It is increasingly accepted that improvements in productivity, competitiveness and social well-being depend not only on boosting skills supply but also ensuring that skills are utilised effectively inside the workplace. Skills utilisation is a relatively new policy area, however, and the evidence base upon which to formulate and develop new policy interventions is limited. In the UK, Scotland is leading the way on this agenda. This paper reports on the findings from a mid-term evaluation of the Scottish Funding Council’s programme of ‘action research’ projects, which are aimed at exploring the potential contribution of universities and colleges to improved skills utilisation in the workplace. The evaluation finds some initial empirical evidence for establishing proof of concept, but also identifies challenges in relation to capacity building and sustainability. The potential exists, it is argued, for the programme to contribute to a broader approach to skills and innovation policy in Scotland.