Innovation helps businesses to grow, access new markets and new customers and create new jobs and opportunities. The impact that innovation has on the continued growth of the Scottish economy cannot be underestimated. That is why I have set it right at the heart of this Government's Economic Strategy.

It is also why the First Minister announced £78 million over the next three years to support innovation through Scottish Enterprise, Highlands and Islands Enterprise and the Scottish Funding Council.

I want to make sure this funding supports us to build on Scotland's existing strengths, such as world-class research, a highly-skilled workforce and a cadre of ambitious and growing business, and makes Scotland a world-leading entrepreneurial and innovation nation - a can do place for business.

Helping me to do this is the Scotland CAN DO Innovation Forum - a high level strategic group with members drawn from across industry and academia. The main purpose of the Forum is to help us increase demand for, and investment in, business innovation to the benefit of Scotland's economy.

Alexander Dennis Ltd (ADL) is a Forum member and a great example of a Scottish company that has made full use of innovation to boost its business. Since their Enviro400 Double Decker bus was created two years ago, the business has sold 1500 units, establishing itself as a market leader and opening up significant new business opportunities in Asia and the Pacific Rim. They have also grown their annual turnover from £170 million to in excess of £500 million and lead the world in midi bus and double deck vehicle production.

The Alexander Dennis example also shows how investment in innovation can help unlock international markets, which is why the development of our Innovation and Investment Hubs is so vital. We have recently launched our first hub in Dublin, which will provide dedicated support for academic and innovation partnerships between Scotland and Ireland. The Dublin Hub will soon be joined by hubs in London and Brussels.

We are also working on a range of interregional projects and have already secured multimillion pound investments for Scotland, with projects in areas including sea-energy technology, healthcare and energy efficiency. In many of these projects Scottish companies will take the lead in developing technology and services with European partners. And through this we can strengthen our competitive capacity, take the lead in new industries for the future and overcome real-life challenges both at home and at an international level.

IBIS (Integrated Aquatic Resource Management between Ireland, Northern Ireland and Scotland) is one such example. This was a £6 million project to protect aquatic resources between the three regions and one of its key benefits was the development of a world-class aquatic research and training facility at Loch Lomond.

Closer to home, we need to encourage and grow more new Scottish innovative businesses. Scotland CAN DO SCALE uses world-class training from MIT and Harvard to help Scottish entrepreneurs scale-up their businesses. Luke Johnston, CEO of oil & gas software firm Cognitive Geology, took part in the pilot programme and since then his firm has recruited four new members of staff, secured £100K in grant funding, been selected for the London Stock Exchange ELITE programme and landed a place at the MIT Entrepreneurial Development Program.

We also need to seek and unlock innovative talent everywhere by creating an environment in which ideas from across the workforce can be heard and valued. This approach can help businesses improve productivity, efficiency, better employee engagement and utilisation of skills. Scott and Fyfe, from Tayside which is now 93% owned by an employee benefit trust and 7% directly by employees is an example of how this new approach can result in new exciting ideas being taken forward.

All of this activity is positive and data on Scotland's Innovation performance is encouraging. In the most recent Community Innovation Survey, for example, the percentage of businesses in Scotland that are innovation active increased from 44% to 51%. But I am determined to do more with the £345 million plus that we commit annually innovation and research. To achieve greater economic impact we need to improve our focus and sharpen up our collective efforts.

That is why as our next major reform, the Scottish Government will work with all our partners - including the Enterprise Agencies, the Scottish Funding Council and the Universities - and with other stakeholders to align our approach to innovation, pool funding and simplify the innovation landscape and access to support.


John Swinney MSP

Deputy First Minister