Scotland's Intermediate Technology Initiative (ITI)

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A government-funded Scottish Enterprise program (2003–2010) aimed at commercializing university research into technology-based spin-off companies across techmedia, energy, and life sciences sectors.
What are the main aims and objectives?

The ITI sought to address Scotland’s low rate of technology start-ups and weak business R&D investment by creating sector-specific institutes to identify, commission, and commercialize pre-competitive technology platforms from university research. It aimed to convert Scotland’s research strengths into new high-growth companies, foster innovation ecosystems across techmedia, energy, and life sciences, and stimulate economic growth by bridging the gap between research outputs and scalable businesses.

How does the program work?

The ITI operated through three sector-aligned Intermediary Technology Institutes focusing on techmedia, energy, and life sciences. Each ITI conducted market foresighting to identify global opportunities, commissioned university research to develop pre-competitive technology platforms, and managed resulting intellectual property. Membership programs engaged companies who accessed technology platforms, research collaborations, and commercialization support. ITI aimed to facilitate spin-off company creation and technology licensing, fostering collaboration among academia, industry, and investors. However, its supply-driven research commissioning and IP focus created challenges for actual market adoption and firm growth.

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.

What is the overall cost?

Scottish Enterprise allocated approximately £450 million (approximately USD 630–720 million) over ten years (2003–2013) to ITI.

How was it implemented?

ITI was launched in September 2003 as a commercial organization under Scottish Enterprise. It recruited sector specialists, developed membership programs, and commissioned university research projects aligned to foresighted global markets. After six years, ITI was integrated into Scottish Enterprise and ultimately wound up around 2010 due to limited commercial results and policy reconsideration. The initiative was conceived in response to Scotland’s economic need to capitalize better on university research and global technology markets but struggled with commercialization focus and ecosystem alignment.

What impact has been measured?

Academic evaluations characterize ITI as a spectacular policy failure, with minimal commercial output relative to investment. The commissioned research was often too far from market, licensing conditions were expensive and restrictive, and Scottish SMEs lacked the absorptive capacity to commercialize resulting technologies. ITI failed to generate significant spin-offs, economic growth, or sector advancement in Scotland. The program was terminated after approx. seven years without achieving its ambitious objectives.

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.
What lessons can be learned?

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".

Limitations

  • The program’s supply-driven IP creation approach misaligned with SMEs’ innovation needs, prioritizing intellectual property over commercialization.​
  • Research output was not market-ready, limiting transfer to business practice.​
  • Scottish SME “absorptive capacity” was insufficient to leverage complex technologies.​
  • Licensing conditions discouraged commercialization due to cost and restrictions.​
  • Lack of complementary business development, financing, and entrepreneurial support undermined impact.
  • The ambitious scale and design proceeded without adequate pilot testing and iterative learning.​
  • The ITI case illustrates the high cost of poorly aligned innovation policies and the need for ecosystem understanding.
Notes + Additional Context

It is argued that paying greater attention to policy failures could potentially help innovation scholars and policymakers better understand how innovation systems function. 

CURATED BY

Cristina Fernandez

Director for Knowledge + Programming
Global Entrepreneurship Network
United States