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On the Leading Edge… or Behind the Curve?

August 1, 2009
Are you sure you’re doing all you can to gain and maintain your competitive advantage? Of course, you are spending a great deal of effort on increasing efficiency, reducing costs, and looking for that one little ‘thing’ that differentiates you from your competitors and lures customers and new prospects your way. But are you ‘on the leading edge’ or ‘behind the curve’? The NPES Standards Programcan help.

The Economic Benefits of Standardization

The German Institute for Standardization (DIN) commissioned a research study to determine the value of standardization to corporations. The study was developed from questionnaires sent to over 4,000 companies in 10 industry sectors, selected at random, in Germany, Austria and Switzerland. The final report on that study, entitled “The Economic Benefits of Standardization,” was published in August 2000, and the findings continue to ring true…maybe even more so, in today’s competitive economic environment.

One part of the report focused on both the benefits of standards for business and on the benefits for the economy as a whole. In comparing both company-developed standards, and industry-wide standards, the report states that “…company standards have the greatest positive effect on businesses, for they help improve processes. When it comes to the relationship with suppliers and customers, however, industry-wide standards are the main instruments used to lower transaction costs and assert market power over suppliers and customers. In fact, industry-wide standards play a vital role in our increasingly globalized world.”

The report further notes that “…it is significant that standards make a greater contribution to economic growth than patents or licenses, that export-oriented sectors of industry make use of standards as a strategy in opening up new markets, and that standards help technological change.”

Strategic Significance of Standardization

“Companies are generally unaware of the strategic significance of standardization.”

Although the persons involved in the standards development process are aware of the significance of the standards to their company’s success, often this awareness does not extend to the corporate decision makers. In addition, the decision to participate in the standardization process is often made only on the basis of how time consuming and costly this will be.

The economic payback of participation in standards development is not always obvious, but the survey showed that companies actively involved in the standards process are more likely to see both short- and long-term cost benefits than those that do not participate.
 

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