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Standards V. Standardization

standards are good, standardization is bad.
Written by Paul Murphy, Contributor
There's a big difference, and it's very simple: standards are good, standardization is bad.

When an industry develops to standards, what you get is competition, buyer choice, and technical progress. In contrast, when an industry standardizes, what you get is higher costs, reduced competition, and the nickel and diming of customer value.

In effect standards empower buyers, standardization empowers sellers -and it doesn't matter whether you're dealing with airline seat miles or web pages.

Industry structure - airlines versus software for example - does matter in terms of the effect empowering the seller has on the market. If relatively few players are heavily capitalized when standardization sets in, buyers become captive to the seller's revenue needs - and we see things like the forced upgrades the Windows community is looking at as Office 12 and SP3 (aka "vista" ) come in. In contrast, if there are many heavily capitalized players when standardization hits, what happens is that they start competing on cutting costs - so airline food becomes a bag of pretzels and then a $5.00 sandwich. Either way, however, the industry stagnates and buyers lose.

There are similar consequences to industry structure when standards are adopted: heavy capitalization leads to feature based competition with stratified pricing, low capitalization leads to more emphasis on services based product differentiation. Either way, however, the industry grows and buyers win.

Not everything, of course, is as simple as a black and white choice between standards and standardization. Both Fed Ex and UPS, for example, have standardized delivery vehicles working to externally set delivery standards. In the Fed Ex case, however, the customer focused external standard dominates internal standardization - thus the Fed Ex truck serving the Big Mountain resort near Whitefish Montana is a Ford F250 4x4 with serious winter tires. In contrast, UPS reverses that. valuing standardization over customer service: its deliveries to the Big Mountain come up on pretty much the same truck, with the same tires, as the ones they use in Miami.

The bottom line is simple: fundamental human behaviors mean that standards adoption works for the customer, and whether those consequences get expressed as W3C compliant web pages or by using the right truck for the job, doesn't matter. Similarly, standardization invokes different, but equally fundamental, human behaviors that have the effect of shifting control to the seller, and that applies equally to skipping deliveries on bad road days and to forcing non IE customers off the company website.

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