Scotland must adapt, the 4th Industrial Revolution is upon us

This article first appeared in The Scotsman newspaper.

Brexit is a defining moment for Scotland’s future economic and social prosperity.

For businesses and organisations which value stability and predictability, the protracted period of uncertainty over the UK’s future relationship with the EU has been deeply disruptive across Scotland.

Employers are postponing, scaling back or cancelling their plans to invest or expand in the face of falling consumer and business confidence. Increasing numbers of EU workers have decided to leave Scotland because of concerns about their future legal status in the UK, exacerbating our existing demographic and labour challenges. 

And whilst the possible shape of Brexit continues to fluctuate almost daily, the economic evidence is that the best outcome for Scotland is the UK continuing to be in the single market and the customs union.

Amidst this uncertainty, we cannot stand still. Scotland has many strengths on which our future economy can play, we have tremendous natural resources, a rich and active culture and one of the best-educated workforces in Europe.

The Scottish Council for Development and Industry (SCDI) – the organisation which I chair – was formed in 1931 to represent a cross-section of the private, public and social sectors – to engage civic Scotland and influence government and key stakeholders to ensure sustainable inclusive economic growth and flourishing communities, everywhere in Scotland.

This mission is as relevant today as ever. And now is the time to for all of Scotland to come together to develop a new blueprint for our economy and society of the future.

Already the Fourth Industrial Revolution is transforming the way in which we live and work. Automation, Artificial Intelligence, connected and autonomous vehicles and the internet of things are not technologies of the future but of now.

Scottish businesses and organisations are already developing within this emerging economy, but we need to do more to ensure that the benefits flow across the whole of society to the common good.

Our recently published report, Building a World-Leading AI and Data Strategy for an Inclusive Scotland, was developed in partnership with BT, ScotlandIS and the Royal Society of Edinburgh, with recommendations on how Scotland should develop global leadership in innovative and ethical AI and data.

Industry will remain at the heart of any successful economy. This has been underlined through the development of the UK Government’s Industrial Strategy which has set out four ‘Grand Challenges’ to focus productivity on the global trends which will transform our future. In parallel is the mission-orientated approach to creating and shaping markets and tackling major societal challenges of the Scottish Government’s planned Scottish National Investment Bank.

Scotland is already a global leader in its low-carbon ambitions and is home to many world-leading research and development businesses. And to support this the SCDI is working with the Scottish and UK governments, via our Investment & UK Industrial Strategy Commission, to support Scottish consortia of academics and entrepreneurs to successfully bid for funding to drive innovation, business scale-up and job creation to help us meet these Grand Challenges of our age.

Mind the gap

Scotland has a tremendous education infrastructure, with one of the best qualified workforces in Europe. Yet at the same time we are beset with poor productivity in many areas and there is much scope for us to do better.

There are no quick fixes, but there is growing consensus that we need to broaden our base of innovative companies – with improvements in the ‘development’ end of research and development to pull through research into world-leading products. And we need to identify what skills we need to equip ourselves for a rapidly-evolving future.

In response to this, we have established a Skills & Employability Leadership Group which is bringing together the public, private and third sectors to reflect on how our education and skills systems can help achieve our ambition for Scotland.

This group will identify actions to support a high-growth Scottish economy with much-improved productivity. This will be underpinned by a number of new SCDI ‘Productivity Clubs’, supported by the Scottish Government through its Economic Action Plan, which will connect businesses to help each other improve performance and establish informal networks supporting and nurturing knowledge-exchange, technology diffusion and, ultimately, growth in productivity.

And if this sounds a bit inward-looking, it is certainly not! A thriving Scotland will need to help all its people, businesses and communities to thrive – and whatever happens with Brexit, Scotland must remain internationally connected.

Trade is a vital component of our economy and Scotland will continue to rely on international talent and expertise from all corners of the globe, so we need to examine how will future migration will drive the needs of Scottish businesses and society.

At the same time there is much that we can learn from countries such as Germany and Austria who have strong indigenous industrial bases coupled to levels of productivity far higher than our own.

But none of this can be achieved without input; change will be only brought about by our own efforts.

No single organisation or individual has the answer, and it is the role of SCDI to stimulate debate, build consensus, recommend and implement action. And for this to succeed it must be, as it is, a broad church, representing all of Scotland’s economy and society.

As such, we welcome views from members the length and breadth of the country.

This week, on April 25 and 26, the SCDI’s 48th annual Forum convenes in Edinburgh – “A Time of Change – Starting the Clock on Scotland’s Next Economy.”

It will be a chance to join the debate with a range of speakers from Scotland, the UK and Europe including broadcaster Robert Peston, Dame Vivian Hunt, Managing Partner, McKinsey & Company, Scotland’s Economy Secretary Derek Mackay MSP, Secretary of State for Scotland David Mundell MP, and German Ambassador Dr Peter Wittig.

If Scotland adapts to a changing world and builds on our knowledge and skills, we can successfully create a thriving economy and develop an exciting blueprint for our future.