidity and Clydesdale’s support allowed us to stay focused, being private, independent and continue growing, such that we are only one of two companies that have been in the Sunday Times Tech Track 100 for each one of the last five years.”

Sands added: “As an organisation we have the skills, deep expertise, and the interest in spending time on other than volume propositions, looking at what’s good and bankable about a business – and often we’re getting to a place others might not.”

the times | Tuesday November 4 2014

11

Business Insight

Innovation

On course with unique action plan

Gleneagles is an example of sustainable golf course management

The 2020 Climate Group is forging links between business sectors to work towards Scotland’s ambitious climate change targets, discovers Ginny Clark

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ollaboration has been key to the achievements of Scotland’s 2020 Climate Group, the innovative and influential member organisation that brings together the private, public and third sectors as they work towards this country’s ambitious climate change targets of reduction of 42 per cent CO2 by 2020.

This is a unique initiative, and Scottish businesses are not only central to its success, but lead the way in forging partnerships, and creating big-thinking projects, in the drive to deliver a sustainable economy through pursuit of a lowcarbon Scotland.

For Samantha Barber, one of the vice chairs of the 2020 Climate Group, the Convention of Parties (COP 21) in Paris next year, the UN’s framework convention on climate change, is not only an opportunity for setting out the Scottish business case for sustainable innovation, but for demonstrating how this country’s ideas can be adopted across other industries and many borders.

“The COP on climate change is very focused on finding effective initiatives, and the spotlight now is on business leadership to help deliver them,” says Barber, who is a non-executive director of Iberdrola, the Spanish owner of ScottishPower, and chair of the board’s corporate social responsibility committee.

“Landscapes, location, weather and culture are subtly different in cities and countries across the world, all with their own strengths, weaknesses and achievements. Scotland is among a small group of countries putting collaboration and innovation at the forefront of tackling climate change and we want to tell how we’re successfully working towards securing a low carbon economy and future in a unique way.

“Our objective at COP is to highlight how we do that, because although we are a small nation we are recognised for pushing ahead in practical initiatives, having set some of the toughest climate change targets in the world.

“Developing new and diverse relationships, between private, public and third sectors and local and national government, and building on previous knowledge and lessons learned, allowed Scotland to focus on low carbon deliv-

ery, rather than procrastinating about responsibilities or accountabilities. Scotland continues to break barriers to tackle climate change. It hasn’t always been easy but identifying priority areas has helped focus and channel energy and collectively agreeing which delivery vehicles to use to maximise effect.

“The decisions and investments we make today will determine how we live with climate in the future. This is the essence of climate change adaptation.”

Barber cites a number of collaborations where businesses and organisations are not only driving forward the climate change agenda through innovative and successful low-carbon approaches, but also creating sustainable economic benefits too. The Scotch Whisky Association (SWA) has been working with the Scottish Environment Protection Agency (SEPA) and other authorities in the development of Scotland’s River Basin Management Plans to ensure a sustainable and good quality water supply, vital to the industry, is maintained, and Peter Lederer, award-winning chief executive of Ryder Cup hosts Gleneagles and 2020 Climate Group vice chair, has established a number of initiatives designed to improve the sustainability of golf course management.

In Glasgow, the city council has been working with the UK Green Investment Bank (GIB) as the first recipient of the recently-launched Green Loan to finance their plans to convert 70,000 streetlights to a low energy LED system, and Retrofit Scotland, a collaboration that emerged from the 2020 Climate Group’s Built Environment sub group, with BRE Scotland, Edinburgh’s Napier University, Architecture and Design Scotland and Historic Scotland, creating a virtual resource for

sharing information on refurbishment projects and best practice in sustainably maintaining older buildings and historic monuments.

“When you look at the whisky industry working in collaboration with SEPA, where previously there might have been an antagonistic relationship between the two, they are now in an environmental group working in collaboration that is better for SEPA and for Scotch whisky,” says Barber. “This learning is now transferable to lots of other countries to their distilling, and even brewing, industries.

“We can say: ‘Look at the processes we have gone through, and if we can deliver a sustainable product in our country, you can do it too’. With the example of Glasgow City Council, we’re offering an economic model to roll out, as with Retrofit, where a complex partnership can create a benchmark for maintaining historic buildings that is once again transferable, and at Gleneagles, where the work of Peter Lederer on sustainable golf course management is transferable too.

“Our communications and engagement strategy underpins the group’s desire to widen its reach and capture the imaginations of businesses and organisations which need the inspiration and tools to ‘do it for themselves’. By using communications and public relations tools, such as websites, social media and online platforms used for sharing, we

Samantha Barber says that the lessons learned in Scotland are now transferable to other countries

don’t limit our reach and our audience we share and expect others to share our content. Our strategy is simple. A call to action — get involved in the conversation and follow in the footsteps of those who have already made an impact.

“Scotland’s culture has been shaped by a long tradition of strong-willed and influential characters, across all sectors, and this is echoed in Scotland’s work on low carbon. Each of these leaders has also demonstrated they are each personally motivated by their own beliefs and values to act on climate change.

“Scotland isn’t always good at standing up and telling the world when it succeeds, but in this case, it strives towards international recognition as a leading nation on low carbon, having set itself the toughest climate change reduction targets in the world.

“The Scottish government is able to set a long-term, ambitious vision that allows for a positive relationship between business and the government, where government is accessible to a wide range of organisations but is not the driving force of delivery. For example, the group is a critical friend to government, but the group isn’t part of government. It can do and say things that government cannot.

“We believe with a shared ambition we can help other countries to follow suit and commit themselves further in the low carbon agenda.”

Mission to inspire and empower the young Young entrepreneur Robyn Haggis is programme manager of the 2050 Climate Group, set up to shadow the main group — but with longer-term aims.

“Our aim is to raise awareness, provide an accessible platform, and empower and inspire young people in Scotland to help bring about transformational change in the drive for a low carbon Scotland,” she says.

“We are helping young people develop

leadership skills and become active participants, encouraging others who can play a huge part now and have a significant bearing on Scotland’s ability to reach 80 per cent reductions by 2050. Young people are the future leaders and can bring creativity as major participants in how we work together to solve climate change problems.”

Members aged 18-30 from different backgrounds in the public sector and

business have been involved in this year’s insight programme of training sessions and workshops, and next month the 2050 Group will host and run a Youth Climate Summit in Edinburgh. “This will be completely youth-led and will inspire, empower, mobilise and unite other young people in Scotland, helping to give them a voice. It’s so important. After all, we are the people who will feel the effects of climate change.”

Robyn Haggis of the 2050 Climate Group

Tuesday November 4 2014 | the times

12

Business Insight COMMERCIAL FEATURE: GRANT PROPERTY

Why buy to let makes sense

Specialising in high-end, traditional properties, one Edinburgh-based company is benefiting from the rise in buy-to-let residential sales, writes Rick Wilson

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inter might be approaching but the buy-to-let climate is hotting up, if the experience of one Edinburghheadquartered specialist is any kind of barometer. With all its indicators currently pointing in the right direction and its business expanding internationally, Grant Property is as optimistic about its burgeoning success as it is alert to the defence of its patch.

Over the past year, this buy-to-let leader with a unique investment philosophy has seen a 45 per cent increase in buy-to-let residential property sales across the UK. With house prices having risen 10.9 per cent in the past 12 months and rents increasing by 5-7 per cent per annum, it’s easy to see why sales of buyto-let investments are on the up.

Securing the highest performing investments for clients is central to the firm’s unique approach, described by its investment director Michelle Grant as the provision of an “end-to-end investment solution” – by which she means more than just looking after properties on behalf of

Michelle Grant says that investments in property are high-end and traditional

landlords (though that is included).

What she is referring to – in the company’s elegant boardroom in Georgian Coates Crescent – is a programme that involves shrewdly sourcing traditional properties, renovating and furnishing them to the highest possible standard before delivering the property to the investor in a radically enhanced condition with improved capital value and return yields.

“We save clients time and money by undertaking comprehensive due diligence ourselves and secure the properties before offering them to our clients. This means the investor doesn’t spend valuable time and money making numerous offers and undertaking costly surveys on lots of properties before securing one,” adds Ms Grant. “Last month we analysed 531 potential properties and bought 20, which means we do a lot of rigorous due diligence on properties before offering them to clients. Alternatively, the properties had other problems which our thorough due diligence process uncovered. We even get our roofing contractors up on

the roof of buildings before we offer so we know exactly what work might need done in the future. This ensures there are no surprises. We offer investors fixed price renovations and so we bear the cost of any additional work.”

This full background service gives investors peace of mind before making an investment, allowing them to focus their attention on growing their portfolio quickly and easily.

In the last 18 years of its existence – having started with a four-person office in Edinburgh’s St Stephen Street – Grant Property, now with offices throughout the UK, has helped an impressive spread of clients, many of them expatriates.

People from no fewer than 30 countries have bought over 2,000 properties in prime city-centre locations for buy-to-let investment.

Inevitably, the hottest Scottish cities in terms of demand have been Edinburgh and Aberdeen – “where we are seeing some of the highest price increases” – but the company’s tentacles are now stretching out beyond these, south of the border to Nottingham and Bristol.

Grant Property makes no secret of the fact that in all these markets, it makes a beeline for high-end traditional properties, usually Victorian or Georgian, “that represent good-quality investments that give a higher return than their new build counterparts.”

“We find this type of property lets well and gives the best returns on investment,” says Ms Grant. “Rental yields are between 6 and 8 per cent – significantly higher than London’s average 3 per cent.

Buying such a place is more interesting than an annuity. You pay for an annuity then when you die, there’s nothing left.

At least this way you become a flat owner, you get the rental income which is hopefully higher than an annuity return, then at the end of it you’ve got a property you still own and can pass on to your relatives.

“It’s also more interesting than investing in some faceless office building in an industrial park. People now favour residential property because it’s easy to understand. Everyone has a house. And everyone likes the idea of having another one that works hard for you but in the end also has a definite, redeemable value.”

Grant Property is a specialist in sourcing residential property investments in Edinburgh, Glasgow, Stirling, Dundee and Aberdeen. All of these cities have a bourgeoning student population, as well as a steady stream of young workers. The demand for high quality accommodation is clear for all to see. With an eye on a youngish tenancy – students and professionals – the Grant Property plan involves renovating and furnishing each property to a high specification. The buy-to-let market for students continues to present a number of opportunities for the savvy investor, with Grant Property offering a number of added incentives for those looking to expand their portfolio.

Where possible, they create extra rooms by cleverly creating internal kitchens and subdividing enormous rooms.

The bar has been raised for the whole sector in terms of the standards now expected in student rentals

They also whet the buying appetite of investors through illustration of previous properties similarly modernised, in the spirit of a recognisable brand that will be reassuringly stylish in whichever city the investor chooses. So wherever you rent or buy a newly refurbished property through Grant Property, you are guaranteed the same high level of quality. This explains why last year, over 50 per cent of purchases were either repeat business or referrals from existing investors. The package then includes total management of the letting and even help in eventual reselling; but the basic model is undeniably compelling.

To use a recent example in Edinburgh, Grant Property acquired a property in the prestigious Marchmont area for an investor for £300,000. In its current condition the monthly rent was £975. Following renovations the property was valued at £340,000 and the rent increased to £1,700.

That is an increase in rental yield of 54 per cent and even allowing for the firm’s 1.5 per cent finder’s fee, it has got to be worth doing. Ms Grant, notes that “many more investors are taking control of their own pension pots and forsaking annuities in favour of this kind of long-term solution”.

Last year more than 50 per cent of purchases were repeat business or referrals from existing investors

With very poor returns from bank deposits in an otherwise improving economic mood in the country, buy-to-let is an obvious alternative for such security hunters. The clincher with a Grant Property example is outstanding renovation quality that gives more substance, aesthetic appeal and longer life expectancy than before.

Of course, some of those looking to invest will be the parents of students themselves, as Ms Grant takes up. “There is also the added comfort for mum and dad that if they buy a flat for young Johnny, and he invites his friends to share the flat with him, the ultimate responsibility for rent collection rests not with the youngster – but with Grant Property.”

“Student accommodation is very different these days from the type of accommodation many of us put up with in days gone by. The bar has been raised for the whole sector in terms of the standards that students now expect. Which is bad news for owners of poorly presented flats but good news for more professional providers offering high-quality accommodation.

“We have vast experience of this.

We know how to renovate and furnish properties to maximise their appeal. In February this year alone, we pre-let 192 flats for the new academic year starting in October and currently have no properties available to let in the whole of Edinburgh as our letting team have done such a good job reletting all of our existing stock.”

So just what prospects lie ahead in the immediate future? Ms Grant, notes: “We are looking at a number of different fund opportunities at the moment to give our investors other options and the ability to invest indirectly and also spread smaller investments across a large number of properties. We are also offering our existing investors an asset improvement service to upgrade existing properties and greatly enhance both capital and rental values. Of the projects we have undertaken so far the rental increase achieved has been between 20 and 66 per cent with an average of 36 per cent.

“On the market generally, a number of senior market commentators share our view that we should see a sustained level of capital growth over the next three to five years within prime regional UK city centre locations. Also, with student admissions increasing by 9.3 per cent across the UK for 2013-2014, the student buy-to-let market looks set to continue being underpinned by strong tenant demand.”

It’s clear to see that rental demand will continue to drive the buy-to-let market, a fact which measured investors are continuing to take advantage of. www.grantpropertyinvestment.com