The relevance, let alone the power of standardization is only understood by a limited degree – if at all – by most companies. Even companies that are totally dependent on standards. In my experience strong opposition to standardization inside companies is coming from business line(s) or even the leadership itself. By their nature companies will want to create defendable threshold(s) to earn money. This “preoccupation” is leading to:
- a Pavlov reaction: “Let’s make/keep our market to ourselves!”
- Non transparency: “Proprietary solution is in OUR advantage!”
- Deliberatively deviating from standards: “we have customer lock in!”
The lack of standardization is often not efficient from a macro perspective (“collaborabillity”), but inefficiency paid by clients all the same (invoking externalities). Nor is the fortified position the company wants to create or hold always the best defendable/lucrative in the longer run. (Recent Examples on RPD: Mini SEPA’s, Bank specific SEPA interfaces and payments processing market)
One major aim of standardization in business is to enable interoperability in a multi-vendor, multi-network, multi-service environment. Many value chains today can only work if parties cooperate directly but also as part of a more fluid and dynamic value chain environment enabled by the networked economy we live in today. Standards are shaping todays markets more and more.
Standardization can be regarded as a special form of strategic cross company innovation. For today’s business strategists standards and standardization should be part of their basic toolkit. They should be answering questions like:
- Is there a business opportunity/tread through standardization? What is the role and impact of the core standardizations in our industry? Is standardization having an impact on what we regard as our industry?
- Should we cooperate with parties like our selves to create a common environment that will be beneficial to our (potential) customers and will create a benefit as opposed to competing solutions?
- How to influence the balance in our value chain for your own purpose via standardization? How do we balance standards vs intellectual property rights?
- Should we be involved in the standardization process? Or should we be even actively steering/initiating standardization?
- How to choose between competing standards if multiple standards are available?
Besides formal standards companies can create defacto (or practical) standards. Especially for network based services and market places linking up parties in a structured and uniform manner will create defacto standards for their users/customers.