Introduction to Innovation

How innovation drives research and

development
An ARM case study
Introduction
Using a laptop computer, Smartphone or iPad has become an essential part of
everyday life for many people. Few, however, will be aware of how the technology that
drives these tools is created.
AR is the world!s leading semiconductor intellectual property "IP# supplier. Intellectual
property is that which originates in the mind such as ideas, literary wor$s, music and
designs. AR%s business model is not typical. It does not own any factories but instead
designs and licenses its technology to a networ$ of partners who carry out the
manufacturing. &ver '(( licenses have been sold to more than )*( different partner
companies. +hese include the world!s leading semiconductor and systems companies,
such as Samsung, ,-I.IA, +e/as Instruments and 0ualcomm.
From its founding in 1''( in 2ambridge in the U3, it has grown to become a ma4or
developer of digital electronic products. +he company has offices around the world,
including design centres in the U3, USA, India, Scandinavia, France and 2hina.
AR is a Research 5 .evelopment "R5.# focused business. Its 6products% are
intangible and cover a diverse range of applications. +hey are used in everything from
sensors to servers. obile phones, tablet computers, washing machines, car bra$ing
systems and networ$ routers all use AR technology. In return for its technology, AR
receives a license fee for the original IP from the partner and a royalty on every
microchip produced. +o date, over )( billion chips containing AR technology have
been manufactured.
AR relies on the high levels of creativity, innovation and $nowledge of its people to
continue to develop new ideas and provide customers with the benefits of emerging
technology. Its R5. activity is collaborative and generates innovation in other
companies. For e/ample, leading brand Smartphones contain AR technology that has
been incorporated into chips manufactured by a variety of semiconductor companies. In
turn, they use diverse software and applications running on various operating systems
1
such as Android. +his sharing of information contributes to increasing the industry%s
$nowledge base.
+his case study will loo$ at the processes of research and development at AR and
show how these support the company%s leading mar$et position.
New product development (NPD)
,ew products may stem from invention or innovations. Invention is the formulation of
new ideas for products or processes. Innovation is the practical application of new
inventions into mar$etable products or services.
Product development may follow different routes7
A product-orientated approach is where a company develops a new product. It then
see$s a mar$et and 6pushes% the product out to that mar$et. +his might be to solve a
problem or to ta$e advantage of an opportunity. An e/ample could be developing new
functions for mobile phones. +his is a higher ris$ approach as the company will carry the
costs of development without $nowing what the returns might be.
A market-orientated approach develops a product to meet a $nown current or future
customer need. +his need would have been identified through mar$et research.
.eveloping a product to specific re8uirements may reduce costs and increase the
probability of product success. 9aving a mar$et waiting to buy the product gives
assurance of return on the investment.
Responding to competitor products allows a business to catch up or overta$e business
rivals. +his development may lead to a better product.
han!es in technolo!y may lead to the development of a more effective product or
one which sets a new benchmar$ for the mar$et. For e/ample, the Ama:on 3indle is
changing the way people read boo$s.
AR adopts a route of innovation to transfer its technology into products customers
want and need. Its technology supports three $ey types of chips7
)
External influences
AR%s product development also ta$es various e/ternal factors into account, for
e/ample, the need to develop low carbon products, increase energy security and
address impacts on global warming. In addition, meeting global economic challenges is
also high on AR%s agenda. For e/ample, developing countries such as ;ra:il and
2hina are becoming more affluent and buying more consumer electronics.
&ther factors affecting AR include the customer%s desire for greater computing
mobility, lower power consumption and increased battery life. 2onsumers are also
loo$ing to 6cloud% technology, for e/ample, in mobile phone apps, to provide remote
access to virtual storage and software. +his provides convenience and lower cost.
AR%s main technical driver is power efficiency, ma$ing microchips smaller whilst
increasing their performance. +he smallest processors are now the si:e of human hair
or crumbs.
Research
+he research process involves in8uiry into and discovery of new ideas to solve a
problem or create an opportunity.
AR invests around <1=( million per year into its research programmes. As a
$nowledge>based research and development business, the ma4ority of costs are
associated with the company%s high 8uality employees.
?
Development
.evelopment involves transforming ideas into a product fit for mar$et. From numerous
ideas at the research stage, AR will ta$e only a few with potential into the
development stage. +he $ey elements of the development process include7
A product brief @ identifying what mar$et need it fills. +o produce a product brief, AR
wor$s with around 1,((( companies. +hese companies may be AR customers,
competitors and collaborators all at the same time. AR%s engineers tal$ to partners who
ma$e the microchips to establish what is possible technically and its mar$et>focused
people identify what the mar$et is as$ing for.
A product specification @ outlining the main features, benefits and costs. AR combines
this feedbac$ and establishes priority needs. +hese are then evaluated to focus on the
application which will lead to a deliverable product.
A process of evaluating alternative solutions @ through computer modelling, samples or
prototypes. AR will select lead partners for specific pro4ects. +he partners% R5. teams
then wor$ with AR%s R5. team to develop the initial idea.
A se8uence of testing @ to chec$ the product meets re8uirements. &nce tested, the
design is then licensed to the partners to manufacture, on which AR receives royalties.
hallen!es and "ene#its o# R$D
+he challenges of a typical R5. process include7
large costs @ of people, time and e8uipment
long timescales @ for e/ample in the pharmaceutical industry it can ta$e as long
as 1(>)( years to complete full testing
high ris$ @ difficulties in anticipating changing mar$et and consumer needs over
the duration of R5. pro4ects, which leads to uncertain outcomes.
AR meets these challenges and reduces the potential ris$ of its pro4ects by7
wor$ing with lead partners to understand what is technically possible
listening to what its customers and their customers are as$ing for
managing timescales by ad4usting the team si:e and ensuring the right s$ills are
in place in order to deliver on time.
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0uestion7
1. Fhat are the e/ternal factors that drive AR product
developmentG
). Fhat are the technical factors that drive product
development in AR.
?. .iscuss development activity in AR.
=. &ne of the challenges in AR involves large cost of people,
time and e8uipment. Hives reasons.
*