MG5594 Knowledge Management Social Networks innovation
Introduction
As opined by Santoro et al., (2018, p. 351), innovation is considered an essential tool that supports the process of organisational development by providing it with new ideas and concepts which shape its competitive leverage in the concerned sector. The growing significance of innovation in the contemporary business world is subjugated by the attribute that there has been a consistent strive to stay ahead of competitors. However, it is a known fact that innovation is difficult for well-established organisations due to their inadequacy in utilising the available knowledge base of the company for supporting their inherent growth. The prevalence of a crisis represents both danger and opportunity which is reflected as choice and its outcomes are determined by the individualistic approach undertaken, (Ode and Ayavoo, 2020, p. 213). Based on the same lines, the pandemic in its purview entailed a holistic view which disrupted the functionality of several industries and organisations across the globe. The manner in which business executives respond to this crisis defines their prerogative of dealing with the crisis, wherein the majority of them have been found to be focussing on the imperatives of business continuity in their core, (Mardani et al., 2018, p. 23). Extending upon the same view the current study intends to envisage discussing the implementation of knowledge management and innovation strategy in relevance to ARM Holdings Ltd.
Overview of the organisation
ARM Holdings is a British semiconductor and software design company primarily based in Cambridge, England. The company is defining the future of computing and is aiming to build a future reliant on one of the best technological ecosystems across the globe along with being a key supplier of semiconductors. Subsequently, the company fuelled the Smartphone revolution and now is involved in revolutionising cloud computing to transform the automobile industry as well as support the IoT economy. Its annual revenue in 2021 was reported to be USD 2.7 billion and has also acquired 19 organisations to build a global ecosystem of innovators, (Arm, 2022).
Section 1: Critical analysis
Significance of innovation in business
As per the McKinsey report, innovation has taken a setback in the majority of industries across the globe with business executives vying for stabilisation and continuity in their forums. A heightened focus on cost-cutting measures, implementation of safety guidelines, driving productivity and supporting innovation-led growth is significant in present times. The majority of business executives surveyed during the McKinsey reports have refrained from asserting innovation as their top priority to support business development. Further, it highlighted that the core focus of businesses in contemporary times is majorly on pursuance of known opportunity spaces, risk minimisation, shoring revenues of core businesses and conservation of cash. This reflects an attitude of waiting, which might lead to missing adequate opportunities in the wake of the pandemic, (Martins et al., 2019, p. 498). In the post-recovery period, a focus should be on adaptation to meet the transforming consumer needs, paced identification of new opportunity arenas and allocation of adequate resources to meet innovation needs is deemed significant.
Extending upon the same lines the business operations of ARM holdings are diversified in nature, with operations spread across computing, semiconductors and cloud computing. However, with the advent of the pandemic and disruptions within the global supply chains, the operational viability of its core semiconductor business has taken a hit. Despite, the demand for its CPU, GPUs and other semiconductor chips being high the vulnerability of the global markets, moreover, it has led to a decline of 15% in the global semiconductors. Given the wake of uncertainties shaped around the industry, a higher focus of the company is on strengthening its core business portfolio as outlined within the McKinsey reports. The company’s source of revenue is also enveloped through loyalties, licensing fees and stakes in major businesses around the world in the same sector. Thereby in order to strengthen the business performance of the entity an enhanced focus on the imperative of innovation is considered essential. The below graph illustrates the positive benefits reaped by business entities who have invested in innovation during the crisis and their success in outperforming markets by a substantial margin. An analysis of the past record indicates the significance associated with bold measures of upholding innovation as a key strategic development to support the growth and financial continuity of business, (Abubakar et al., 2019, p. 109).
Figure 1: Performance of companies who have invested in innovation
(Source: McKinsey, 2020)
Eight Essentials of Innovation and their application to the chosen organisation
As mentioned by Abbas and Sağsan, (2019, p. 613), the dynamic nature of the business environment requires a consistent change in the outlook of business functionality as entities need to respond to shifting consumer trends in each era. Similarly, the competitive leverage of a business is also consistently reshaping with the adaptability quotient linked to market realities. Businesses that are swift in recognising opportunities as well as realising that their core competencies might be less differentiating in the shifting paradigm are at the high end of gaining increased leverage within the concerned sectors. The semiconductor industry dynamics have revolutionised with sanctions imposed on global trade and emerging protectionist measures around global nationalities, (Moyne et al., 2018). It could subsequently lead to an increase in competitiveness within the sector and disruption of already unstable markets within the semiconductor industry impacting the business flow of ARM holdings. A similar aspect is noticed within the McKinsey reports on innovation in crisis where the influx of competitors from other industries is highlighted as a key pivot evident during the pandemic. For instance, within the medical industry, the relaxation of regulations has led to an increase in the count of new entrants such as GM and Dyson as ventilator manufacturers. The core business of the two companies was distinct from their current focus of manufacturing medical essential equipment which can be accounted as a strategic intent of utilising business opportunity in crisis. Continuing in the same vein, the eight essentials of innovation are to be examined with respect to ARM holdings to navigate its strategic imperative to deal with the Covid-19 crisis.
Aspire
As argued by Ardito et al., (2021, p. 386), the primary essential towards favouring innovation-led growth relates to recognition and acceptance that it is critical for business development. In times of crisis, it is often witnessed that other essentials uphold greater significance thereby leading to a different course of action. In the context of ARM holdings, the management of the business needs to identify the key proportions of innovation which can fuel its growth.
Choose
The second essential of innovation relates to the evaluation of the inherent business processes and their alignment with risk-balanced portfolios of sustenance. In this scenario, it is evident that the majority of operations of ARM holdings are centred on investments that could support its recovery and sustenance in the semiconductor industry. This in turn highlights the absence of deviation from the regular curve of operations.
Discover
The market context during a crisis is dynamic in nature with little adequacy regarding the proportions that are to define the world when metrics stabilise, (Wang et al., 2020, p. 216). In order to effectively identify the key opportunities of business development it is significant that the imperative of discovery is attended by ARM holdings. It entails several steps within its purview ranging from market insights to customer analysis to reflect upon the key transitions undergoing in the business environment. Moreover, it is important to realise for ARM holdings that every consumer touchpoint is an opportunity to learn and develop a new understanding of consumer behavioural patterns.
Evolve
In the wake of the crisis, there underlies an opportunity to rebuild systems and strengthen the financial discourse of an organisation. Countless examples centred around this view are evident within the paradigm of shift which has assisted businesses in enhancing their revenue flows substantially. An instance of this is reflected in marketing dimensions of business operations where earlier the emphasis was on offline strategies which have now shifted to digital attributes thereby favouring the expansion of businesses that took the pivot. Similarly, the realisation of internal strength in technological superiority and using it as an advantage can prove beneficial for ARM holdings.
Accelerate
The “Accelerate” element of essential innovation relates to the increasing pace of innovation introduction within the markets. The post-Covid 19 business scenario has witnessed a surge in the pace of development and execution of new ideas through expediting regulatory processes and the application of pressure on business ecosystems to provide scarce products and services in a new way. The increasing shortage of semiconductors across the globe has led to an enhancement in pressure from other industrial forums to inoculate practices that could cater to the shortage issue.
Scale
The scale imperative of innovation relates to the recognition of the upsurge in demand in the markets and induces substantial changes within inherent systems to reap positive benefits, (Ebersberger and Kuckertz, 2021, p. 131). The lack of these attributes within the business ecosystem of ARM holdings has limited its scope of business expansion in the post-pandemic business scenario.
Extend
In certain scenarios, businesses often extend external partnerships to enhance their organisational reach and gain a higher return on investments made within the innovation horizon, (Li et al., 2019, p. 139). The investments made by ARM holdings within distinct businesses that support cloud computing can be accounted as a measure of extended elements of business innovation.
Mobilise
The mobilisation aspect relates to dealing with the fast allocation of resources or investments to optimally utilise a business opportunity, (Faccin et al., 2019, p. 445). For instance, data transparency within the pharmaceutical industry to expedite the process of vaccine research accounts as a measure of mobilisation. However, its absence is depicted in the emphasis of ARM holdings on its core business portfolio leading to limited diversification.
Section 2: Action plan
Knowledge management and innovation strategy
As mentioned by Lee and Trimi, (2021, p. 18), the prelims of knowledge integrate structured information, capabilities and abilities to improve upon existing goods and services for acquiring competitive leverage. Knowledge is an essential resource which can be segregated into two classes one can be stored in the form of data while the other is tacit in nature and cannot be separated from individuals who possess it. Similarly, the process of knowledge management is defined as the procedures implemented to aggregate, distribute and efficiently utilise knowledge as a resource. The process of implementation of KM or knowledge management entails operations of creation, storage, distribution and application of knowledge and is termed as KM cycle, (Chen and Yin, 2019, p. 28). Its imperative to innovation is vital as it enables the organisation to build upon its existing capabilities to support further growth. In the scenario of ARM holdings the company’s existing capabilities in technological development and expertise which it has gained over the years in the business is its major knowledge resource. Through the use of an adequate KM strategy the business can envision enhancing innovation within its domains to optimally utilise the opportunity presented by the pandemic, (Lichtenthaler, 2021, p. 292). Further, as evident within the case study of Irizar, it can be ascertained that the organisation made substantial changes in its outlook through the diversification of markets, and emphasising its business operations on luxury coaches to support its viability, (Forcadel and Guadamillas, 2002, p. 168). Similarly, an analysis of ARM holdings reveals its diverse portfolio where it is involved in several activities of cloud computing and the establishment of a global innovation ecosystem along with its basic blueprint design to support semiconductor production.
Success factors of ARM holdings
The success of ARM holdings within the technological industry is supported by consistent performance and a robust outlook posited by the company. Its revenues have increased by 35% in 2021 from both royalty and non-royalty segments. The company’s strategic venture to acquire businesses that can support its fundamental leverage within the industry has been a major imperative of its success. Moreover, the licensing fees that the company acquires through the sale of its blueprint and technological equipment add to its revenue model. As a future initiative, the company aims to power the next set of technological revolutions including AI, IoT and Metaverse through its computing efficiency. Extending upon these attributes it can be ascertained that the business of ARM holdings rests upon its computing technologies and the expertise it has in the arena of innovative global ecosystem development. However, the company’s limited operations capability in mainstream operations limits its scope of progress and depicts its vulnerability to the functionality of other organisations. Moreover given the increased technological adaptation in businesses across the globe investments to leverage the inherent capabilities of organisations can posit a risk to the business.
Figure 2: Success of ARM holdings
(Source: HPC wire, 2022)
Knowledge management strategy for the development of innovative capabilities at ARM holdings
The case study of Irizar highlights the KM strategy undertaken by the company to strengthen its efficiency and continuity in the markets. The core principles of its approach revolve around the dissemination of ideas for transition, building the strategic positioning of the firm, instituting changes within the organisation and expansion of its business functionality. Drawing upon the same approach, the KM strategy of ARM holdings needs to be diversified in its outlook with the inclusion of two core business models which support its continuity and provide it with higher competitive leverage in the markets. The crisis of pandemic has enhanced the semiconductor shortage across the global business which can be an opportunity for ARM Holdings where can pivot its business model to not only produce blueprints but also manufacture semiconductors to gain mainstream access to the business, (HPCwire,2022). Further, its cloud computing operations can be expanded to a larger scale to support its business solutions arm. Enhanced focus on these two key business functionalities can provide the organisation with adequate resilience built on its inherent knowledge base.
McKinsey 7s model
| Hard S | |
| Structure | ARM Holdings’s current organisational structure is of functional form which enables the organisation to serve its distinct business functionalities, however, integration of operations to emphasise two key areas of operations is recommended. |
| Strategy | The strategic direction of the firm is extensively on gaining non-royalty revenue and being a supporting source for global technological development. |
| Systems | The incorporation of robust KM systems can assist the business in identifying the key areas of improvement and opportunity through the use of market insights and consumer data trends. |
| Soft S | |
| Shared values | It is to be built on organisational restructuring and transitions in the mission and goals of business development. |
| Style | The leadership style of the business is to entail an innovation-led approach within its purview for optimal utilisation of KM strategies. |
| Staff | Building innovative capabilities among staff through training and development. |
| Skills | Adequate utilisation of the tacit knowledge prevalent within the people at its organisation to support its KM progression. |
Conclusion
Knowledge management and innovation development are correlated concepts and their active utilisation can assist a business in strengthening its strategic positioning in times of crisis. The above study detailed the manner in which crisis entails an opportunity within itself and enables businesses to optimally utilise their inherent capabilities to support further growth. Through the use of KM tools and concepts and drawing upon previous research works in the discipline of innovation in the time of crisis the case scenario of ARM holdings has been illustrated in the study. It also entails some conclusive insights for building up the KM strategy of the business to support innovation growth.
References
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