Scotland desperately needs to rekindle the national spirit which ignited an entrepreneurial culture in the latter years of the 20st century, declares a leading thinker on economic development.

A new book entitled How Scotland Found Its Entrepreneurial Compass – Then Lost It Again, has been penned by entrepreneurial educator and commentator Iain Scott, who  has been a colourful and active agitator on our nation’s entrepreneurial landscape since the 1990s.

His study pays tribute to the pioneering work of Crawford Beveridge, the CEO of Scottish Enterprise, who steered the newly created economic development organisation, in its quest to build an entrepreneurial ecosystem in Scotland. Beveridge, a Scot who helped grow Sun Microsystems in California, brought insight from Silicon Valley’s entrepreneurial culture, which lead to many Scottish companies, such as Atlantech, Simclar, Wood Group,  Aggreko, Inveresk Research, Orbital Technologies, transport groups, such as Stagecoach and First Group, and others gaining international traction and financial support.

Beveridge also oversaw the creation of 13 new Local Enterprise Companies, which were more locally focused on developing entrepreneurship from Lanarkshire, the Borders to the Highlands and Islands. These have all since disappeared.

At the time, Beveridge identified a critical problem.  “We in Scotland have been aware that as a nation we seem to have lost some of that entrepreneurial drive… It is apparent that we have a fundamental problem — a lack of companies in Scotland.”

The result was the Scotland’s Business Birth Rate survey, a collaborative inquiry between Scottish Enterprise and Scottish Business Insider.  It drew on voices from across business, finance, academia, and media—both domestic and international.

The key questions were: why does Scotland lag in new firm creation, what cultural barriers exist—myths, fears, assumptions, and  can new firm formation help reinvent Scotland post-industrial decline?

As Scott says in his book: the findings were clear and compelling.

Beveridge declared: “From now on, addressing the problem of Scotland’s business birth rate will be as fundamental to Scottish Enterprise as inward investment, trade development or skills training.”

In 1993, “Improving the Business Birth Rate – A Strategy for Scotland” was launched.

 It outlined six key objectives:

  • Improving the Business Environment – Building grassroots networks and support.
  • Unlocking Potential – Inspiring more people to believe they could start.
  • Improving Access to Finance – Especially appropriate forms of capital.
  • Widening the Entrepreneurial Base – Including women, youth, and working-class Scots.
  • Targeting Key Sectors – Without excessive gatekeeping.
  • Supporting Growth Companies – But not at the expense of small or slow ones

From this, several key initiatives emerged, including:

  • Personal Enterprise Shows, which were attended by thousands, mainly young Scots keen to learn more about starting their own companies;
  • The formation of the Entrepreneurial Exchange –  and organisation for entrepreneurs, by entrepreneurs, set up in 1994, with support from Lanarkshire Development Agency. This was seminal in helping each other’s companies to grow.
  • Company Formation Programmes, including those in Lanarkshire after the closure of Unisys and Ravenscraig.
  • Enterprise Incubators. This was units where the individual could transition from being an employee to entrepreneur.
  • Women’s Enterprise Unit – A national support system to encourage women into business.
  • Education Action Group – Integrating entrepreneurship into schools.

Iain Scott also recalls groundbreaking campaigns such as the Year of the Entrepreneur in 1995 with nationwide enterprise shows.

So what went wrong in Scotland?

The strategy had momentum but it was overtaken – or perhaps undermined – by political and institutional shifts. Iain Scott says: “Devolution in Scotland and a new Parliament brought new scrutiny and shifted priorities.  Changes in government (from Conservative to Labour) altered economic goals, and academia and consultancies became more focused on evaluating entrepreneurship than enabling it.”

He says the media—once indifferent to covering business and entrepreneurship — began using the strategy’s targets as a stick to beat Scottish Enterprise.

 “A critical error occurred when numerical targets were added later, making the strategy vulnerable to criticism. Originally, it was about cultural change, not KPIs. Post-2001, the focus shifted from enabling people to start businesses, to job creation through  ‘growth’ firms. Entrepreneurship was no longer seen as a tool for resilience or regeneration, but a mechanism to meet employment targets,” he says.

The late Professor David Storey advocated that only ‘worthy’ high-potential firms should receive public support. He famously questioned whether someone in a deprived area should be funded to start a business—and he concluded that the answer was no.

 “This approach took hold in Scotland. Support moved away from inclusive entrepreneurship toward supporting potential high-growth firms in high-growth sectors. It became an exclusive model. Unless you fit the matrix—you are out. Not worthy,” says Scott.

 What Has Been Lost Since Then?

Iain Scott is clear that a lot has been lost since these heady days. He says those networks and local groups which had empowered people were deprioritised, the vital link between skills and self-employment were severed, notably in 2008 with the creation of Skills Development Scotland, grassroots entrepreneurship was marginalised by the obsession with scale-ups and favoured sectors.

“Policy moved from responsive to strategic—from ‘what people need’ to ‘what the system wants’.  The particular ways of operating for women’s enterprise, rural businesses and the fast growing creative sector, as well as the needs of the self-employed, have been dismissed and the opportunity for high growth business from non-traditional sectors not just ignored but patronised,” he says.

Furthermore, the term ‘lifestyle business’ was used as a term of derision as opposed to representing a multi-billion pound sector. Market opportunities, which play to the strengths of local people and local economies, have been ignored in favour of high-growth tech and urban initiatives such as Techscaler.

Where Are We Now in 2025?

 Today, says Scott, we have a proliferation of strategies and delivery boards (e.g., NSET), a Chief Entrepreneur role, three economic development agencies, countless reports, fewer results, with fewer new firms being created, and far from global recognition.

 “The system talks to the system—not to people,” he says.

 In his conclusions, he says, The Business Birthrate Strategy was not a failure. It was a bold, locally-attuned plan for post industrial renewal. But it was never given time—or stable conditions—to deliver.

“It was replaced by a model that prioritised picking winners, employment numbers over enterprise, data over people. This model has failed. Scotland now risks entrenching inequality and feeding populism as public funds are seen to benefit a narrow elite. Economics as if people matter has become economics as if people don’t.”

What are Scott’s Solutions:

“How do we reclaim the Spirit of 1993? We need to reframe the Question. What is the government’s role— enabler or deliverer? And what should public agencies do in a devolved country? Are they still needed in the current form at all?”

 And he calls for key actions:

  • Return to first principles: enable people to start where they are, with what they have.
  • Rebuild local networks: community-based support matters.
  • Trust ordinary people: belief and confidence fuel businesses.
  • Use modern platforms: Instagram, TikTok, Shopify can help people build with today’s tools.
  • Balance the digital with the local: modern tech meets community values.

 “There has never been a better time to start a business. There has never been a more important time to help people believe they can.”

He says there has been an erosion of grassroots enterprise support in favour of exclusive, data-driven strategies.

“My book serves as an elegy and a rallying cry. It argues that the future of economic resilience lies not in unicorns or incubators alone – but in returning power, belief, and support to people and communities ready to build from the ground up.”

https://entrepreneurshipmostly.substack.com