Becoming the industry standard when standardisation is not standardised

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We may be unaware of it, but nearly everything we use, from Wi-Fi and 4G internet connections to central heating and direct debit bank cards, has been through a process of standardisation; they contain standard technologies that are used across many products in each sector. These technologies have become the standard in their field, but how do they become established? How does a new product become the standard against its competitors? Researcher Paul Wiegmann of Rotterdam School of Management, Erasmus University (RSM) has studied how standards come into existence. He explains three basic routes for standardisation, but for products to become ‘the standard’, manufacturers must often combine these routes strategically.

Standardisation plays a role in the development and introduction of new technologies that can have major effects on society, such as mobile telephone networks. The process of standardisation – of implementing and developing technical standards – comes from a consensus of manufacturers, users, interest groups, standards organisations and governments. Important developments, such as making things ‘smart’ rely on standardisation. Without it, many technological developments simply wouldn’t be possible. Paul Wiegmann: “Standardisation’s key aim is limiting the number of options in simultaneous use, which may be ineffective and inefficient. One would expect those involved in standardisation to adopt this approach to its own processes and ensure that standardisation itself is ‘standard’. However, closer inspection reveals that this is not the case.” 

Three modes of standardisation

Wiegmann says that there are three modes of standardisation: committee-based, market-based, and government-based, and explains: “In committee-based standardisation, there are lots of interested parties that try to develop a solution to a problem together.” A well-known example of this type of standardisation is the A-format of paper sizes, like A3 and A4 under the ISO 216 standard.

“In market-based standardisation, companies releasing products onto the market basically compete against each other until one dominates the others,” says Wiegmann. A classic example is the battle for standardised home video equipment. Sony introduced Betamax, JVC developed VHS, and Philips and Grundig came with Video 2000. The latter never achieved a significant market share and was the first to disappear, but Betamax and VHS battled for years until VHS finally became the de facto standard. With government-based standardisation, according to Wiegmann, “the government picks a standard and uses its position at the top of the hierarchy to impose it on the market.” This may happen particularly when political goals, such as combatting climate change, are at stake in a standardisation process.

Mixed modes

Wiegmann noticed a trend for these three modes of standardisation to become increasingly mixed. There are examples in which two modes were used to establish a standard. For example, LED lighting was standardised by a combination of committee and the market, just like USB, Wi-Fi and Blu-ray. Examples of standardisation in which a committee and government were involved are GSM, the ISO 55.180.10 standards for intermodal shipping containers and requirements for medical devices in the EU. And examples of a combination of government and market-based standardisation are 2G mobile telecommunication and the gauges of railway tracks. In some cases, such as the recent standardisation of charging connectors for electric vehicles in the EU, all three modes may be involved simultaneously.

Strategic use

Paul Wiegmann expects multi-mode standardisation will become increasingly prevalent due to the major trend for smart systems, the complexity of these systems, and the variety of stakeholders involved. Wiegmann: “If you want to influence the next standard under development in your industry, you need to be aware of these three modes and how you can use them strategically, given the resources available in your company. "

“For example, engaging in a committee can increase the legitimacy of your proposal. Introducing your product into the market can help you to establish an installed base (a measure of the number of units actually in use). You also need to be aware of what your competitors are doing. If, for example, they form a committee and you don’t join, you are left out of the discussion. And you need to be aware of the standardisation culture in your country and industry. If committees are not used very often, it might be difficult to get others on board."

“If you make good and strategic use of all of these options, you can really increase the chances of getting a standard that reflects your preferences.”

Read the article here: Paul Moritz Wiegmann, Henk J. de Vries, Knut Blind (2017) Multi-mode standardisation: A critical review and a research agenda. Research Policy Volume 46, Issue 8, October 2017, Pages 1370-1386

Rotterdam School of Management, Erasmus University (RSM) is one of Europe’s top 10 business schools. RSM provides ground-breaking research and education furthering excellence in all aspects of management and is based in the international port city of Rotterdam – a vital nexus of business, logistics and trade. RSM’s primary focus is on developing business leaders with international careers who can become a force for positive change by carrying their innovative mindset into a sustainable future. Our first-class range of bachelor, master, MBA, PhD and executive programmes encourage them to become critical, creative, caring and collaborative thinkers and doers. Study information and activities for future students, executives and alumni are also organised from the RSM office in Chengdu, China.

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Special thanks to Orange Motors, Rotterdam, for providing the filming location.

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