Scots must up the ante on R&D

SCOTTISH businesses must improve their "poor" record of innovation to remain competitive in the international marketplace, according to a former head of Scottish Enterprise.

Jack Perry said companies needed to innovate with their products and services in order to improve their margins.

Perry, who was chief executive of the economic development agency between 2004 and 2009, warned that Scotland lagged behind the rest of the UK when it came to investing in research and development.

He said: "The spend on R&D in Scotland is about 6 per cent, which lags the rest of the UK by a third and is about half that of our major competitors.

"When you dig into it, you also find that two-thirds of the R&D in Scotland is actually done by foreign-owned firms, so the amount of R&D by indigenous Scottish companies is minimal."

Perry added: "There are medium-sized and large companies in Scotland that are innovative but there are just not enough of them. Scotland is not just dominated by small and medium-sized enterprises, it is dominated by small enterprises. We need to do more to help Scottish firms to innovate."

His comments came ahead of an Institute of Directors (IOD) event in Edinburgh next month at which business leaders will discuss innovation.

Perry said firms needed to look beyond just their products and services to innovate in their processes and business models.

He highlighted the work done by US electronics firm Apple in changing its business model from computers to also include the iPhone mobile phone and music players, such as the iPod.

Lesley Clark, chair of IOD Edinburgh, said: "Scotland has a long history of innovation, so it's a shame we've slipped and it's the right time to make the fix."