Standardization can confer numerous competitive benefits to businesses, from the efficiencies gained in the manufacturing production line, to the massive productivity gains available to knowledge workers, to the implementation of cutting-edge performance-enhancing technologies such as robotics process automation (RPA), business intelligence (BI) and analytics, and customer-journey mapping and enhancement.
Despite all that potential, it can be difficult to find a consistent and usable definition for standardization in business—let alone the actual standards that result from it.
In this article, we will definitively answer the question, “What is standardization?” We will trace its history and development. We will define and explore the different types of standards. And we will show the numerous benefits and advantages of standardization in business.
Standardization is the process of developing – and implementing – measures, metrics, (or, “standards”) used to specify essential characteristics of just about anything: rules, technologies, behaviors, measurements and countless other items.
However, one of the most important benefits of standardization in business is that throughout history it has always provided a powerful and valuable competitive weapon.
Four categories of standards are helpful for understanding where the competitive advantages of standardization in business can be developed:
Standardization is any process used to develop and implement metrics (i.e., “standards”) that specify essential characteristics of something whose control and uniformity are desired. Thus, standardization can apply to just about anything, including:
While the above summary-level definition is accurate, it lacks sufficient detail to explain the transformative role of standardization in business—both in its historic past and its future potential. Capitalizing on standardization in business requires further definition of standardization processes, as well as the standards that they produce.
Finding this sharper focus is inherently difficult, given this paradox:
The basic irony of standards is the simple fact that there is no standard way to create a standard, nor is there even a standard definition of “standard.”
So while standardization processes, and the standards themselves, are often poorly (even elliptically) defined, they must be recognized. And new ones must also be created. These are both prerequisites to harnessing business-empowering technologies such as robotics process automation (RPA), business intelligence (BI), advanced analytics, machine learning, and artificial intelligence (AI). None of these can live up to their promise of augmenting or even replacing human activities, unless the activities themselves are standardized first.
Some standardization processes are launched intentionally and managed formally. Others develop casually and evolve unmanaged:
Deliberate standardization processes are knowingly and intentionally defined, adopted, and enforced. They’re often centrally managed. They can include documentation, formal reviews, and analysis, all to deliver a set of published standards; indeed, deliberate standardization processes are what most people associate with the term “standardization.” Examples include:
More examples, and details, will be provided in the Types of standards section below.
De facto standardization processes, by contrast, often emerge spontaneously, and proceed in a decentralized fashion. Despite broad input and wide adoption, they’re rarely managed. Instead, they’re typically informal, undocumented, and context- or interpretation-dependent. Thus de facto standardization processes can hide in plain sight; they’re easily overlooked and taken for granted. De facto standardization processes are what most people think of when they hear terms such as “crowd-sourcing.” Examples of de facto standardization processes include:
What the above examples have in common, aside from their spontaneous roots, is the fact that human, rather than machine, interpretation is often essential for even trivial tasks that rely on de facto standardization processes.
While deliberate and de facto standardization processes can exist simultaneously, the distinction between them is simple and stark:
Deliberate standardization processes are subject to greater scrutiny, analysis, and evaluation. Therefore, the standards which emerge from these processes are typically well-tested and explicitly documented. It’s easy to locate their documented outputs, such as:
Similarly, locating the organizations that authored these standards is a straightforward exercise.
By contrast, de facto standardization processes—and the standards that emerge from them—can often be illogical, ineffective, and even counterproductive. When they’re longstanding, widely-held, and unquestioned, they present a significant barrier to the introduction of deliberate standardization—forming the basis of an “anti-standardization bias” that can be difficult to surmount.
Deliberate standardization processes range from the casual and ad hoc to the formal and legal. Depending on the parties developing the standards, as well as their objectives, four broad categories of intentionally-developed standards emerge:
All of these categories—including the especially important fourth one, “Innovators”—will be discussed in greater detail in the Types of standards section later in this article.
Among the less-obvious de facto standardization processes which persist in business today, five categories can be defined:
 Russel, Andrew, and Vinsel, Lee, “The Joy of Standards,” The New York Times, February 16, 2019.
The history of standardization, just like the practice of standardization, is far from written. It is still evolving. A conventional history of standards in business is rife with gaps: It begins with the evolution of weights and measures—and then leaps forward thousands of years to the industrial revolution that began in the late 1700s. It typically ends with a dry review of the regulatory bodies (such as Underwriters Laboratories) that emerged in the early 1900s to set standards for power, communications, and a host of then-emerging technologies. But that’s not a history of standardization; it’s largely a history of technology, with an institutional history of standards organizations bolted onto it.
Such an approach to the history of standards in business overlooks three essential insights that are vital to its formation:
Laws. In de jure (“by right”) development, standards are mandated by legislation, rulings, regulations, and interpretations thereof to meet the needs of courts and enforcement bodies charged with overseeing contracts, agreements, and compliance. Examples include:
This source of standardization in business has persisted throughout history. Seven thousand years ago, in ancient Babylon, clay tablets were employed to track merchants’ accounting figures. And in the United States in 1917, for example, there were 994,840 varieties of axes available for sale. Under Herbert Hoover’s newly-created National Bureau of Standards, a far smaller number was mandated—along with such mundane yet important items as nuts, bolts, and the wrenches to turn them.
Voluntary development. Here, standards are created intentionally and implemented via collaboration and cooperation. Examples include:
Again, the influence of these sources can be traced throughout history. Ancient Egyptians divided the work on the pyramids among skilled craftsmen, artisans, stonecutters, and porters—precursors of later trade guilds. Modern examples include crowd-sourced computer code, such as Linux and HTML.
Preferences. Contrasted to the de jure (“by right”) development described above, preference-driven standards are more de facto (“in effect”). They emerge as a result of widely-preferred work methods, technology, and product and customer characteristics. They may be catalyzed by a diversity of factors, whether planned or unintended, such as convenience, market forces, tradition, and perception. Examples include:
Preferences, as the basis of standards, can be traced back for decades. The Society of Automotive Engineers, founded in 1905, was instrumental in standardizing everything from the size of wrenches to the viscosity of motor oil; while modern preference-based standards for computers include DOS, and for phones, systems such as iOS and Android.
Innovators. This is the most important category, as it pertains to business transformation. Individuals and businesses alike perceive standards as an opportunity to achieve a competitive advantage, and continually seek out new ways to apply the principle of standardization. This enables both specialization and division of labor, among workers and machines. Examples are manifold:
Innovators and their standards have re-shaped the history of business and competition. Consider Adam Smith’s “pin factory” cited above; consider, too, how modern robotic process automation (RPA) allows individual knowledge workers to configure and install software robots—without the need for IT skills or coding.
Standards are often created on a limited basis, to serve an in-house need, or a single business’ strategic objective (Category 4, “Innovators”). Later, if they succeed, these can evolve to become de facto industry standards (Category 3, “Preferences”). Over time, these can be further institutionalized by voluntary industry organizations (Category 2, “Voluntary Standards”). Ultimately, these standards might be mandated into contractual agreements and regulatory standards (Category 1, “Laws”).
Building codes represent a good example of this type of organic evolution. Other, less obvious examples include many elements taken for granted today in business: accounting rules, the definitions of assets, costs, even “facts,” and the means to display these: bar charts and pie charts.
 Heitman, William, The Knowledge Work Factory, New York: McGraw-Hill, 2019, pp. 25, 56.
 “What Does SAE Stand for in Motor Oil?”: https://www.yourmechanic.com/article/what-does-sae-stand-for-in-motor-oil
 Heitman, William, The Knowledge Work Factory, New York: McGraw-Hill, 2019, pp. 53-54.
 Heitman, William, The Knowledge Work Factory, New York: McGraw-Hill, 2019, p. 59.
Is it possible to create a systematic, step-by-step process to continually replace informal, inefficient work methods, or “rules of thumb,” with rigorous, scientifically developed standards? Could a process-standardization approach be developed to escape the unpredictability of random, one-off standardization “breakthroughs”? Doing so would continuously increase the benefits of standardization in business—and accelerate automation to enable more digital transformation.
In fact, Frederick Winslow Taylor (1856-1915) spent most of his career developing and promoting precisely that process-standardization approach—minus the emphasis on automation. He published his seminal work in 1911, entitled The Principles of Scientific Management. Although this masterpiece has historically been misinterpreted, under-utilized, and overlooked, Taylor’s insistence on scientifically developed, quantitative standards for work activities is directly applicable for businesses struggling to identify digital transformation opportunities.
Taylor noticed the vast drain on business efficiency that resulted from management’s widespread reliance on common rules of thumb when rigorous, scientifically accurate standards could be feasibly developed. And so, by his own 1911 description, Taylor set out to create a management process-standardization approach based on “…the substitution of scientific, for rule-of-thumb methods in even the smallest details of the work… (to achieve)…enormous saving of time and…increase in the output…”.
More importantly for digital transformation today, Taylor noticed that the intangible waste of avoidable work effort was difficult to perceive, because it left nothing behind: no scrap piles, no returned goods. Appreciating these vast, stealthy losses required, according to Taylor, “an effort of the imagination.”
“Rules of thumb” is a very effective way to understand the “unstandardized” problem. While businesses will often push back against that portrayal, the fact is that existing work is not un-standardized. Rather, it is under-standardized. That’s because it operates according to rules-of-thumb standards. Rules of thumb are like a least-effort solution to standardizing—a stark contrast to the development of quantified, scientific standards.
Businesses consciously adhere to a wide range of diverse, deliberately-developed standards—some voluntary, others mandated by law. At the same time, they often seek to deliberately establish standards as a part of their competitive strategy. If successful, the business might establish its product or service as a wider standard for the industry, the region, or an entire category. Consider the examples below:
Generic standards include a product or service that defines an entire, often new, class of similar things:
Brand standards include the visual, audio, or linguistic characteristics which define a company or category of products:
Some brand standards are so powerful that the owners temporarily modify them, disrupting standard customer expectations to increase brand recognition and awareness:
Industry standards are generally-accepted practices and/or technical specifications adopted across an entire industry:
Market standards are similar to industry standards (above), except that they pertain to market segments, which might cut across industries:
Standardization can empower business performance by enabling effective management of the “intangible assets” in knowledge-work business—which accounts for 60 percent of the average S&P business today.
Historically, the most valuable benefits of standardization in business deliver breakthrough competitive advantage for workers, businesses, and entire industries. Over the course of two and a half centuries, landmark breakthroughs in business standardization have been famously documented for manufacturing straight pins (Adam Smith, 1776), laying bricks (Frank Gilbreth, 1909), and assembling automobiles (Henry Ford, 1913).
Each of these standardization breakthroughs replaced informal, inefficient work methods with more rigorously—even “scientifically”—developed standards. Over the course of time, the benefits of standardization in business from these insights have been continuously harvested in the form of increased levels of automation; even brick laying is increasingly performed by robots. These standardization breakthroughs have not been overlooked; they continue to be transformational.
The single standardization process most relevant to business is that driven by innovation, as described in the History of standardization section above. In this instance, businesses or entrepreneurs develop what they believe will be a “better mousetrap”—one that impels customers to “beat a path to their door”, e.g., a faster algorithm, a tastier formula, or a more efficient supply chain.
Henry Ford noted in his autobiography that “the greater the subdivision of industry, the more likely that there would be work for everyone.” This actually speaks to the activity-level standardization in manufacturing, and the numerous benefits it confers upon the company:
In modern production operations, these brief, consistently-timed activities deliver numerous benefits, including:
The very lack of standardization which persists in knowledge-work operations today points up a vast opportunity for benefits of standardization in business. The lack of standardization among knowledge workers squanders some $3 trillion in value among the Fortune 500 alone:
By contrast, the elimination of virtuous waste, due to rigorous standardization of knowledge-work activities, can transform this liability into an asset.
  Heitman, William, The Knowledge Work Factory, New York: McGraw-Hill, 2019, p. 236
 Heitman, William, The Knowledge Work Factory, New York: McGraw-Hill, 2019, p. 236.
 Heitman, William, The Knowledge Work Factory, New York: McGraw-Hill, 2019, p. 3
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