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Needs research
Needs Research
NEEDS RESEARCH R. 1. Hart
A suggested approach for identifying research projects attempts to discover the real needs of customers and then to direct research and development effort towards satisfying them. At British Telecommunications Research Limited multi-disciplinary 'needs research' has shown that technology-based capital goods industries must be prepared to look up to 30 or 40 years hence to fit a new product harmoniously into the environment that will exist.
COMPANIES need to grow either to get bigger in real terms or alternatively to stand still in relation to an expanding competitive environment. Broad growth objectives, couched in financial terms, are generally dictated by considerations of what constitutes a viable enterprise to the investing public. Inevitably the desired growth rates exceed what is possible with existing products and markets. If the objectives are to be more than a pious hope, there must be a positive attitude towards product and market development. Strategies for meeting the target may include mergers and acquisitions, licence arrangements, establish. ment of overseas plant, product diversification, and the employment of research and development effort. This paper is solely concerned with the r and d aspect although this must not be taken to imply any superiority over the other procedures. A recipe for growth will contain many different ingredients according to the particular circumstances, especially those of time-scale, which are involved. Sheer magnitude of investment in rand d is not in itself sufficient to ensure success. It is of paramount importance to select the best projects on which to deploy the scarce resources of suitably skilled effort and of finance. The term 'scarce' is used in a relative sense considering the many tasks to be performed. In absolute terms, expenditure on rand d frequently accounts for an appreciable part of a Company or National budget, and is yet another reason for spending it wisely. For example, the Plessey Company, with a turnover of £165 million in 1968, devotes £20 million per annum and employs 7,000 people on rand d. As a nation, UK rand d expenditure is around £1,000 million or a little under 3% of the GNP-only the USA spends more ofits national income in this way. How then does one select projects on which to deploy relatively scarce rand d resources? Does one playa hunch, follow the lead of a competitor, or is there some other way? There is still a place, thank goodness, for the hunch R. I. Hart is Head of Systems Research Division at British Telecommunications Research Ltd, Plessey Telecommunications Group, Taplow, Berkshire, UK
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or flash of genius but it can hardly be relied upon as a regular procedure. Following the lead of a competitor is a method which has been used in the past much more than one cares to admit. It has certain advantages, such as being able to profit from the leader's mistakes, which have led some people to adopt this as a positive policy.' However, unless one is in an industry where the reaction time to innovate is very short, the leader will have a few years unhampered commercial exploitation: In the telecommunications industry, and in similar capital goods industries, reaction time is not short but has not in the past been disproportionate to a product life measured in many tens of years. Under these circumstances a competitor's lead of a year or two was not disastrous; there was plenty of business left for those subsequently entering the field with similar products. There is a tendency now, however, for the lifetime of capital goodsto shorten and therefore the first in the field may reap a large part of the market. Furthermore, with the increasing complexity oftechnological products, customers prefer to place further business with the original supplier for logistical reasons if alternative suppliers appear later with only marginally different products. One concludes that playing a hunch has its place, but a place probably towards the r end of the rand d spectrum, and that following the leader is more appropriate to the selection of licensing arrangements than of rand d projects. Neither is suitable as a positive method o£identifying research projects which can put -a company in the lead and keep it there. What other ways are open? Clearly there is no simple solution wh ich wiII guarantee success, but one suggested approach is to try and discover the real needs of customers and then to direct one's rand d effort towards satisfying those needs. On the face of it, this may seem such an obvious approach as to hardly need saying. However, upon closer inspection one realises that discovering needs is a difficult task. One can either give up the whole idea quickly in face of the difficulties or one has to take very definite steps to tackle them. It was the latter approach that we adopted several years ago at British Telecommunications Research and a small team containing people skilled in engineering, mathematics, and economics was established to carry out needs research. Whilst the work of this team is primarily concerned with the telecommunications industry, the underlying philosophy is equally applicable to other technologically based capital goods industries. Before embarking upon a description of needs research it might be helpful to give a brief picture of the company environment in which it is conducted. Company environment British Telecommunications Research Ltd is a research and development establishment of the Plessey Company Ltd. The latter is divided into product groups responsible for conducting business in different areas of the wide field of telecommunications and electronics from components through to large and complex systems. Each group has certain rand d faciliti es together with product planning, manufacturing, and marketing organisations. British Telecommunications Research Ltd undertakes work for all groups of the Plessey Company as well as for outside agencies such as the British Post FUTURES
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Office, Mintech, and Comsat, 'York at BTR therefore covers a wide spectrum and one which is becoming wider as the areas of telecommunication and computing begin to merge. The important feature of the work is that it is primarily concerned with rand d into future systems as distinct from devices and materials which are studied elsewhere in the Plessey Company. The work involves quite long rand d phases, measured in years, and the fact that the constituent devices and materials will already be known, is also a characteristic, although some may be at an early stage in the research laboratories. It was against this background that the 'needs research' team at BTR was established to assist the director of research, and the product groups sponsoring work at BTR, in defining potentially fruitful rand d projects. The objectives of the needs research team
Referring to Figure I, the needs research team aims to study the 'user' and to try and assess his needs in the field of communication. The team also studies the state-of-the-art of technology in terms of materials, devices and techniques in an attempt to see which of these might be embodied in new communication systems which could satisfy the need. These two activities lead to a specification for a systems research programme which will lead to a new product appearing on the market. The first problem that arises in trying to execute the simple concept outlined above is due to the rather long gestation periods involved. For the class of goods with which we are concerned, the period from commencement of rand d to the product being ready for sale is rarely less than 2 or 3 years and frequently approaches 10 years. One is therefore less interested in what the user requires now but in what he will require in 10 to 20 years hence. In this timescale there is little point in posing questions directly relating to communications Post and teleqraph authorities Industry
Materials Devices Techniques
Commerce Military Individuals
filjI
Communications Politics Economics
Figure 1. The framework for needs research in an internationally operating company
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to the user himself. He is both too pre-occupied with present day problems, and generally unaware' of what is technologically possible, to give useful replies. However, one can expect to receive well informed views from the user about his own business and these the needs researcher must translate in communication needs. A second problem area is created by the comparatively long lifetime associated with capital goods. For example the type of telephone exchanges which today still form the major part of many telephone networks, the first installation in the UK being in 1912, are based substantially on the Strowger patent of 18g1. It has already been stated that lifetimes of capital goods are getting shorter and we are unlikely to have a repeat of the Strowger phenomenon, however lifetimes of 10-20 years can still be expected. This being the case, a new product should ideally not only meet the initial needs but any changes in need occurring during its lifetime. Needs research then must be prepared to look up to go or 40 years hence. The new product, when it arrives, must fit harmoniously into the environment which will exist. It should also continue to do so for as long as possible as the environment changes-failure to do so will be one of the factors defining the end of the product's life. Environment is taken here to mean the technical, political and economic scene, but in the field of telecommunications the first mentioned aspect is perhaps most powerful. National and international telecommunications have been evolving for more than a century and each new phase must be compatible with nearly all that has gone before. Without this compatibility a system could hardly exist but it does place severe restraints on new product design. Most designers in their time will have had the most perfect concept for a communication network if only the entire existing system could be scrapped. Since the investment in existing plant throughout the world is vast-it approaches £1,500 million in the UK alone-this option hardly seems open. The task of the needs researcher then is basically threefold. He must: • Study a large range of users and devise methods for discovering their telecommunication needs in a time frame extending up to 40 years hence • Be aware of the state-of-the-art of technology and appreciate the possibilities of using this in new systems to fulfil needs • Collect factual information about the past and present technical, economic and political environment and to forecast its future. Clearly not many individuals will be fully equipped to deal with all these aspects and hence the need to assemble a team of mixed skills. Equally clearly the team could approach the size of the Company it is meant to assist if it tried to do these tasks unaided. It is essential therefore that there is the fullest co-operation between the needs research team and many other parts of both BTR and the entire Plessey Company. The user
Ultimately communication springs from human beings and it is their requirements, both as individuals and as organised groups, which we primarily study. FUTURES September 1969
Needs Research
In addition, in the context of communications, it is desirable to include peoples machines (eg computers, visual displays, teleprinters, telemetry terminals etc) as users. In some cases these machines are merely transducers between a person and an electrical network in the same sense as is the telephone instrument. However, in a growing number of cases machines can originate and receive information without the immediate intervention of human beings. The user then comprises: people,
their organisations,
and their machines
Some of the fundamental things we wish to know about the user are: • How many? '\There? 'Vhen? • Who can pay? How much? • Past and present use of telecommunications. To find this information, statistics relating to such items as population distribution and growth, computer distribution and growth, and the location of industry are collected and studied. The primary information in these cases is usually drawn from such sources as Government and United Nations publications. The main tasks here are to reconcile statistics from different sources, to derive forecasting techniques for extrapolating the collected data, and to present the information in a convenient form. Figure 2 is taken from one of the BTR reports on population growth and helps to answer 't he question -'which users to study?'. There is tendency to concentrate on those users who currently constitute the biggest markets, but if one is looking as far ahead as 30 or 40 years then the changing distribution in world population is an important modifying factor. Numbers of people alone only set some kind of upper bound to telecommunication requirements. The extent to which those people are, or will be, users of telecommunication depends upon many factors including ability to pay. e therefore carry out studies of the way in which nations, companies and individuals deploy their budgets. Inevitably many of these historical studies relate predominantly to telephony whereas telecommunications covers a much wider field. However it is unlikely that a population ill-equipped with telephones will be a leader in needs for more refined forms oftelecommunication. A useful indicator of telecommunication awareness is 'telephone density', measured in telephones per hundred population. Figure 3 shows a link between this and the economic indicator, gross national product per capita. At the level of the individual we have made use of the interesting demand curves due to Tornquist- and shown in Figure 4. These curves show consumption of goods broadly categorised into luxuries, relative luxuries, necessities, and inferior goods, against income. They are in accordance with intuition and show that at low incomes most expenditure is on essentials whilst at higher incomes the demand for essentials flattens out and more is spent on luxuries. These curves, taken together with the distribution of incomes, can be manipulated in a variety of ways to assess how an individual's need will be modified by the price of satisfying that need. One interesting observation that has arisen from using these methods is that the telephone for domestic purposes is treated substantially as a luxury.
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National income per capita, in dollars Figure 3. Telephone density/national income averaged over years 1957-1959
Finally, with regard to the user, we have to study the extent to which he uses, or has used, the existing telecommunication facilities. This again is largely a question of collecting considerable amounts of statistical information which must be processed in ways which can reveal future trends. Such trends will not be discovered by blind extrapolation of a past time-series, but by questioning the reasons for past behaviour. For example, one question we need to answer is how much telecommunication traffic will flow between any two centres of population such as two countries or two cities. Taking the route between the USA and the UK it was noted that between 1935 and 1955, making allowance for the war period, telephone traffic had risen steadily at about IO}% per annum. One might have concluded then that this indicated the need to communicate between those two countries. However, in 1956 the . first transatlantic submarine telephone cable, TATI, was opened with the effect that traffic doubled almost instantaneously and the subsequent annual growth rate has substantially increased. The fact was that, prior to TATI, FUTURES September 1969
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Relative luxuries "0
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Figure 4. Tornquist's demand functions
communication was via HF radio circuits which offered poor quality and, because of long periods of fading, considerable delays in obtaining a circuit were common. The cable brought very much improved quality and reduced the waiting time with the consequent dramatic effect upon demand. This phenomenon has since been used to forecast behaviour in similar situations and in many cases has been substantiated when improved communications have been installed. The environment The needs researcher must study the total environment including technical, economic, political, and ideally, sociological aspects. On the technical front he must know such things as: • Existing and planned national and international links • Characteristics and economics of current equipment • Plans and recommendations of such organisations as International Telecommunications Union • Industrial and other private networks With regard to the economic and political scene he has to be aware of the implications of the economic plans of various countries. Plans such as the intention of the UK to enter the Common Market can greatly affect needs. Such a move would undoubtedly stimulate a greater community of interest between the UK and those of continental Europe but, unless the UK becomes multi-lingual overnight, it may not give rise to a bigger need for speech communication. It could be that in the short run it will point to the necessity for more hard-copy communication which can be translated at leisure, and in the long run the need for automatic on-line speech translation. Another large and important study area concerned with the environment relates to substitutes for telecommunication. Whilst BTR's objective is to promote the spread of telecommunication by substituting it for other services, eg post, one must be aware that the converse could happen and development in other fields erode the telecommunication market. For example, one notes FUTURES
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Needs Research
the apparent necessity for business men to travel the country to conduct their affairs, whilst at the same time observing that physical travel is becoming increasingly difficult. It should be perfectly possible to create a comprehensive telecommunication network providing video, audio and data facilities which could satisfy all business needs and render travel unnecessary except for pleasure. However, people in the transportation business wiII be doing their own needs research and improved methods of travel can be expected to threaten the travel-less concept of the telecommunicator. Re-capitulation So far the motive for needs research has been explained and its underlying philosophy. As initially conceived, needs research should: • Identify users' future needs and specify an rand d programme which wiII lead to their satisfaction. This ideal approach is inextricably linked with a second use of the needs research facility: • To assess suggested programmes for innovation technically and economically in the light of forecast future needs. People wiII still have bright ideas for future products without waiting for the needs researcher to identify a need. However, instead of accepting or rejecting those ideas on whim, hunch or by special pleading, we can test them against a standard reference picture of future requirements. In this context it does not matter if our picture of the future is inaccurate, as long as it is not wildly so, the important thing is to have a consistent yardstick. Whilst needs research is primarily concerned with considerations of the long-term future, the data which is collected and the techniques for processing it can also be of more immediate use. Thus the needs researcher is often called upon to assist marketing and product planning people with such topics as increasing the market for existing products or prediciting their decline. Finally, although we established the needs research team to work in the field of telecommunication it has been found that their expertise can be turned to other areas of interest to the parent company. They have in fact studied future trends in such topics as, road traffic, air traffic and electronic aids to education. How to do needs research Having explained the objects and aims of needs research the question arises as to how these are achieved. It must be pointed out immediately that there is no hard and fast methodology. 'When researching into needs, as with any other research project, one is experimenting. However there are some basic guidelines: • Perhaps the most important step is to understand that needs research is a philosophy, to believe in it, and to propagate the message. A standard cry to companies these days is to inspect their strengths and weaknesses. This FUTURES
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• • •
•
is of course important but it must not lead solely to making what you are able to rather than what is really wanted. By careful design the two must be brought into coincidence. A guide to the future is the past. Copious historical data must be collected and critically inspected, and efforts made to understand why certain trends have occurred. Taking into account the reasons for past trends, forecasting methods must be developed for projections into the future. Frequently this means looking for correlations with some parameters which are more readily predictable. Only the most basic needs are in-elastic. Generally a need becomes more or less real according to the price of satisfying it. In these days when almost anything is technically possible, at a price, it is essential to study the way in which people deploy their budgets. . In the long time-scales of interest to needs research, the user cannot be expected to formulate his future requirements in terms of, in our case, telecommunications. He can however be expected to hold the best available views of the future of his own business area. These the needs researcher must obtain and from them derive needs which can be satisfied by telecommunication.
I t is in this area that one sees the emergence ofa positive piece of methodology through modelling. The user's system is modelled, and here a model is any form of representation of the real situation which is amenable to quantitative manipulation. It can vary from a set of simple linear equations through to a complex description requiring computer assistance. The system is then made to grow in accordance with some postulated growth laws and one tries to accommodate this growth using existing procedures, equipment, techniques etc. In doing this some problem areas will generally arise and will be denoted by such indicators as high costs, long delays, shortage of manpower, etc. These then are the areas upon which the needs researcher should focus attention and ask himself how new development could satisfy those needs. Organlsatlon for needs research
The need has already been shown for a needs research team to be multidisciplined. Certainly one wants specialists in the industry in question (in our case telecommunication engineers), and here two types are required either separately or combined. The one should have a good knowledge of the past and present and have his feet on the ground, whilst the other must be a forward thinker with his head almost in the clouds. Hopefully one seeks tall men who can do both. The team also requires mathematical ability, particularly in the areas of statistics and the use of computers, and an economist with a leaning towards econometrics. In so far as this kind of research is concerned with human needs there is also a case for including the skills of the sociologist and the psychologist. At BTR, this stage of development has not yet been reached but we try to make up this deficiency by frequent contact with the relevant departments of universities. The next question is what size should the team be? The minimum requisite FUTURES
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Weeds Research
number should be sufficiently large to include the skills discussed above. Much more difficult to define is the maximum size of the team. Clearly if the team is going to be up-to-date in all branches of the laboratory's technical activities then it will approach the size of the laboratory itself. e have taken the view that a team of say six people should form the nucleus of the needs research effort, collecting and processing data and developing a set of research tools and methods. In any particular study however, specialists from other parts of the laboratory are co-opted. This serves the dual purpose of injecting the latest technical thinking into needs research and, conversely, of updating the specialists with incipient needs. Finally, where is the right place to conduct this research? There are some who argue that it is merely a form of market research and as such should be located with the marketing or sales function. We have taken the view that its essence lies in marrying future needs to what will be technically feasible. Under these circumstances it makes sense to locate the team in a technical and research environment. It was fortunate that we encountered the term needs research in a book by A. D. Hall, of Bell Telephone Laboratories," at a time when we' were looking for a name to distinguish our activities from such things as market research. However, it must be remembered that there are many parts of the overall company which are concerned with the future from different aspects and with different timescales. It is important that there is a frequent exchange of views between the needs researcher and those other functions, for example, corporate planning, product planning, marketing and sales.
"r
Application examples Any comprehensive case history of a needs research study would tend to be lengthy and would demand a considerable knowledge of telecommunication for its understanding. It is therefore proposed to merely outline two such studies:
Satellite communication system This was one of the earliest examples of needs research when BTR was involved with a consortium of companies under the title of the British Space Development Company. The communication satellite itself came as the result of a bright idea rather than through identifying a need. However the problem of how to use it in a system certainly required needs for international communication to be discovered. The first task was to compile matrices of traffic that was likely to flow between nations in the years 1970 and 1980. In some cases the collection of past traffic data assisted the process but in many others there was either no existing traffic or no record of it. Methods therefore had to be devised, using such factors as political and trade ties between countries, their physical separation, telephone ownership etc.! Secondly it was recognised that the satellite would offer a higher quality of service than hitherto experienced on many routes. Furthermore it was likely that satellite communication might reduce tariffs. Studies were therefore FUTURES
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carried out to investigate the likely effect on demand due to changes in price and quality. Thirdly it was necessary to assess the threat to satellites by other forms of communication such as submarine and terrestrial systems. Technical and economic trends in these competing areas therefore had to be forecast. The result of this work, and much work by other members ofBSDC, enabled a satellite communication system to be specified in terms of such parameters
0'01 E local-local to sub's equipment
0'025 E single junction
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t STD at remote exchange
Figure 5. Simplified schematic of the telephone network
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as choice of orbit, satellite capacity, multiplexing and modulation methods, number, size, and location of ground stations."
A national telephone network Figure 5 is a simplified model of a national telephone network. The boxes represent switching equipment whilst the lines represent transmission equipment. The structure of the model involves a knowledge of the actual routing in terms of, for example, the number of tandem switching points involved in calls of varying distances. The quantities ofeach type ofequipment required are arrived at by statistical information about such things as numbers of subscribers, the traffic each originates, and the distances over which that traffic is conveyed. In some cases equipment must be provided exclusively for each subscriber, eg the telephone instrument, whilst in other cases equipment is shared between many subscribers, eg a trunk circuit. Knowing the unit prices for each item of equipment in the network, and the utilisation each subscriber makes of it, one can arrive at a cost for the extra equipment that must be added each time a new subscriber joins the network. The next step is to make forecasts about the growth rate of subscribers, the traffic they will originate, and traffic flow patterns. The model system is then allowed to expand in order to take care of the growth, and the 'cost.per added subscriber' evaluated for future years. If one postulates existing equipment for this expansion then it is found that the cost per added subscriber rises considerably with time even in terms of 1968 prices. It is presumed to be a need of administration to minimise these costs. A detailed inspection of the cost breakdown shows that the biggest increases are occurring in a particular area of switching. The state-of-the-art of technology is inspected and it is known that digital techniques applicable to the problem area are being worked on. Hypothetical systems using these techniques are tried in the model using estimated prices and considerable improvements in future economics are observed. This then leads to specifications for r and d programmes to create such systems and to devise ways of introducing them into the existing environment. Acknowledgement The Author wishes to thank British Telecommunications Research Ltd for permission to publish this paper. References
George Cyriax, "The Case for Being Second", Financial Times, 3 April 1968 H. Wold and L. Jureen, Demand Anarysis (New York, John Wiley & Sons) 3. Arthur D. Hall, A Methodology for Systems Engineering (Princeton, Van Nostrand) 4. R. I. Hart, "Traffic forecasting and its application to the design ofcommunication satellite systems", Proceedings of International Conference on Satellite Communication (London, IEE, 1962) 5. G. E. Parrett, "A Commonwealth communications satellite network using a sequential transfer technique", Proceedings of International Conference on Satellite Communication (London, lEE, 1962) I.
2.
FUTURES 'September 1969
457
NEEDS RESEARCH R. 1. Hart
A suggested approach for identifying research projects attempts to discover the real needs of customers and then to direct research and development effort towards satisfying them. At British Telecommunications Research Limited multi-disciplinary 'needs research' has shown that technology-based capital goods industries must be prepared to look up to 30 or 40 years hence to fit a new product harmoniously into the environment that will exist.
COMPANIES need to grow either to get bigger in real terms or alternatively to stand still in relation to an expanding competitive environment. Broad growth objectives, couched in financial terms, are generally dictated by considerations of what constitutes a viable enterprise to the investing public. Inevitably the desired growth rates exceed what is possible with existing products and markets. If the objectives are to be more than a pious hope, there must be a positive attitude towards product and market development. Strategies for meeting the target may include mergers and acquisitions, licence arrangements, establish. ment of overseas plant, product diversification, and the employment of research and development effort. This paper is solely concerned with the r and d aspect although this must not be taken to imply any superiority over the other procedures. A recipe for growth will contain many different ingredients according to the particular circumstances, especially those of time-scale, which are involved. Sheer magnitude of investment in rand d is not in itself sufficient to ensure success. It is of paramount importance to select the best projects on which to deploy the scarce resources of suitably skilled effort and of finance. The term 'scarce' is used in a relative sense considering the many tasks to be performed. In absolute terms, expenditure on rand d frequently accounts for an appreciable part of a Company or National budget, and is yet another reason for spending it wisely. For example, the Plessey Company, with a turnover of £165 million in 1968, devotes £20 million per annum and employs 7,000 people on rand d. As a nation, UK rand d expenditure is around £1,000 million or a little under 3% of the GNP-only the USA spends more ofits national income in this way. How then does one select projects on which to deploy relatively scarce rand d resources? Does one playa hunch, follow the lead of a competitor, or is there some other way? There is still a place, thank goodness, for the hunch R. I. Hart is Head of Systems Research Division at British Telecommunications Research Ltd, Plessey Telecommunications Group, Taplow, Berkshire, UK
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or flash of genius but it can hardly be relied upon as a regular procedure. Following the lead of a competitor is a method which has been used in the past much more than one cares to admit. It has certain advantages, such as being able to profit from the leader's mistakes, which have led some people to adopt this as a positive policy.' However, unless one is in an industry where the reaction time to innovate is very short, the leader will have a few years unhampered commercial exploitation: In the telecommunications industry, and in similar capital goods industries, reaction time is not short but has not in the past been disproportionate to a product life measured in many tens of years. Under these circumstances a competitor's lead of a year or two was not disastrous; there was plenty of business left for those subsequently entering the field with similar products. There is a tendency now, however, for the lifetime of capital goodsto shorten and therefore the first in the field may reap a large part of the market. Furthermore, with the increasing complexity oftechnological products, customers prefer to place further business with the original supplier for logistical reasons if alternative suppliers appear later with only marginally different products. One concludes that playing a hunch has its place, but a place probably towards the r end of the rand d spectrum, and that following the leader is more appropriate to the selection of licensing arrangements than of rand d projects. Neither is suitable as a positive method o£identifying research projects which can put -a company in the lead and keep it there. What other ways are open? Clearly there is no simple solution wh ich wiII guarantee success, but one suggested approach is to try and discover the real needs of customers and then to direct one's rand d effort towards satisfying those needs. On the face of it, this may seem such an obvious approach as to hardly need saying. However, upon closer inspection one realises that discovering needs is a difficult task. One can either give up the whole idea quickly in face of the difficulties or one has to take very definite steps to tackle them. It was the latter approach that we adopted several years ago at British Telecommunications Research and a small team containing people skilled in engineering, mathematics, and economics was established to carry out needs research. Whilst the work of this team is primarily concerned with the telecommunications industry, the underlying philosophy is equally applicable to other technologically based capital goods industries. Before embarking upon a description of needs research it might be helpful to give a brief picture of the company environment in which it is conducted. Company environment British Telecommunications Research Ltd is a research and development establishment of the Plessey Company Ltd. The latter is divided into product groups responsible for conducting business in different areas of the wide field of telecommunications and electronics from components through to large and complex systems. Each group has certain rand d faciliti es together with product planning, manufacturing, and marketing organisations. British Telecommunications Research Ltd undertakes work for all groups of the Plessey Company as well as for outside agencies such as the British Post FUTURES
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Office, Mintech, and Comsat, 'York at BTR therefore covers a wide spectrum and one which is becoming wider as the areas of telecommunication and computing begin to merge. The important feature of the work is that it is primarily concerned with rand d into future systems as distinct from devices and materials which are studied elsewhere in the Plessey Company. The work involves quite long rand d phases, measured in years, and the fact that the constituent devices and materials will already be known, is also a characteristic, although some may be at an early stage in the research laboratories. It was against this background that the 'needs research' team at BTR was established to assist the director of research, and the product groups sponsoring work at BTR, in defining potentially fruitful rand d projects. The objectives of the needs research team
Referring to Figure I, the needs research team aims to study the 'user' and to try and assess his needs in the field of communication. The team also studies the state-of-the-art of technology in terms of materials, devices and techniques in an attempt to see which of these might be embodied in new communication systems which could satisfy the need. These two activities lead to a specification for a systems research programme which will lead to a new product appearing on the market. The first problem that arises in trying to execute the simple concept outlined above is due to the rather long gestation periods involved. For the class of goods with which we are concerned, the period from commencement of rand d to the product being ready for sale is rarely less than 2 or 3 years and frequently approaches 10 years. One is therefore less interested in what the user requires now but in what he will require in 10 to 20 years hence. In this timescale there is little point in posing questions directly relating to communications Post and teleqraph authorities Industry
Materials Devices Techniques
Commerce Military Individuals
filjI
Communications Politics Economics
Figure 1. The framework for needs research in an internationally operating company
FUTURES
September t969
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448
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to the user himself. He is both too pre-occupied with present day problems, and generally unaware' of what is technologically possible, to give useful replies. However, one can expect to receive well informed views from the user about his own business and these the needs researcher must translate in communication needs. A second problem area is created by the comparatively long lifetime associated with capital goods. For example the type of telephone exchanges which today still form the major part of many telephone networks, the first installation in the UK being in 1912, are based substantially on the Strowger patent of 18g1. It has already been stated that lifetimes of capital goods are getting shorter and we are unlikely to have a repeat of the Strowger phenomenon, however lifetimes of 10-20 years can still be expected. This being the case, a new product should ideally not only meet the initial needs but any changes in need occurring during its lifetime. Needs research then must be prepared to look up to go or 40 years hence. The new product, when it arrives, must fit harmoniously into the environment which will exist. It should also continue to do so for as long as possible as the environment changes-failure to do so will be one of the factors defining the end of the product's life. Environment is taken here to mean the technical, political and economic scene, but in the field of telecommunications the first mentioned aspect is perhaps most powerful. National and international telecommunications have been evolving for more than a century and each new phase must be compatible with nearly all that has gone before. Without this compatibility a system could hardly exist but it does place severe restraints on new product design. Most designers in their time will have had the most perfect concept for a communication network if only the entire existing system could be scrapped. Since the investment in existing plant throughout the world is vast-it approaches £1,500 million in the UK alone-this option hardly seems open. The task of the needs researcher then is basically threefold. He must: • Study a large range of users and devise methods for discovering their telecommunication needs in a time frame extending up to 40 years hence • Be aware of the state-of-the-art of technology and appreciate the possibilities of using this in new systems to fulfil needs • Collect factual information about the past and present technical, economic and political environment and to forecast its future. Clearly not many individuals will be fully equipped to deal with all these aspects and hence the need to assemble a team of mixed skills. Equally clearly the team could approach the size of the Company it is meant to assist if it tried to do these tasks unaided. It is essential therefore that there is the fullest co-operation between the needs research team and many other parts of both BTR and the entire Plessey Company. The user
Ultimately communication springs from human beings and it is their requirements, both as individuals and as organised groups, which we primarily study. FUTURES September 1969
Needs Research
In addition, in the context of communications, it is desirable to include peoples machines (eg computers, visual displays, teleprinters, telemetry terminals etc) as users. In some cases these machines are merely transducers between a person and an electrical network in the same sense as is the telephone instrument. However, in a growing number of cases machines can originate and receive information without the immediate intervention of human beings. The user then comprises: people,
their organisations,
and their machines
Some of the fundamental things we wish to know about the user are: • How many? '\There? 'Vhen? • Who can pay? How much? • Past and present use of telecommunications. To find this information, statistics relating to such items as population distribution and growth, computer distribution and growth, and the location of industry are collected and studied. The primary information in these cases is usually drawn from such sources as Government and United Nations publications. The main tasks here are to reconcile statistics from different sources, to derive forecasting techniques for extrapolating the collected data, and to present the information in a convenient form. Figure 2 is taken from one of the BTR reports on population growth and helps to answer 't he question -'which users to study?'. There is tendency to concentrate on those users who currently constitute the biggest markets, but if one is looking as far ahead as 30 or 40 years then the changing distribution in world population is an important modifying factor. Numbers of people alone only set some kind of upper bound to telecommunication requirements. The extent to which those people are, or will be, users of telecommunication depends upon many factors including ability to pay. e therefore carry out studies of the way in which nations, companies and individuals deploy their budgets. Inevitably many of these historical studies relate predominantly to telephony whereas telecommunications covers a much wider field. However it is unlikely that a population ill-equipped with telephones will be a leader in needs for more refined forms oftelecommunication. A useful indicator of telecommunication awareness is 'telephone density', measured in telephones per hundred population. Figure 3 shows a link between this and the economic indicator, gross national product per capita. At the level of the individual we have made use of the interesting demand curves due to Tornquist- and shown in Figure 4. These curves show consumption of goods broadly categorised into luxuries, relative luxuries, necessities, and inferior goods, against income. They are in accordance with intuition and show that at low incomes most expenditure is on essentials whilst at higher incomes the demand for essentials flattens out and more is spent on luxuries. These curves, taken together with the distribution of incomes, can be manipulated in a variety of ways to assess how an individual's need will be modified by the price of satisfying that need. One interesting observation that has arisen from using these methods is that the telephone for domestic purposes is treated substantially as a luxury.
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FUTURES
September 1969
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FUTURES
September 1969
Needs Research
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National income per capita, in dollars Figure 3. Telephone density/national income averaged over years 1957-1959
Finally, with regard to the user, we have to study the extent to which he uses, or has used, the existing telecommunication facilities. This again is largely a question of collecting considerable amounts of statistical information which must be processed in ways which can reveal future trends. Such trends will not be discovered by blind extrapolation of a past time-series, but by questioning the reasons for past behaviour. For example, one question we need to answer is how much telecommunication traffic will flow between any two centres of population such as two countries or two cities. Taking the route between the USA and the UK it was noted that between 1935 and 1955, making allowance for the war period, telephone traffic had risen steadily at about IO}% per annum. One might have concluded then that this indicated the need to communicate between those two countries. However, in 1956 the . first transatlantic submarine telephone cable, TATI, was opened with the effect that traffic doubled almost instantaneously and the subsequent annual growth rate has substantially increased. The fact was that, prior to TATI, FUTURES September 1969
451
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Needs Research
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Figure 4. Tornquist's demand functions
communication was via HF radio circuits which offered poor quality and, because of long periods of fading, considerable delays in obtaining a circuit were common. The cable brought very much improved quality and reduced the waiting time with the consequent dramatic effect upon demand. This phenomenon has since been used to forecast behaviour in similar situations and in many cases has been substantiated when improved communications have been installed. The environment The needs researcher must study the total environment including technical, economic, political, and ideally, sociological aspects. On the technical front he must know such things as: • Existing and planned national and international links • Characteristics and economics of current equipment • Plans and recommendations of such organisations as International Telecommunications Union • Industrial and other private networks With regard to the economic and political scene he has to be aware of the implications of the economic plans of various countries. Plans such as the intention of the UK to enter the Common Market can greatly affect needs. Such a move would undoubtedly stimulate a greater community of interest between the UK and those of continental Europe but, unless the UK becomes multi-lingual overnight, it may not give rise to a bigger need for speech communication. It could be that in the short run it will point to the necessity for more hard-copy communication which can be translated at leisure, and in the long run the need for automatic on-line speech translation. Another large and important study area concerned with the environment relates to substitutes for telecommunication. Whilst BTR's objective is to promote the spread of telecommunication by substituting it for other services, eg post, one must be aware that the converse could happen and development in other fields erode the telecommunication market. For example, one notes FUTURES
September 1969
Needs Research
the apparent necessity for business men to travel the country to conduct their affairs, whilst at the same time observing that physical travel is becoming increasingly difficult. It should be perfectly possible to create a comprehensive telecommunication network providing video, audio and data facilities which could satisfy all business needs and render travel unnecessary except for pleasure. However, people in the transportation business wiII be doing their own needs research and improved methods of travel can be expected to threaten the travel-less concept of the telecommunicator. Re-capitulation So far the motive for needs research has been explained and its underlying philosophy. As initially conceived, needs research should: • Identify users' future needs and specify an rand d programme which wiII lead to their satisfaction. This ideal approach is inextricably linked with a second use of the needs research facility: • To assess suggested programmes for innovation technically and economically in the light of forecast future needs. People wiII still have bright ideas for future products without waiting for the needs researcher to identify a need. However, instead of accepting or rejecting those ideas on whim, hunch or by special pleading, we can test them against a standard reference picture of future requirements. In this context it does not matter if our picture of the future is inaccurate, as long as it is not wildly so, the important thing is to have a consistent yardstick. Whilst needs research is primarily concerned with considerations of the long-term future, the data which is collected and the techniques for processing it can also be of more immediate use. Thus the needs researcher is often called upon to assist marketing and product planning people with such topics as increasing the market for existing products or prediciting their decline. Finally, although we established the needs research team to work in the field of telecommunication it has been found that their expertise can be turned to other areas of interest to the parent company. They have in fact studied future trends in such topics as, road traffic, air traffic and electronic aids to education. How to do needs research Having explained the objects and aims of needs research the question arises as to how these are achieved. It must be pointed out immediately that there is no hard and fast methodology. 'When researching into needs, as with any other research project, one is experimenting. However there are some basic guidelines: • Perhaps the most important step is to understand that needs research is a philosophy, to believe in it, and to propagate the message. A standard cry to companies these days is to inspect their strengths and weaknesses. This FUTURES
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• • •
•
is of course important but it must not lead solely to making what you are able to rather than what is really wanted. By careful design the two must be brought into coincidence. A guide to the future is the past. Copious historical data must be collected and critically inspected, and efforts made to understand why certain trends have occurred. Taking into account the reasons for past trends, forecasting methods must be developed for projections into the future. Frequently this means looking for correlations with some parameters which are more readily predictable. Only the most basic needs are in-elastic. Generally a need becomes more or less real according to the price of satisfying it. In these days when almost anything is technically possible, at a price, it is essential to study the way in which people deploy their budgets. . In the long time-scales of interest to needs research, the user cannot be expected to formulate his future requirements in terms of, in our case, telecommunications. He can however be expected to hold the best available views of the future of his own business area. These the needs researcher must obtain and from them derive needs which can be satisfied by telecommunication.
I t is in this area that one sees the emergence ofa positive piece of methodology through modelling. The user's system is modelled, and here a model is any form of representation of the real situation which is amenable to quantitative manipulation. It can vary from a set of simple linear equations through to a complex description requiring computer assistance. The system is then made to grow in accordance with some postulated growth laws and one tries to accommodate this growth using existing procedures, equipment, techniques etc. In doing this some problem areas will generally arise and will be denoted by such indicators as high costs, long delays, shortage of manpower, etc. These then are the areas upon which the needs researcher should focus attention and ask himself how new development could satisfy those needs. Organlsatlon for needs research
The need has already been shown for a needs research team to be multidisciplined. Certainly one wants specialists in the industry in question (in our case telecommunication engineers), and here two types are required either separately or combined. The one should have a good knowledge of the past and present and have his feet on the ground, whilst the other must be a forward thinker with his head almost in the clouds. Hopefully one seeks tall men who can do both. The team also requires mathematical ability, particularly in the areas of statistics and the use of computers, and an economist with a leaning towards econometrics. In so far as this kind of research is concerned with human needs there is also a case for including the skills of the sociologist and the psychologist. At BTR, this stage of development has not yet been reached but we try to make up this deficiency by frequent contact with the relevant departments of universities. The next question is what size should the team be? The minimum requisite FUTURES
September 1969
Weeds Research
number should be sufficiently large to include the skills discussed above. Much more difficult to define is the maximum size of the team. Clearly if the team is going to be up-to-date in all branches of the laboratory's technical activities then it will approach the size of the laboratory itself. e have taken the view that a team of say six people should form the nucleus of the needs research effort, collecting and processing data and developing a set of research tools and methods. In any particular study however, specialists from other parts of the laboratory are co-opted. This serves the dual purpose of injecting the latest technical thinking into needs research and, conversely, of updating the specialists with incipient needs. Finally, where is the right place to conduct this research? There are some who argue that it is merely a form of market research and as such should be located with the marketing or sales function. We have taken the view that its essence lies in marrying future needs to what will be technically feasible. Under these circumstances it makes sense to locate the team in a technical and research environment. It was fortunate that we encountered the term needs research in a book by A. D. Hall, of Bell Telephone Laboratories," at a time when we' were looking for a name to distinguish our activities from such things as market research. However, it must be remembered that there are many parts of the overall company which are concerned with the future from different aspects and with different timescales. It is important that there is a frequent exchange of views between the needs researcher and those other functions, for example, corporate planning, product planning, marketing and sales.
"r
Application examples Any comprehensive case history of a needs research study would tend to be lengthy and would demand a considerable knowledge of telecommunication for its understanding. It is therefore proposed to merely outline two such studies:
Satellite communication system This was one of the earliest examples of needs research when BTR was involved with a consortium of companies under the title of the British Space Development Company. The communication satellite itself came as the result of a bright idea rather than through identifying a need. However the problem of how to use it in a system certainly required needs for international communication to be discovered. The first task was to compile matrices of traffic that was likely to flow between nations in the years 1970 and 1980. In some cases the collection of past traffic data assisted the process but in many others there was either no existing traffic or no record of it. Methods therefore had to be devised, using such factors as political and trade ties between countries, their physical separation, telephone ownership etc.! Secondly it was recognised that the satellite would offer a higher quality of service than hitherto experienced on many routes. Furthermore it was likely that satellite communication might reduce tariffs. Studies were therefore FUTURES
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carried out to investigate the likely effect on demand due to changes in price and quality. Thirdly it was necessary to assess the threat to satellites by other forms of communication such as submarine and terrestrial systems. Technical and economic trends in these competing areas therefore had to be forecast. The result of this work, and much work by other members ofBSDC, enabled a satellite communication system to be specified in terms of such parameters
0'01 E local-local to sub's equipment
0'025 E single junction
O'01 E two junction
! STD terminates at GSC
t STD at remote exchange
Figure 5. Simplified schematic of the telephone network
FUTURES
September 1969
Needs Research
as choice of orbit, satellite capacity, multiplexing and modulation methods, number, size, and location of ground stations."
A national telephone network Figure 5 is a simplified model of a national telephone network. The boxes represent switching equipment whilst the lines represent transmission equipment. The structure of the model involves a knowledge of the actual routing in terms of, for example, the number of tandem switching points involved in calls of varying distances. The quantities ofeach type ofequipment required are arrived at by statistical information about such things as numbers of subscribers, the traffic each originates, and the distances over which that traffic is conveyed. In some cases equipment must be provided exclusively for each subscriber, eg the telephone instrument, whilst in other cases equipment is shared between many subscribers, eg a trunk circuit. Knowing the unit prices for each item of equipment in the network, and the utilisation each subscriber makes of it, one can arrive at a cost for the extra equipment that must be added each time a new subscriber joins the network. The next step is to make forecasts about the growth rate of subscribers, the traffic they will originate, and traffic flow patterns. The model system is then allowed to expand in order to take care of the growth, and the 'cost.per added subscriber' evaluated for future years. If one postulates existing equipment for this expansion then it is found that the cost per added subscriber rises considerably with time even in terms of 1968 prices. It is presumed to be a need of administration to minimise these costs. A detailed inspection of the cost breakdown shows that the biggest increases are occurring in a particular area of switching. The state-of-the-art of technology is inspected and it is known that digital techniques applicable to the problem area are being worked on. Hypothetical systems using these techniques are tried in the model using estimated prices and considerable improvements in future economics are observed. This then leads to specifications for r and d programmes to create such systems and to devise ways of introducing them into the existing environment. Acknowledgement The Author wishes to thank British Telecommunications Research Ltd for permission to publish this paper. References
George Cyriax, "The Case for Being Second", Financial Times, 3 April 1968 H. Wold and L. Jureen, Demand Anarysis (New York, John Wiley & Sons) 3. Arthur D. Hall, A Methodology for Systems Engineering (Princeton, Van Nostrand) 4. R. I. Hart, "Traffic forecasting and its application to the design ofcommunication satellite systems", Proceedings of International Conference on Satellite Communication (London, IEE, 1962) 5. G. E. Parrett, "A Commonwealth communications satellite network using a sequential transfer technique", Proceedings of International Conference on Satellite Communication (London, lEE, 1962) I.
2.
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