The Intermediate Technology Initiative (ITI) was one of the most ambitious ‘systemic’ regional innovation policy instruments developed in the UK in recent years.
The approach of ITIs sought to anticipate market developments through pre-competitive research, by identifying future global markets, rather than simply reviewing a proposal and awarding requested funding in turn of waiting for results.
The role of ITIs was to provide, from the earliest possible moment, hands-on support in innovation processes. ITIs undertook market fore-sight exercises, focused technology development, and managed intellectual assets to maximise the commercial and economic return to Scotland.
Scottish Enterprise established a total of three ITIs in Glasgow, Dundee and Aberdeen, each employing a team of between 15 and 20 experts with experience in early-stage research, technology development, intellectual asset management, technology marketing, deal-making, and company formation and development.
The three ITIs worked together with the central office in Glasgow (ITI Operations) which provided coordinated services in human resource management, finance, corporate and legal affairs, and knowledge management under the objective of ensuring a cooperative, efficient work environment, simplifying procedures and cutting transaction costs.
The three ITIs had each an individual emphasis on life sciences, energy and communications technology and digital media: "ITI Techmedia", "ITI Life Sciences", and "ITI Energy".
ITIs were open to all companies and research institutes willing to participate in their programmes, particularly Scottish universities, research institutes.
The project was given a £450m annual budget in 2003, and was intended to run for 10 years.
The programme was prematurely terminated in 2010.
The programme was intended to address two weaknesses in the Scottish economy:
- The low number of technology start-up companies, and
- The low level of business spending on research and development.
To face these challenges, the ITIs sought to address the market failure which exists in taking 'good' ideas forward to commercial application, what is called the innovation’s 'valley of death'.
The specific stated aims of the programme were:
- To create and expand the number of high growth, high value technology companies;
- To attract and expand foreign direct investment that is linked to knowledge and retained skills, and
- To nurture strong technical, entrepreneurial and flexible skills to create a fertile environment for growth.
Early operational outcomes, such as for the period 2004/05 included:
- 13 Market Intelligence and Foresighting Reports published;
- 11 R&D Programmes commissioned (against a target of 9);
- 21 Programme participants (against a target of 11), with more than 50% Scottish-based;
- Over GBP 70 million funds committed;
- 87 companies joined in 2004/5 (against a target of 65); and
- 95% of expert staff recruited has previous careers in industry.
However, a 2015 comprehensive study by Professors Colin Mason (University of Glasgow), Ross Brown (St Andrews University), and Geoff Gregson (University of Edinburgh), concluded that little of the ITI's anticipated outputs materialized. They examined the reasons for its failure, which largely centred on the programme's inappropriate design.
The authors interviewed a substantial number of people during this study, and sought input from a plethora of stakeholders, participating companies, people in Scottish Enterprise and the Intermediate Technology Initiative (ITI).
Reasons for its failure
The study's findings suggest that a number of factors contributed to ITI underperformance:
- The research undertaken was too 'far from market';
- The research fitted poorly with the innovation needs of Scottish SMEs;
- It had too many restrictions in terms of the usage of the intellectual property; and
- The licensing conditions were prohibitively expensive.
Lessons and recommendations
Per the above mentioned study, the commented to the BBC that they recommend to innovation policymakers:
- Greater recognition needs to be given to the specificities of local entrepreneurial ecosystems when designing, aligning and executing systemic innovation policy instruments.
- Less focus on generating the supply of new intellectual property and more focus on increasing the ability of Scottish SMEs to undertake innovative activities and to absorb external sources of knowledge. "A critical mass of innovative SMEs will provide more of a seed-bed for new tech start-ups than policies to stimulate and protect new intellectual property".
It is argued that paying greater attention to policy failures could potentially help innovation scholars and policymakers better understand how innovation systems function.