Business Value

Hold on, you get your choice ... a nice story (IMHO), or a discussion of business issues related to standards. Ok, so the story is a discussion of standards and business value .... sort of a "morality tale" for the 21st century.

For a colorful discussion of this, go back to the story, before it is too late!


A view from 2020 (the year) - this 1997 perspective has survived better than I would have thought.

At that time my focus was operating systems and app portability standards. Subsequently, smart phones, servers and cloud computing have primarily built on the POSIX/LINUX base that I was heavily invested in for some time. And on top of this Java and Python (noted below), along with significant growth in Open Software (thank you Richard Stallman and Linus Torvalds).

The big change has been the growth of China from an "over there" to a "strategic intent" player. The standards game just got far more serious with one country-company (the boundaries in China are unclear) that has a strategic intent of global economic hegemony. Their tool is of course, standards combined with working implementations and patents. Their targets include: AI, 5G, surveillance systems, payment systems, bio-tech and other critical infrastructure. They will leverage the total lack of U.S. strategic perspective (next election is the longest time frame) and U.S. corporation perspectives (maybe to the end of the fiscal year, but quarterly is most likely.) And China now has the economic and engineering/scientific resources to pull it off.


The I.T. industry seems to get confused at best about standardization, no doubt a mixture of the engineering personality and the relative immaturity of the industry. Here are a few "straight" responses to the issues that are regularly raised by Scrooge, and others:

Standards are too slow - you get what you pay for, a formal standard can be put through the IEEE process and approved within 9 to 12 months; most other SDO's can match that. The key is that substantial backing or dedicated resources have to be put into project editing and management.

Standards inhibit innovation

my perception is that this is the lament of engineers who are desperate to re-invent the wheel; and would rather do that than invent uses for the wheel (carts, rollers, gears...)

No one uses standards

Actually, folks assume standards exist, and are most frustrated when they don't, but rarely are aware of the distinctions. In some areas we use standards references with hesitation: DIN film speed; VHS video tape; SAE oil weight; sometimes by the name of the standard. There is a catch 22 here, if we don't have a standard DC power connection for laptops, we don't get folks asking for it; and if we define it and use it, folks will assume it's there and be frustrated when it's not. One of the problems of the computer industry is that users do not demand the necessary standards for their effective use of the technology; and at times they can be "bought out" by lower price, etc. ("This is oil, you can put it in your car, and it's cheaper than that SAE stuff." "It's not my fault your engine seized up...")

Standards don't offer differential advantage

guilty, an effective standard (one that is widely used) is a pre-requisite for doing business in the market, and implicitly does not offer differential advantage.

If we make this standard, my competitors will have it too!

eventually, yes - although they may have to pay you some reasonable patent royalties. The question is do you want to be the dominate force in a small market, or a major player in a much larger market? Consider Apple, which chose to keep it's "better" technology for it's own advantage. Getting 100% of 15% of the desktop market. If Mac had been "open" in 1987 (3 years after introduction, 5 years before Windows 3.0), that would have dominated the market. Lets call that one a 30 Billion dollar mistake from which Apple has not recovered.|

[Ok, 2020 vision -- in 2020 -- Apple seems to be doing alright, even if they lost 30B early in the game, and still proprietary.]

How can I sell a standard?

Oddly enough it can be important to do this; note the folks that put professional accreditation's on their business cards (Did you really want your appendix taken out by a P.E.?), Companies with ISO 9000 banners, and so forth. You can actually use standards to sell products, and conversely, use of these re-enforces the market value of the standards. The real value of standards is to create a larger market, that only happens as consumers become aware of the distinction being established by the standard, the perceived value of this --- and this means selling the standard.

The industry is moving too fast

a great reason for standards. It's like putting down the foundation as you build the next layer. There are occasions when it makes sense to start over at a lower layer, however most of the time the future value added, innovation, and growth will be built on the shoulders of those who have gone before. Much of the time in the computer industry we refuse to accept what was not invented here, and so we end up building on the toes of those who have gone before.

Doing standards in areas where things are immature - This is a risk, just as building software for the Osborne portable computer was a risk ... some pan out, others don't. Failure to establish standards can substantially restrain markets.

Let the Market decide

The market always decides (even when the market encourages the government to enforce things via regulatory intervention.) Standards can only change this in the negative. The absence of a standard prevents the market from choosing a standard. Competing standards are acceptable, although until buyers are confident that one (or both) will survive, they may defer purchasing. Clear focus by providers on core standards creates a strong momentum for market growth, increasing consumer confidence, and accelerating commitment.

Applications software doesn't need them

actually just the opposite. Somewhere in the mid 80's the "PC" became a sufficiently well defined environment that applications software suppliers jumped on board. It reached "sufficient standardization", perhaps not recognized by ANSI, but a very real effect, and a demonstration of the impact of standards. Of course the single vendor domination inhibited the pressure for a robust environment. Concepts like memory protection, multi-tasking, 32 bit addressing, and such were all missing - sort of like moving everyone from flying jets back to open-air single engine planes.

[2020 vision again - Java, and then other interpretive languages like Python, created standards for applications software that does port from one system to another in many cases. Open source approaches have also driven commonality with "free" software.]

These meetings are just a travel club

Standards activities require good management just as much as the rest of industry; but for the most part, it is the consortia, not the standards committees that head off for the best locations. If the work is moving forward, management might do well to invest good talent in the work as a form of recognition, and hope the travel is enjoyable, or at least tolerable.

Committees don't know when to stop

This can be difficult. There is a requirement for ongoing maintenance and interpretations of the work; but most engineers have a tendency keep going ... just one more feature, etc. Standards are no exception. Again, make sure committees have a few good business folks involved, not just techies.

Consortia have focus

Consortia start with focus, if it weren't for the overhead of formation (much of which occurs in the 6 months before they are announced) they would generate results fairly efficiently for the initial area of their work. However, an interesting thing happens. They hire staff, and the #1 job of most staff is job continuation (what will we be doing after this work is done?). And then the group starts to look at the next related problem. But, the driving consensus that formed the consortia is now more diverse, or gone; new members have joined (can't keep it closed forever, anti-trust and all that), and so a few new processes are needed. A consortia either will die in these early phases, or will develop the due processes, and bureaucratic overhead that makes it the equal of a full fledged standards body (at least in terms of costs and time frames, if not in terms of recognition by government, etc.)

The government used to care

In the U.S. this is unfortunately true, the "used to" part. Since 1995 or so, the willingness of the government to make pro-active investments in the standard that the U.S. government needs to do it's work has diminished significantly (along with budget cuts). Oddly this is at the same time that DoD has been moving from internally defined standards, to externally defined standards, as have other agencies. And the same time that industry has been downsizing. Needless to say, there are very few folks with the 3-5 year vision that is needed to see the strategic value of doing standards in the I.T. industry. This may prove a double whammy for U.S. consumers, as government costs escalate with constant re-engineering due to the lack of standards; and the loss the market growth that could improve competition as well as lower costs that would result from significant focused buying power.

Europe accepts government intervention

this is generally true; Europeans don't have quite the wild west, buyer beware approach of the "free market entrepreneurs" of the U.S. They also face the visible impact of their nationalistic differentiation (electrical power, telephone plugs, TV's that don't receive signals, etc.) and can see the value of a broader base of standards. This is all in the face of forces to deregulate, and encourage entrepreneurial spirit, creating a challenging future for European market growth.

What difference does it make? That's the real question, how does it affect my bottom line?

This is the key question that business should ask. And the answers are as follows:

Appropriate standards accelerate market growth (more business, and sooner), and extend the market life cycle (more time to milk the cash cows). Standards can encourage complementary market growth factors to come into play (for example, VHS video tape, encouraging video rentals, encouraging more VHS sales...). And finally, standards can be used to manage government intervention (either discourage intervention where industry has got it's act together; or provide a basis for intervention that already has an established industry consensus.)

Standards are a tool in developing markets ... a concept that does not always come instantly to the mind of engineers. Consumer confidence and the perception of quality, interoperability, and investment protection that can be established with standards can be critical to maximizing markets.