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Michael G. Gorman is director of Strategic Standardization Management at Ameritech in Chicago, Ill. He leads a team charged with ensuring that customers' needs are addressed as the information industry develops new standards for telephone, video and wireless communications services. Gorman helped establish the Ameritech Joint Program with Bell Northern Research in Ottawa, Ontario, Canada. He began his career with Ameritech in 1966 and has held a number of assignments in planning, operations management, marketing, carrier account management and strategy.
"Standards Are Everything"
That's how one industry expert sums up the issue of standards in the information industry. His assertion may be an overstatement used for effect, but it points to an essential truth: standardization is one of the most problematic issues facing Ameritech and the information industry.
How the standardization issue is resolved will influence the shape of the future for the industry and society. It will help determine how effectively and quickly powerful applications of information and communications technology are made available to the world.
Ameritech has staked its future on the power of these technologies to transform business, education, entertainment, government and health care. But this great potential will be realized only when the industry reaches genuine agreement on a multitude of standards.
A Company Immersed in Change
Based in Chicago, Ill., Ameritech is a leading supplier of communications and information services. Its primary market includes about 12 million customers in Illinois, Indiana, Michigan, Ohio and Wisconsin-but it's more than a regional company. Ameritech also has major operations in Poland, Hungary, Norway and New Zealand. The company has a work force of approximately 66,000 employees and total corporate assets of more than $23 billion. Record-level 1993 revenue totaled almost $12 billion.
But the reality behind those statistics is much more compelling. Ameritech is a company immersed in change-a company continually engaged in meeting new customer demands and establishing new measures of success in a rapidly evolving industry.
Standardization will play a critical role in this difficult and uncertain environment. According to W. Patrick Campbell, Ameritech's executive vice president of corporate strategy and business development, "As the communications revolution unfolds, we need to ensure that the standardization process makes it easier for customers to use telephone, video and wireless communications services."
Consequently, the company has embarked on an aggressive program to encourage the development of industry standards that will help the industry serve its customers. This program has both external and internal objectives.
Externally, Ameritech is working to help develop industry standards to ensure that the vision of a new national telecommunications infrastructure, a "network of networks," can be realized. In essence, this vision is based on the belief that the nation will require an open, interconnected communications environment that integrates a broad range of wireless and fiber-optic/copper networks and capitalizes on the core competencies and resources of many companies, industries and institutions.
Internally, Ameritech has established standardization management as a key initiative. "We must view standards development from the customer's perspective, in addition to the traditional focus on technical considerations," says Campbell.
This new focus signifies a major change at the company and dramatically differentiates Ameritech from many other communications providers. It also demonstrates how the radical changes transforming the information industry are forcing communications companies to rethink their basi business practices.
The Birth of a New Industry
Yesterday's communications industry has died, rendered obsolete by new technology, new partnerships, and new products and services. Communications companies also face extinction if they fail to adapt and take advantage of powerful forces reshaping the world: the convergence of voice, data and video; globalization of the information and communications marketplace; growing competition; cross-industry alliances; advancing technology; and rising customer expectations.
In years past, the communications industry was highly compartmentalized. Each technology and company had its place, and few saw any advantages to the possible synergy between technologies or industries.
Now, everything is blending. New technologies integrate the strengths of old technologies, and powerful companies scramble to define their new roles in this changed world. Telephones equipped with video screens and computer chips become devices for video-conferencing, home shopping and remote banking. Telecommunication companies, cable companies and entertainment conglomerates merge or initiate joint ventures. And the industry stitches together vast global networks from a host of wired and wireless facilities.
An environment of mergers and strategic alliances, hybrid technologies and collapsed barriers demands standardization. How else could this blending of companies, technologies and networks work effectively?
Standard Intersections for the Information Superhighway
In this environment, interoperability is key. "The new communications infrastructure will combine many separate technologies," says Campbell. "Telephone, television, cable, personal computer, radio, facsimile, imaging, camera technologies-all will need to work together in one system that consumers and businesses can operate easily." For example, local exchange carriers, interexchange carriers and others are introducing asynchronous transfer mode (ATM) switches into their networks. This networking technology enables transmission of high-bandwidth integrated video, data and voice communications with the ease with which voice signals are transmitted today.
The cost-effectiveness of using the public switched network for video and data transmission will be a tremendous boon to businesses and institutions, which then will be able to avoid more costly approaches such as private line networks. But those wonderful benefits will not be fully realized if all the ATM switches installed by different companies in their various networks do not work together in a seamless fashion.
To Campbell, the seamless movement from technology to technology, network to network, has enormous potential. The introduction of interactive video services to the home will require the cooperation of numerous content and transport providers. They also will have to work together to develop standard, user-friendly interfaces.
"We are proposing to deliver advanced services to a nation in which 16 percent of households have at least one VCR flashing 12:00, more than 50 percent of the population has never heard of the information superhighway and 25 percent has never used a computer," said Campbell. "Simplicity, uniformity and ease-of-use will be essential to the creation of this information infrastructure."
A Tough Time for Cooperation
Developing standard interfaces may not be an easy task. At a time when the need for agreement and cooperation is greatest, the industry has never been more divided. "The Bell system had the ability to create its own de facto standards since it delivered most of the nation's telecommunications," says Tom Hester, Ameritech executive vice president and general counsel. "With the divestiture of AT&T, the responsibility shifted to the regional Bell companies. Competition among the Bells will make standards setting even more problematic."
A New Corporate Structure and a New Strategic Initiative
To meet this challenge, Ameritech has made standards an essential element of its comprehensive effort to rebuild the company and make customer service the top priority. Just as Ameritech has created a new corporate structure to shift primary decision-making power from network organizations to marketing units, the company is transforming its standards process to focus on the customer.
In years past, the standards arena was often viewed as a sphere exclusively for technicians and engineers. The customer service implications of standards were seldom considered, but who benefits most from standardization? The customer benefits from standards setting that makes products and services more effective, universal and user-friendly.
Consider the role that standards have played in Ameritech's introduction of screen-based telephones. A screen telephone has an alphanumeric display and a keyboard that enables users to pay bills electronically and bank from home. They also perform call management phone services, such as call forwarding or three-way calling, at the push of a button. Screen-based telephones are designed to give users computer-like capabilities from a device as simple to use as a touch-tone phone. The success of these telephones will depend on the wide acceptance of a standard that will allow users to access a rich variety of shopping, information and financial services. That's why Ameritech has encouraged service providers and hardware manufacturers to adopt a standard-the ADSI (Analog Display Services Interface) standard-to ensure that users can reap all the benefits of this new technology.
Analysis of customer acceptance of screen-based telephones and other innovative technologies has demonstrated the importance of strategic standardization. It also has proven how important it is to address the issue from a company-wide perspective.
The Senior Leadership Program Standards Team
A Senior Leadership Team was formed to deliver a strategy to implement a company-wide process for standards. To accomplish its mission, the team undertook an extensive data-gathering exercise and deployed various sub-teams to explore targeted areas, such as standards-setting bodies, Ameritech's existing practices and the standards practices of vendors.
Benchmarking proved to be one of the most valuable tools for the team. Team members studied best-in-class management practices from 12 outside firms including Motorola, Apple Computer, Honda, Quantum, Sun Microsystems, Polaroid and GTE. The team also reviewed the American National Standards Institute's (ANSI's) benchmarking study of 28 companies in various industries and ANSI's focus group studies of 35 Fortune 500 companies.
To take full advantage of these opportunities, the team offered three basic recommendations that have since been implemented: adopt standardization as a key customer service tool; clearly link standards activities to business, products and technology goals; and establish a Strategic Standardization Management Group.
Strategic Standardization Management Group
The four-person Strategic Standardization Management Group has taken over implementation of the leadership team's recommendations. The team reports directly to Campbell, who is responsible for Ameritech's overall strategy. The group's mission is to ensure that the standardization process furthers Ameritech's three-part corporate strategy: serve the customer better than ever within the profile of today's business; serve the customer with an expanded product-and-service profile; and pursue focused and disciplined investments outside the Midwest.
When he announced the formation of the team, Campbell was quick to emphasize the team's role as an interface between Ameritech's business units and the company's technical experts who participate in industry standards-making committees. "The team will work with all our business units as they develop new products, to ensure they will be simple to use and compatible with each other," Campbell said.
Customer acceptance of these new offerings is critical. By exploring the new technology's ease of use, Ameritech intends to help consumers and businesses move up on the value chain of products and services. To Campbell, the communications companies of the future will be more than carriers of information; they will also focus on the content of what is carried. The challenge will be to take bits of information-words in a book, pictures on film or data in an archive-and present them in compelling ways that surpass present ways of experiencing them.
As the regulatory environment changes to allow greater freedom and competition in the industry, the standardization team will work with industry stakeholders to ensure Ameritech customers' needs are addressed as the industry develops these new offerings.
A Powerful Alchemy
Ameritech's insistence on making strategic standardization a top priority underscores the importance of this focus to customer service and business success. This new emphasis on standardization also reflects the company's commitment to harvest the vast potential of new technologies by focusing on customer needs.
Ameritech judges technological innovations not according to esoteric specifications, but in terms of benefits-benefits to customers and communities. The company delights not in the faster computer, the more intricate formula or the supremely sensitive machine, but in better schools, more responsive businesses and an improved quality of life.
The merging of computer, telephone and television technologies creates a powerful alchemy that can fundamentally transform education, entertainment, health care, publishing, banking, shopping and home security. But this rich prospect will be realized only as the industry recognizes that the applications of the technology are more important than the technology itself.
Strategic standardization ensures that technology does not get beyond the customer it is intended to serve.
Industry Standards-A Key Factor for Market Success
How AMP Addresses the Critical Element
by Henry Line
Henry Line is director of Global Product Standards for AMP Incorporated. He is responsible for developing and implementing AMP's product standards program worldwide. Since joining AMP in 1967, he has served as basic product manager, manager of product engineering, manager of business planning and as an analyst on AMP's corporate staff in the area of strategic planning and acquisition analysis. Line has a bachelor's degree in physics, engineering administration, and business administration.
AMP is the world's leader in electrical/electronic interconnection devices with sales in 1992 of $3.34 billion. In a market estimated to be $18 billion to $20 billion and growing six percent to nine percent a year, AMP is estimated to have about 18 percent to 19 percent market share. With 26,800 employees located in 35 countries, AMP ranked 148th in sales and 59th in net income in the 1992 Fortune 500 list. A critical factor in AMP's success is its ongoing investment in research, development and engineering (RD&E), which reached a record $272 million in 1992 (more than eight percent of sales) and more than $2 billion in the last decade. As a result of this investment, AMP receives between 275 and 300 U.S. patents each year- recently ranking it 20th in the United States and 38th worldwide. A recent study in Business Week ranked AMP 24th in the world among all corporations based on patent strength.
Complementing AMP's intense focus on RD&E, especially in recent years, has been its participation in industry standards development committees around the world. The focus of this article is to explain why we at AMP believe standards are a critical factor in business success and to describe some of the key features of AMP's approach to standards development.
The Standards Imperative-Standards as Change Agents
Standards serve a dual role, with each role appearing to be in conflict with the other. On the one hand, standards establish viability and provide stability to an emerging industry but, conversely, they serve as change agents. Their ability to accommodate change in an orderly fashion is an invaluable tool that both allows and encourages industries to implement new advances in technology.
Standards serve as agents for change in other areas as well. Consider the following list of external influences on business in today's environment.
Critical External Business Factors
The biggest challenge to corporations today is to manage the changes taking place all around them. Tom Peters, author of In Search of Excellence, says it this way: "The only winning companies will be constantly adapting ones-organizations that are not only able to respond quickly to shifting circumstances, but to proactively take advantage of them."
Participating in standards development is one way to help manage this change and, at the same time, learn about the latest activities in a particular area. Closely following these events gives a company the maximum opportunity to plan as well as react, hopefully finding competitive advantages.
Related to this list of factors is another interesting observation. In 1990, the International Organization for Standardization and the International Electrotechnical Commission (ISO/IEC) jointly published a study entitled "A Vision for the Future: Standards Needs for Emerging Technologies." It was a forecast of international standardization needs based on a comprehensive global survey covering 12 major technology sectors. There were 2,744 respondents from 40 countries. Consider the following list of areas identified in this report as requiring new standards, either then or in the near future. Keep in mind that this is only a partial list of the areas addressed by the report. What is important to understand is that in each of these areas, the standards development process is well under way.
As you can well imagine, each of these areas is important to AMP's new product development activities. So today's new reality, for even the most high-tech companies, is that the marketplace is already demanding standards, regardless of how technically advanced the area seems to be. The point of this discussion is that standards are at the heart of the changes taking place external to the company and will certainly be drivers of the changes that must take place internally as well.
The Anticipatory Nature of Standards
If we take this argument one step further, there is a fundamental characteristic of today's emerging standards that underscores the reasons AMP places so much emphasis on this activity. Standards in our business today often precede the products and systems they describe. Because of the complexity and cost of much of today's equipment, the users of these products are demanding standards to assure interconnectability before they will purchase new systems. This is a key imperative imposed by standards on business that will be discussed further in the next section.
That's a distinct change from our experience of the past. In the years following AMP's founding in 1941, our standards activities were largely focused on MlL-Specs and MIL-Standards. These documents, developed by and for the government, were vehicles to help government and defense agencies purchase products. Frequently, these specifications were developed years after the product first appeared in the marketplace. As purchasing documents, they rigorously described the product, focusing on form, fit and function. While these areas remain important to us, the impact of standards on our business changed dramatically in the 1980s with the advent of what author John Naisbitt described in Megatrends as the "Information Society." This phenomenon, more than any other single event, reset the focus of AMP's standards-making work.
The Standards Imperative
The coming together of data systems and telecommunications into what we know today as information technology spawned a proliferation of very expensive electronic equipment. Unfortunately, the purchasers of these devices quickly found that the equipment often couldn't be interconnected.
The market reaction was swift. Users who wanted computer and telecommunications systems tailored to their requirements, or who didn't want to be tied to only one supplier, demanded that components from different manufacturers be interconnectable. The only way to ensure this was through product standards. As a result, a whole new discipline was born, one that strikes at the very heart of AMP's business and, in fact, all businesses.
The anticipatory nature of standards forcefully underscores the impact of standards on a business. Because of the complexity and cost of many of today's information technology products, both developers and purchasers are now demanding standards that assure interconnectability before the products are taken to market. Planning new products without regard to applicable standards, especially those under development, is at best a risky approach. For these reasons, standards have a direct influence on a company's product development activities. Our experience has been that this phenomenon applies to most other technology-driven industries as well.
From this vantage point, the issue becomes quite simple. It's not "if" AMP, or any other leading company, needs to be involved in the standards-making process. The question is, "How best to get involved?"
Strategic Standards Management in AMP-Horizontal Standards Work
To begin the discussion of strategic standardization in AMP, I'll start with some activities that don't relate directly to the development of product standards but, nonetheless, are of great concern to us. We refer to them as "horizontal" standards activities because they cross many product and industry boundaries. We have taken a much greater interest in this work lately because, while the results of these activities seem to start out as voluntary standards, they often end up taking the form of regulations.
Three specific activities are of special interest to us: Global quality standards development; global environmental requirements being advanced, especially by Europe and; the onerous global intellectual property provisions being advanced by the European Telecommunications Standards Institute (ETSI).
Although AMP has nearly completed its program to implement ISO 9000 around the globe, it does so with some mixed emotions. While companies with little or no quality management in place will likely find the ISO 9000 series to be a good quality certification system, companies with well-established, sophisticated quality programs question whether ISO 9000 quality certification will add value to their products. For example, the current version of ISO 9000 depends largely upon quality inspection techniques and doesn't require such things as statistical quality control or other features of today's total quality management (TQM) systems. Knowing that life preservers made of concrete can satisfy ISO 9000 requirements-which they can-should not exactly inspire confidence. Conformance to requirements that make no sense with respect to a product's intended application is the antithesis of what should be expected of a quality certification program.
We believe future iterations of the ISO 9000 requirements will be better served by a stronger voice from industry. Accordingly, we have joined the U.S. Technical Advisory Group of Technical Committee (TC) 176 on Quality Management and Quality Assurance with the hope that we can contribute to the progress of this work as it finally begins to implement TQM and other tools that can improve quality.
We do ascribe to the Malcolm Baldrige National Quality Award criteria. Incorporating them into our business has not only improved our quality, but has resulted in one of our divisions receiving a site visit during this year's national competition. Only four out of the 32 entrants in the manufacturing category received a site visit, so AMP is understandably proud.
AMP is also proud of the work it's doing relating to the environment. While AMP is a strong advocate of protecting and preserving the environment, and has received commendation in the press and from several investor research organizations for its work in this regard, we believe that doing so must be based on sound scientific and economic principles. Environmental requirements now in place, or being proposed, must be considered during new product development-from concept all the way through to recyclability at the end of the product's life.
For these reasons, the requirements that emerge from the global committees working on environmental issues will directly impact AMP's products. Here too, AMP is populating these committees to work toward assuring that the resulting requirements are for the greatest good of all.
AMP shares the concerns of many leading edge companies over the policies contained in ETSI's proposed Intellectual Property Rights Undertaking. We believe they run counter to current internationally accepted policies for protecting intellectual property and have notified both ETSI and the EEC of our objections. In addition, we will continue to work closely with the Computer Business Equipment Manufacturers Association, the Electronics Industries Association and the other associations in which we are active, with the hope that jointly we can bring sense to these policies.
Product Standards Development Work
Following is a brief overview of AMP's participation in the industry product standards development process. As indicated earlier, it is highly improbable in today's markets that a supplier can achieve dominance with a product that flies in the face of industry standards.
The lesson learned by the Sony Corp. with their BetaMax system is an ideal example of what can happen if a company attempts to go it alone. (For a brief but excellent description of this, see Forbes magazine, Jan. 20, 1992, page 82.) This article highlights why AMP intends to make its voice heard in those key industry committees developing standards that set requirements for products we make.
To assure that we effectively carry this out, we have included standards considerations in the strategic plans of every major AMP business unit around the world. We also make sure that our standards people are in attendance during the annual presentation of these strategic plans to executive management.
This process helps assure excellent interaction between our standards professionals and the rest of the company, most notably the engineering community. It also helps us identify the committees in which we should be working and the opportunities they present us.
Standards work is too important to be left only in the hands of the standards professional. Effective committee work depends upon continuous and close cooperation between our corporate staff of over a dozen standards professionals and our engineering and technical community consisting of over 2,000 people with technical degrees. Our standards staff identifies the committees and their needs and provides training on how to participate effectively and legally.
It is these standards-making professionals who are responsible for bringing together all within AMP who need to be part of the standards strategy sessions wherein we jointly chart our course for satisfying committee requirements. With the direction and guidance of our standards experts, it is our engineers who represent the technical merits of AMP's products during the intense committee deliberations that determine which product best meets the need of the marketplace.
To help prepare our committee attendees to participate effectively in standards committee meetings, the AMP standards staff has assembled a comprehensive training manual to assist those who represent us. Our eight-hour standards training course covers such things as the importance of standards to our business, how to prepare for and follow up after meetings, Robert's Rules of Order, and the actions to avoid from an anti-trust perspective.
So far we've used this manual in training classes involving more than 100 people from five countries. We are flattered that the American National Standards Institute (ANSI) is interested in using our material as a starting point in the development of a national training program to help improve the global competitiveness of the U.S. standards development process.
Through these in-house "partnerships" of the standards professionals with their technical counterparts, AMP participates in about 450 standards-setting bodies throughout the world. These include both ANSI-accredited committees and numerous industry consortia that are addressing the type of products manufactured by AMP.
It's important to understand that a supplier can very seldom dictate the decision of these committees as to which product should be in the standard. It is the users-in this discussion, our customers-who set the requirements and make the decision. Accordingly, we must make sure that committee participants are not only technically talented, but are skilled at communicating and negotiating. It also helps tremendously if they know their customers and each one's requirements.
Global Coordination of Our Standards Work
In recent years, AMP's most significant standards challenges have come from outside the United States. Obviously, much of this activity has come from Europe, in particular, from the two principle standards-making bodies of the EC (the European Committee for Standardization and the European Committee for Electrotechnical Standardization), the European Telecommunications Standards Institute and others. In fact, the U.S. Department of Commerce has indicated in a recently published document that U.S. standards are diminishing in importance in comparison to international standards, a fact that is true for any country's national standards.
For these reasons, and to support our global objectives and those of our global customers, AMP formed a Global Working Group for Standards two years ago. It consists of one key individual from each of our global companies located in countries where standards-making activities are especially critical. So far this group includes representatives from the United States, Japan and five countries in Europe. Others will be added as they are needed.
The purpose of this working group is to set the direction and assure coordination of our global standards programs in the committees around the world. We never again want to hear that the only people at cross purposes with each other in international meetings were AMP representatives from different countries, as was a reported occurrence some years ago!
This group has documented its plans in a comprehensive and rather impressive manual that is updated twice annually. With two global meetings a year, frequent global teleconferences and an effective electronic communications network in place, the Global Working Group is making great progress.
Doing things right is of little use if no one knows you're doing them. A successful standards program requires an abundance of communication. AMP has been involved in some aspect of standards since our founding in 1941, although the scope has changed dramatically in the past eight to 10 years. As previously stated, almost all of our focus before 1980 had been on military and safety standards.
We have had quite a job bringing about the changes made necessary by the increased importance of regional and global standards and the accelerating rate of technological change. The key to carrying this out has been the commitment to standards that is held by our executive management. We widely communicate their commitment to our requirements around the world to all in AMP who need to know about our standards activities and, more importantly to those who will be called upon to participate in them.
To this end, the monthly reports of our Global Product Standards department are circulated globally to more than 300 people, with regular electronic communication of key events to even more. The department distributes special notices called Standards Alerts to a broad audience, and has made a number of standards-related electronic databases available to over 8,000 of our people around the world.
What proved to be especially effective in getting the message out was the unique Global Standards Day Workshop that AMP held early this summer. Over 250 of our people from throughout the world attended. Among those who made presentations at this highly successful forum were members of AMP's executive management, the president of the American National Standards Institute, and both the president and secretary general of the IEC. In addition, our standards department prepared over 600 pages of information that acquainted attendees with current standards activities relating to their product and industry assignments.
One of the things we've learned is that we cannot communicate too much, especially with those outside our professional staff. For most of them, standards work is in addition to their regular assignments. Accordingly, the standards necessities sometimes can get overlooked. So communication-globally-needs to be stressed, and those responsible for doing so must be equipped with the tools they need to carry it out as easily and effectively as possible.
One of the tools we're currently working on is a broader implementation of full motion video conferencing. We think this will not only encourage more global standards meetings, but will be a big cost cutter as well.
Several critical points we have learned about the importance of standards to business success are: Standards are a market-driven phenomenon which create new and huge markets for the products they describe. Suppliers alone cannot assure that a particular product will appear in a new standard. Only by working closely with the users of that product-in and out of the committee-can this be done.
We believe that standards hasten the implementation of new technology. Because the marketplace abhors standards that don't meet market requirements, and because today's standards often precede the products they describe, the latest advances in technology are increasingly embraced in the new requirements. Furthermore, since most standards define requirements-that is, form, fit and function, and not exact design features-there is ample opportunity for manufacturers to differentiate their products through superior implementation of technology.
Owners of proprietary products should not view standards as a threat. Standards committees are permitted to select patented products, provided the patent holder agrees to grant reasonable and nondiscriminatory licenses. If, however, the patent holder refuses to license, they likely will find themselves competing against the product selected by the committee. So there's a powerful argument to suggest that the best way to protect and exploit your technology is to advance it in the committees.
It must be mentioned that standards-making can be expensive. Obviously, the out-of-pocket costs incurred, largely travel related, are a function of the number of committees in which you participate. But you need to know that committee participation is a long-term commitment, and regular attendance at the meetings is a requirement. Most committees look with disdain upon members who show up only at the meetings when a critical vote is to be taken. In fact, in some instances, members can lose voting rights if they fail to satisfy minimum attendance requirements.
At AMP we look upon standards making as an important part of the individual's professional development and recognize our full-time standards experts as career professionals. We call upon only our most qualified people to take part in these activities.
Because voluntary standards are not an end in themselves, they must be a part of the company's global market strategy and new product development efforts. Standards-making activities are directed at the new product requirements of our customers, who are rapidly becoming more global. For these reasons, AMP's Global Product Standards department reports to the corporate vice president of Global Marketing.
It must be pointed out that those companies who participate in standards have a choice. For any given committee, they can choose to participate in the many meetings that finally lead to a new standard or they can choose to follow the work and implement the standard when it has been completed. One option is chosen as often as another. However, for all the above reasons, and for many others, we've observed that companies who either are, or would aspire to be market leaders, usually are at the vanguard of standards development work. What's important is that a company chooses a level of participation that best meets its needs and resources.
We mentioned our concerns with current activities in environmental regulation, with the emergence of ever more numerous and stringent quality and certification requirements that have been put together with little contribution from business, and about ETSI's confiscatory policies governing intellectual property. To this list we add our concerns with Washington, which seems all too eager to take a leadership role in the U.S. voluntary standards-making process. While a partnership between government and industry must be a requirement, government control of standards-making must not. All involved in the standards-making process must work together toward finding wisdom in a partnership that best serves our nation. Participation by companies in those standards-writing industry associations that impact their business and in the American National Standards Institute is a good first step to preserving the most successful voluntary standards-making process in the world today.
The international standards movement is playing an increasingly critical role both in the advancement of technology and in the progress towards a higher standard of living for everyone. We believe that companies expecting to prosper during the coming years must be fully involved in this dynamic movement or they will be left behind.
AMP's Participation in ASTM Committees and Use of ASTM Standards
ASTM standards are used to define the minimum requirements for all of AMP's test procedures and raw material specifications. For this reason, AMP purchases a complete set of ASTM standards each year. In addition, we subscribe to ASTM standards through another corporate level department, receiving them in CD-ROM format. Requests by other departments for ASTM documents are received weekly by our Corporate Engineering Standards Department.
In addition, AMP participates in at least three ASTM committees:
B-4 on Materials for Thermostats, Electrical Heating and Resistance, Contacts and Connectors; B-8 on Metallic and Inorganic Coatings; and E-34 on Occupational Health and Safety.
We find that our involvement in ASTM and the use of ASTM standards have been a great contributor to our success.
Caterpillar's Strategy for Enabling Global Markets with Standards
by Paul E. McKim
Paul E. McKim is external standardization manager, Standards and Regulations, Technical Services Division at Caterpillar Inc., Peoria, Ill. He is responsible for coordinating the involvement of Caterpillar and technical people in outside standards development activities in national and international standards organizations.
None of us can go through a day without being affected by standards. The concept of modern civilized society requires agreements on standards that affect virtually everything we do. Formal technical standards have been in existence for over 100 years. They used to be based on tedious technical jargon and of little interest to most people. Times have changed. Interest in standards has moved from specific technical areas to the corporate boardroom. Today's standards are much broader in scope and should be the building blocks for a broader business issue-strategic standardization.
Caterpillar views standards as enablers for trade in the marketplace. In an ideal world, customers and producers of a given product or service would use the same set of accepted standards. Caterpillar, like most companies, has used standards extensively throughout our business. These standards affect every aspect of the company. Standards provide a way of defining the product, the basis for manufacturing operations, the essential language for defining components produced by our large network of suppliers, the foundation for (and the assessment of conformance to) internal procedures, and the criteria for customers to evaluate our product.
The scope of standards-related activity has expanded in the last few years. New standards are migrating toward broader (and more controversial) issues such as environment, healthcare, safety, and consumer protection. Some of these standards are the basis for regulatory activity.
Companies have developed internal (proprietary and non-proprietary) standards. Each company used to take pride in the various internal standards that could set it apart from other companies. In the 1970s, most of the standards in the portfolio for a company were internally created and maintained. The standards environment has changed; the focus on standards has shifted toward externally created (and owned) standards.
What is causing this shift away from internally developed and controlled standards? Why change to external standards? There are many possible reasons that vary by industry and market sector. One major factor for Caterpillar has been the change in the market environment from local customer to global customer focus. To be competitive, companies have changed their focus more toward customer needs. Customers base purchasing decisions on real or perceived value for the product or service based on their unique set of expectations. These expectations have become more sophisticated as technology has advanced and more varied as the marketplace becomes global.
Customers cannot rely on company trademarks as the only basis of trust in the product. As standards become more prolific and as governments create standards-based regulations, we see a growing need for harmonization of similar or duplicative standards. The customer will be best served if we can agree on a set of "internationally recognized and technically valid standards." This is a strategic imperative for companies to remain competitive.
Caterpillar supports an efficient voluntary consensus standards development process that creates uniform internationally recognized, technically valid standards. This process provides standards that are vital to our future as they tend to provide market access, advance technology, and reduce regulations. Caterpillar supports active participation in the development of standards that are vital to its future. Managers should encourage their employees to participate where the need is identified and the employee has the expertise and credentials to contribute. Management has accountability for current and future standards that impact their products, services, and customers; and for developing and implementing strategies to address standards development issues.
The most basic definition of a standard is: an agreement, or a way of communicating, between two or more people or entities. Caterpillar has developed internal standards as a method of communicating within the company and for doing business with suppliers or vendors. Standards became an extension of our drawing (documentation) to prescribe additional requirements. As we've grown in size and complexity, we have recognized the advantage of sharing some of the same standards or requirements with others. Professional societies and standards developers have evolved to become a value-added service, bringing people with similar standards needs together in a forum to permit various viewpoints to agree by consensus on standards. Then people and organizations involved have used the standards in the related business activity.
The use of voluntary consensus standards by business and industry has grown in scope to include virtually every item we use from every country in the world. Standards development has become an industry of its own with about 700 organizations (620 are non-government). They create, promote and sell standards as a value added service. Standards developers have become a large resource for consumers and manufacturers with 93,000 standards available within the United States. Another 100,000 are available from the rest of the world. The National Institute of Standards and Technology has published a comprehensive list of the organizations that will be searchable through the ANSI National Standards System Network website at http://www.nssn.org.
The Caterpillar View of External Standards
Caterpillar is a major customer of standards. We use several thousand in the course of our business. The selection of the needed standards is very critical in today's environment. Several hundred thousand standards are "out there" for our consideration. We have many possible sources for the standards. We could buy from each developer or we could buy from "third party" providers. We support the efforts of the American National Standards Institute to provide "one stop" searching and delivery methods for standards.
Success Factors for Strategic Standardization at Caterpillar
Standards management can be a very complex issue for companies. Several factors need to be considered. The following is a suggested list of guidelines:
One answer is to develop "international" standards through the International Organization for Standardization (ISO), the International Electrotech-nical Commission (IEC), or the International Telecommunications Union (ITU) committee process. Through this multi-country process, many thousands of standards have become "international." For those companies producing products to recognized international standards, there are significant economic advantages.
One example is ISO Technical Committee 127 on Earth-moving Machinery. This committee has published about 95 international standards related to "earth-moving and related machinery." Nineteen countries currently participate in the development of these standards. Many other countries and customers have accepted these standards as the basis of product definition and for satisfying conformance to criteria.
Effective management of the business of standards requires the application of strategic standardization-the body of coordinated management practices throughout the enterprise that guide the tasks of identifying and delivering the right standards to the user. "Right standards" means standards that make us even more competitive and protect our ability to produce differentiated products and services. Success factors include evaluating the standards process, providing resources to develop and maintain standards, and effective utilization of the resulting standards to enable the enterprise to more effectively serve our customers.
Headquartered in Peoria, Ill., Caterpillar Inc. is the world's largest manufacturer of construction and mining equipment, natural gas engines and industrial gas turbines, and a leading global supplier of diesel engines. It is a Fortune 50 industrial company with more than $16 billion in assets. While 75 percent of Caterpillar's assets are in the United States, more than half of its sales are to overseas customers. Exports from the United States reached a record $5.13 billion in 1995.
Caterpillar's products range from track-type tractors to hydraulic excavators, backhoe loaders, motor graders, off-highway trucks, diesel and natural gas engines and gas turbines. They are used in the construction, road building, mining, forestry, energy, transportation and material-handling industries.
Caterpillar owes its reputation to customers who have remained loyal over the years and measures its success by repeat customers. In fact, more than 80 percent of the company's sales are from repeat customers. Caterpillar's commitment to customer service is demonstrated by the fastest parts delivery system in its industry. Caterpillar's customers can obtain replacement parts from their dealers usually upon request. If not, Caterpillar typically delivers them anywhere in the world within 24 hours, usually much sooner.
Caterpillar products and components today are manufactured in 31 plants in the United States and 23 plants in Australia, Belgium, Brazil, Canada, China, England, France, Hungary, India, Indonesia, Italy, Japan, Mexico, Russia and the United Kingdom.
For more information:
Harmonizing Internal vs. External Standards
Not every standard needs to be internationally recognized. For technologies that have proprietary content-truly unique to one enterprise-some of the standards should remain within the company's intellectual property inventory. From our perspective, standards can be divided into six categories:
Standards Development: A Competitive Venture
by Keith B. Termaat
Keith B. Termaat is manager of Global Strategic Standardization for Ford Motor Company. He is responsible for external and internal standards strategy and forecasts and directs the development of worldwide product acceptance, test, component and manufacturing standards. Termaat also develops policy governing the introduction of engineering materials in the company. He chairs the U.S. Council for Automotive Research's Strategic Standardization Board and is a member of the American National Standards Institute's (ANSI's) Board of Directors, Company Member Council Executive Committee and participates in several ANSI committees.
Ninety years ago, standards played a prominent role at Ford Motor Company, and in fact standardization of design and production was a founding principle of the company. Global operation was another founding principle. Ford has fused these two principles in its "Ford 2000" initiative. This article places the Ford 2000 initiative into the perspective of standards users, standards developers and the federated American National Standards system.
Ford Motor Company established international roots soon after it was formed in 1903 when Henry Ford sold a Model A to a Canadian customer. Later that year, Ford shipped two Model A's to London, England. In 1911, Ford's first assembly plant outside of North America opened at Trafford Park in Manchester, England. European operations continued to expand until around 1950, when Henry Ford II began to think about streamlining them.
At that time, Ford was a collection of independent companies. The two biggest, Ford of Britain and Ford of Germany, competed with separate dealer networks. In time, Ford of Europe was formed with 15 national companies and major manufacturing facilities in Belgium, Germany, France, Spain and the United Kingdom.
In the following years, Ford continued to evolve toward a more global focus. Today, that multinational approach has blossomed into Ford 2000, the most ambitious transformation of the company's automotive operations since Ford of Europe was created. Ninety years of global evolution is being rapidly accelerated. Alex Trotman, the company's chairman, whose career began in Europe, told shareholders that Ford 2000 will help the company eliminate duplication, improve quality, reduce costs and expand sales.
Standardization Is Key
Standardization is a key principle for Ford 2000. The company will operate with worldwide common processes, systems, product and technology standards and one set of global objectives. Best practices will be driven into everything we do.
Ford 2000 is an opportunity for keeping the best vehicle platforms, systems, components and materials, while enhancing the unique vehicle personalities demanded for each market segment in each country. Worldwide standards must cross vehicle platforms and systems, blend external and internal requirements and replace internal with external standards wherever possible.
Ford 2000 also recognizes time compression in a shrinking globe. Supercomputers, satellites and fiber optic networks have literally created a worldwide marketplace. The impact of this change is best illustrated by travel times. Earlier in this century, when European general managers were called to Ford World Headquarters in Dearborn, Michigan, they first had to take a train to the nearest port, then a ship to New York, then another train to Dearborn. The fastest round trip journey consumed about six weeks (1,000 hours). Today, that journey is approximately 20 hours, a fifty-fold reduction. As communications have been accelerated, the world has shrunk and the need for global standards has expanded.
Why are standards important to Ford Motor Company? Since markets and their competitive and regulatory forces have become global, worldwide standards development and deployment are essential for survival of the enterprise. At Ford, we use international standards wherever possible, followed by national or, if necessary, industry standards. Company standards are used primarily to differentiate Ford products from the competition, to achieve a competitive advantage, or to fill in where external standards do not exist. Ford 2000 globalization depends on worldwide standards development and deployment.
What are the benefits of working in the voluntary standards system? In a word, networking-connecting with other company representatives to reshape the system to better serve our interests. This networking also serves to spread best practices among companies by formal benchmark studies or by informal sharing. Another benefit is the background information that is gathered from standardization events and issues to allow forecasting of the impact on the company. This important benefit also has the effect of expanding the company's resource base and occasionally providing an alternative communication route to relatively senior people to whom we might not otherwise connect.
The Purpose, Management and Benefits of Standards
Ford is committed to building on its successes by strategically using standardization for six purposes: To deploy product performance policies so as to create a competitive advantage or correct a disadvantage; To unify global markets and operations; To help achieve specific societal goals; To assure connectivity of rapidly advancing technology; To obtain cost efficiency through commodity buying of large production volumes; and To institutionalize corporate memory and transfer knowledge and experience across the whole organization.
At Ford, we have begun to strategically manage standardization. This emerging discipline evaluates multiple aspects of standardization across the enterprise or industry, then defines and implements strategies and policies for competitive advantage. The discipline requires monitoring the pulse of standards activity, forecasting, developing strategies and standards, coordinating deployment and implementation, and evaluating effectiveness of deployed standards.
At Ford, our strategic approach began on an issue-by-issue basis as illustrated by examples drawn from export, commodity creation, regulation and technology. First, upgraded internal product standards that better reflect local driving conditions and customer preferences have resulted from the strategic initiative to expand exports overseas. Secondly, Ford, General Motors and Chrysler are cooperating on a number of initiatives through the United States Council for Automotive Research (USCAR). One such effort is aimed at standardizing commodity specifications for plastics and fasteners to reduce the number of grades by about 50 percent. Third, a need for upgraded engine oil performance led to an auto-oil partnership to create a new oil packaging label in connection with a performance standard. And finally, a technology driven standard will improve urban traffic flow by having the car "talk" to the road.
The Challenge to Standards Developers
These few examples don't begin to describe the richness of the Ford and automotive industry standards effort. What they do have in common is that all but the urban traffic flow standard were developed outside the traditional standards system. The reason is straightforward in that companies are still not served well enough by standards developers. So we are often bypassing the cumbersome and expensive process.
Look at this from a company perspective. The standards developing organization sets up a technical committee for which our engineers provide the intellectual horsepower. Companies pay travel, salaries and technical support for developing the standard. Then the rights belong to the standards developer which proceeds to sell the work product back to us. And the time to completion is still way too long.
A standard ought to be developed in much less time than it takes to develop the underlying technology. Reductions in time by a factor of up to 50 should be targeted. International standards never pass this timing test and even U.S. standards often do not. In 1993, I challenged the standards industry to respond to global forces, downsize, reduce costs, improve quality, and drive toward customer satisfaction, and to do it quicker and more efficiently. The point of standardization is to satisfy the interests we have in common, within any one industry sector, among various sectors and internationally. The primary interest we have in common is U.S. competitiveness, economic growth and quality of life.
The good news is that many people in the standards industry are responding. U.S. competitiveness, economic growth, and quality of life are emerging as the centerpiece objectives of the federated standards system. Streamlined and simplified standards processes have begun to take hold, both inside companies, in industries and in external standards development organizations. But more remains to be done. I have already explained a little of what we at Ford have done with our standards program. Let me now share some ideas on what else is needed.
Recapturing Nontraditional Standards Developers
There are simply too many standards developers. Many standards come from consortia, de facto standards and internal company standards. Ford, with more than 20,000 engineering standards in use, could be an officially recognized standards organization in the American National Standards system. So while we could be a standards development organization, we are in fact reducing our dependency on internal standards. But we also want to avoid redundant business involvement with a number of different organizations. Our vision is to enter into a closer relationship with a select few standards developing organizations.
Some standards developers are effective. They have come to realize that the strategic issues are not governance, American National Standard designations, procedural rules, publication rights nor revenue streams. The issues are market access, preceding or preempting regulation and achieving competitive advantage. Standards developers must have customer focus and the customer is U.S. industry.
Some of the largest standards organizations understand these principles while others still do not, often to the detriment of American industry. The only way to re-recapture nontraditional standards developers like Ford is to listen to a company as "the customer." Then the standards organization must evaluate its own performance by the objective criteria of technical performance, quality performance, delivery performance and commercial performance.
ASTM standards continue to be important to the auto industry. However, more and more, we are moving outside ASTM and developing standards through other groups, such as USCAR and the American Automobile Manufacturers Association simply because the ASTM process is not responsive to our needs.
Bilateral industry standards development is also becoming more common as auto representatives withdraw from the committee process. Our legitimate customer concerns, supported by technical data, are deemed "non-persuasive" by committees that do not, in our view, properly balance interests. While the ASTM customer focus has improved, the improvement is not sufficient to the needs of Ford as an automotive company. Unbalanced, very large committees must be corrected to assure continued Ford participation in ASTM standards processes.
Untangling the Standards Process
The standards process must be untangled so companies can intuitively grasp its workings and benefit from lessons learned. Untangling means simplifying procedures, restructuring committees and reducing the paper flow of agendas, minutes, proceedings, multiple drafts, positions and verbose "legalese" and "technicalese." Too much of this paper is being mailed by too many standards organizations to too many companies without analysis of the underlying issues and synthesis of solution alternatives. Providing a forum by gathering papers from one organization and passing them unread and unanalyzed to a company is wrong.
The strategic standardization discipline described earlier is also required of the standards industry. An emerging use of standards is to analyze markets globally to make operational decisions that take advantage of commonalities, and to eliminate differences that offer no benefit to our customers. Standards developers and the federated system must also build a capability to forecast trends and synthesize potential solutions for application by member companies to compete in the global marketplace.
What are the lessons learned? It would be wise for standards developers to: (a)Appoint a champion for each major standards initiative and a steering team to guide the development along; (b)Employ standardized program management as some companies and standards organizations already do; (c)Set a strict, compressed timing standard which centers on several key principles.
First is a concept development phase during which major alternatives are examined until a congruent standards proposition is achieved. Second is seeking formal concept approval, after which the standards development process is initiated. Up front buy-in from a senior council or board is key to the process. Third, initiate technical committee work within the firm boundaries of an approved proposition and within assigned time lines to meet the required approval date. Finally, obtain technical sign-off and approval without further senior review. In other words, obtain concept buy-in up front and then don't change the proposition and never re-issue global standards as national standards.
Then there are the concepts of "fast start" and "fast finish" teams. Instead of meeting monthly or quarterly, a team sequesters itself for a few weeks to develop the essence of a standards proposition. It then enters into an electronic review process after buy-in by a senior board or panel. Then near the finish, the team reconvenes for weeks to finalize the work product and release it.
Single source distribution, one-stop shopping, and committee participation by only those who have a material stake in the outcome are also necessary. Committee members should be credentialed by companies and other recognized organizations that have a material stake. Excessive concern about openness in technology standards development has deteriorated the process to where talking about acting has too often become an acceptable substitute for acting. Each of us has a responsibility to speak up when a committee or board is wasting time, and then to leave if the process or meeting does not improve. Openness in policy related standards, such as public health, environmental management systems, fuel efficiency and engine driveability, must be expanded to assure that material interests are represented in a balanced manner.
Survival Is Not Assured
The point is that survival for standards developers is not assured. Survival demands faster, more effective standards developers. U.S. competitiveness, economic growth, and quality of life must be established as central purposes of the voluntary standards system, and strategic issues must be identified in this context. Each company must orient itself on strategic issues specific to its mission and then move to a cohesive management approach for standardization. Each company must also approach the prominent standards developers in an industry, rate them on technical, quality, delivery and commercial performance and choose to work with only the best.
Standards organizations must re-examine every aspect of their activities with the aim of simplifying and streamlining the process and the structure. There are simply too many boards, committees and panels. The organizations must question their effectiveness, judge themselves by how much they contribute, reduce the number of layers between working technical committees and the most senior boards to no more than three-the International Organization for Standardization (ISO) currently has seven. I have seen spider charts of committee structures that defy action. While managing complexity is a virtue, simplifying is a greater one.
What can employees of a company or a professional in the standards organization do?
(a)Know the standards that apply to your area of responsibility. The quality of standards implementation depends on the commitment of the product and manufacturing engineers and standards professionals in the system.; (b)Reduce the number of procedures and the number of people in committees and synthesize and digest information before it is passed on; (c)Always start with an international perspective.
Keep in mind the wisdom of Sergio Mazza, president of the American National Standards Institute, who has said on several occasions, "Act as a federation and stop looking inside the federation for competition. The competition is external to traditional standards developers, in solution consortia, companies, industry groups, and de facto standards." Recapturing nontraditional standards development requires overcoming burdensome processes and structures.
We Must All Do Our Part
Above all else we must exercise leadership. Together we can continue the renewal of the U.S. voluntary national standards system as well as the international system-Ford as an international enterprise certainly needs those systems.
Back in 1903, Henry Ford revolutionized production by standardizing the components and assembly process. The Ford 2000 initiative builds on that fast start with the next logical phase in standardization. We will do it internally and externally. But change to the external system must take place and it must happen quickly to make U.S. economic growth, competitiveness and quality of life the centerpiece objectives of the voluntary standards system. Ford is ready to help-are you?
Competitiveness, Standards and the U.S. Automobile Industry
by Francis L. "Tex" Criqui
Francis L. "Tex" Criqui is manager, NAO Technical Standards, with the General Motors Corporation where he has been involved with both national and international activities related to import-export, regulatory requirements, project management, strategic planning, technical liaison and engineering administration. Criqui is on the Board of Directors of the American National Standards Institute (ANSI) and serves as chairman of the ANSI Center for Strategic Standardization Management Board. He has been an active participant within ANSI's Company Member Council for many years and served as the council's chairman for three years.
ASTM has pioneered the idea of devoting an entire issue of Standardization News to the subject of standards and competitiveness, a move made in recognition of the importance of that relationship. Previous articles have described how several companies attempted to manage this relationship. These articles have been extremely interesting, containing numerous insights. Unfortunately, all of them discussed only one side of the relationship: standards; none discussed competitiveness. I would like to explore one person's views on global competitiveness, describe the actions taken by the U.S. automobile industry, and articulate the challenges facing the standards system in 1996.
Using a sports analogy, competitive teams are those that have combined the basic skills of the team members (enhanced by intensive practice and training programs) with clearly defined roles and responsibilities (positions) working collectively toward a common goal (championship). These are minimum requirements. The distinguishing factor of superior teams is a level of competence based upon an implicit interdependence-every team member executes their respective responsibilities to the best of their ability, trusting that the other team members will execute theirs, at a similar level, for the benefit of the team. Individual glory and accomplishment must become secondary to the overall success of the team.
Considering this analogy, it appears that the characteristics of competitiveness include:
Basic skills enhanced by practice and training; Clearly defined roles; Common goals and; Trust based upon team benefit.
Like any team, there are relative levels of influence (superstars) based upon the individual contribution to the common good, that is, the benefit of the team as a whole. The challenge, then, is to get all these individual elements to act in harmony. By evaluating the competitive characteristics of a superior team to the U.S. voluntary standards system, a better understanding of global competitiveness begins to emerge and the actions necessary to enhance the performance of the team (U.S. voluntary standards system) come into focus.
Basic Skills Enhanced by Practice/Training
In the industrial world, the basic skill set is the fundamental ability to operate a commercial enterprise. The mere fact that some companies prosper while others do not is testament to the necessity of a basic skill set. Furthermore, a basic skill set implies a required capability at a given level of competition. This skill set is not necessarily sufficient to compete at the next higher level. The ability to be competitive at the national level is one thing; the ability to compete at the multi-national level is another and the ability to compete on a global level is a third. Most companies have the skills to compete nationally and even multi-nationally; few, however, have demonstrated the skill set to compete globally.
To compete globally, a company must be equal to or better than the best the world has to offer, like competing in an economic version of the Olympics. The required skill set for superior performance at a global level is not yet clear; particularly when analyzed in relationship to standards and international trade. There are, of course, those companies that excel at the global level. There even appears to be a positive correlation between those companies that are excellent performers at the global level and those that exhibit a high level of participation in standards-making activity.
There is precious little evidence, however, to indicate whether this correlation is causal or coincidental. The fact that a company actively participates in international standards setting does not guarantee any level of success; standards cannot compensate for poor products. Conversely, superior products can, and often do, set standards. Thus, it is not yet clear that the basic skill set for global competitiveness must include standards. Literature and opinion do indicate that participating in international standards setting enables global competitiveness.
If there is at least a minimal causal relationship between standards and competitiveness, it is in the best interest of any company that its participants in standards-making activity exhibit an enhanced set of skills relative to the other participants. Training programs provide a participant an understanding of the rules of the game, how to play, and enhance the basic skill set to a superior level. Enhanced skills can only be accomplished through participation; one cannot enhance basic skills by not practicing. Similarly, a company cannot be successful in the international world of standards if it does not play. Thus, to make standards an enabler to global competitiveness for any given company, that company must participate in the international standards arena.
Clearly Defined Roles
Industry, government, the American National Standards Institute (ANSI), and Standards Developing Organizations (SDOs) are the primary players in the standards process. Just as a tackle would not expect to play quarterback, one should not expect industry to play the role of government or SDOs and vice versa. There is not a clear definition of the roles of the players on the team at this point. The net result is that, to the uninvolved observer, the U.S. voluntary standards system often appears confusing, chaotic, and not at all interested in improving U.S. global competitiveness. There is a need for clearly defined roles for the members of the team. The following are descriptive and presented as thought starters.
When its players work together, the U.S. system has the potential to be second to none. There are some, however, who feel that because the U.S. system is different from the European or Japanese system, it is inferior. There is simply no evidence to document this claim. Because the U.S. system is different, it is a potential source of competitive advantage over other systems. The challenge to the members of the team is to ensure that the U.S. system does provide a sustainable competitive advantage.
Clearly Articulated Goals
One of the deficiencies of the U.S. standards system is the absence of clearly articulated, proactive goals that convey a sense of direction for the system. The system is very good at reacting, quickly responding to any threat or consideration to change the existing system. The system does lack a sense of direction; there are no goals, no vision. The system operates pretty much as it did in the 1960s. Some clear goals are necessary.
Examples of this are: There is a need for a single standard development process model. A single standards development process model will allow all SDOs (and companies) to evaluate their business practices to the same model. Comparative efficiencies can be established; variation and non-value added time can be removed. Today, discussion around the process usually focuses on the method used to demonstrate consensus. Also, any standard should be available within 12 months from date of initiation. Today the standards development process is discussed in terms of years and not months. The majority of effort to speed up the process involves electronic delivery that, at best, will reduce process time 5-15%.
While these appear to be SDO problems, they really are a systemic problem. SDOs do not have the skills to write the standards; the content comes from companies and other interested parties. If companies want faster execution of the process, they must be willing to provide the expertise to accelerate the process. The majority of time in the current process is dead time between meetings; accelerating the process should be a relatively straightforward effort. The application of project management techniques and the elimination of non-productive time will accelerate the process at very little cost.
Trust Based Upon Team Benefit
The level of trust and interdependence among the members of the system is not yet as cohesive as it could-or perhaps even should-be. Companies have not yet begun to trust each other, much less the government. Things are getting better; companies are starting to work together for the benefit of all. For the most part, however, the superstar mentality prevails, exemplified by one company trying to resolve an industry problem based upon its terms. A sage once said, "Some of us have more than the others, but none of us have more than all of us." Only by working together can the synergy created benefit all members.
This is a transitional consideration that is counter to our culture. Returning to the sports analogy, many superstars have found that they alone cannot carry the team to the goal; they need the support of the other members of the team. The same is true of the standards system. None of the members can do it alone; it requires the cooperation of all. The definition of roles and responsibilities, combined with a set of national goals, provide the basis upon which to build trust. This is one reason that roles and goals are so important.
Auto Industry Response
Recognizing the increasing influence of standards, the U.S. auto industry has decided to take a leadership role in managing the relationship between standards and competitiveness. Believing standardization is an enabler to global competitiveness, the auto companies chose to take a strategic approach to managing the relationship between standards and competitiveness. To this end, the industry has established the Strategic Standardization Board (SSB) under the United States Council for Automotive Research (USCAR).
USCAR was founded in 1992 to facilitate, monitor, and promote a growing number of pre-competitive cooperative research programs among Chrysler, Ford, and General Motors. By leveraging their resources to address common technical issues, the Big Three are sharing precompetitive research without compromising their ability to compete in the marketplace. Through its joint R&D efforts, USCAR hopes to strengthen the nation's technology base and, as a result, provide jobs for U.S. workers. Some of the consortia under USCAR are: Environmental Research Consortium, Low Emission Paint Consortium, United States Advanced Battery Consortium, Automotive Composites Consortium, and the Partnership for the Next Generation of Vehicles. The newest USCAR partnership is the Strategic Standardization Board (SSB).
Strategic Standardization Board
Established in June 1994, the SSB has a very broad charter: (1)Identify standardization opportunities within existing USCAR consortia as well as opportunities to establish new consortia; (2)Identify standardization opportunities for joint development of parts, components, and engineering processes across the industry; (3)Identify standardization opportunities that render emerging technologies compatible with existing technologies; (4)Identify emerging standardization issues of industry concern, providing a head start in developing products with worldwide commercial acceptance; (5)Apply concerted action in public and governmental fora on standards issues of common interest; (6)Provide liaison to standards development organizations for documentation developed by USCAR Consortia.
The desired outcome of this activity is a significant reduction in non-value added product development and manufacturing cost.
The activities of the SSB are based upon two predominant considerations, 1) the activity must be strategic and 2) standardization precedes standards; the overall driving force of the activity is the competitiveness of the industry. Any increase in the competitiveness of the U.S. automotive industry as a whole results in the increased competitiveness of each company. Similarly, SSB activities must ensure that the industry does not find itself at a competitive disadvantage.
The SSB uses a generic process to identify and define the activities that the Board will pursue. The process begins with the identification of non-value variability in the processes, leads into the definition of a project plan to reduce the variation, and concludes by documenting the resulting findings and recommendations.
The focus of the first stage is competitiveness: What are the sources of non-value added variability in the process? What are the impacts? What is the source? The focus of the second stage is reduction of variation and project management: What has to be done to reduce the variation? What resources are required? How long will it take? The third stage is the documentation and communication of the decisions made by the project teams. Documentation is required to facilitate communications to others within each organization. This documentation may or may not result in a standard.
The point is that the standard is the last item of consideration, not the first. Competitiveness is the first consideration.
Areas to Standardize
The generic process model is overly simplistic and must be supplemented with potential areas for standardization and criteria for selection. For the most part, there are four large areas that are candidates for standardization.
Interfaces and interactions: Since no part, component, or vehicle operates entirely on its own, it must interact or work together with some larger entity. These interactions and interfaces should be standardized.
Invisible to the customer: Some areas are considered invisible to the customer, that is, the customer is virtually unaware of either form or function when making the purchase. These areas become prime candidates for standardization because there is typically no commercial reason for variation.
Commodities: Commodity parts are major areas for standardization because their function is independent of the application and should always be standardized. This category covers such items as switches, belts, pins, clamps, fasteners, filters and similar non-competitive parts and components.
Infrastructure: This is an area that is rich in standardization opportunities. Infrastructure includes such items as computer systems, facilities, internal management systems, areas where variation drives cost and complexity with no discernible benefit in the marketplace.
One of the major considerations in determining the need for a new standard is the identification of an existing standard that will meet most of the industry's needs. For example, the Big Three have recently agreed that ANSI Y14 standards for Geometric Dimensioning and Tolerancing (GD&T) will be used rather than the company specific standards previously published. Each company's standards for GD&T were similar but not identical, causing a variation in dimensions on a drawing of nearly identical parts. The SSB charted a Task Team of designers (one from each company) to evaluate the new edition of the ANSI standard and make a recommendation on industry wide acceptance. The recommendation was that the National Standard be adopted and supplemented with an industry standard for all optional areas. When fully implemented in 1996, the Big Three will all follow one GD&T methodology based upon a U.S. National Standard.
The first step in identifying parts for standardization across the industry is to establish a set of criteria that categorizes the parts. The USCAR SSB has categorized the parts of a vehicle into three categories:
Discriminators-those parts that have direct influence on the customer's purchase decision. This would include such items as powertrains and exterior sheet metal (styling). These items are never standardized.
Influencers-those parts that are generally invisible to the customer but may have some influence on brand character. These are parts such as shock absorbers, springs and other suspension items or even more generally, a part that has application specific calibration. These parts may or may not be standardized.
Commodities-those parts that are invisible to the customer and do not influence brand character. As described previously, these parts are usually independent of application.
The SSB has identified a number of parts that are prime candidates for standardization across the industry: belts and pulleys, filters, plugs, fastener finishes, trailer connectors, bulbs. Task Teams in these areas are either established or in the process of being formed.
The U.S. standards system has served the country well over the past years; together we have accomplished much. Many of the perceived problems of the past are now resolved. There is new leadership in all areas of the system. The system and its members are poised to make the next quantum leap forward. What needs to be done:
The Importance of Standards to Hewlett-Packard's Competitive Business Strategy
by Brian D. Unter
Brian D. Unter is director of Corporate External Standards with Hewlett-Packard Company, Palo Alto, Calif. Unter is a member of the ANSI board of directors, Company Member Council Executive Committee, and the Information Technology Industry Council Board Committee on Standards, Technology and Trade.
Hewlett-Packard Company designs, manufactures and services electronic products and systems for measurement, computing and communication used by people in industry, business, engineering, science, medicine and education. HP's basic business purpose is to accelerate the advancement of knowledge and improve the effectiveness of people and organizations. The company's more than 24,000 products include computers and peripheral products, electronic test and measurement instruments and systems, networking products, medical electronic equipment, instruments and systems for chemical analysis, handheld calculators and electronic components.
HP is one of the largest industrial companies in the United States and one of the world's largest computer companies. HP is recognized for excellence in quality and support, and has been ranked America's most admired computer/office equipment company by Fortune magazine. The company had net revenue of $31.5 billion in its 1995 fiscal year (ended October 31). Headquartered in Palo Alto, Calif., the company employs approximately 110,800 people. HP research and manufacturing facilities are located in 29 U.S. cities, and in Europe, Asia Pacific, Latin America and Canada. HP is one of the top 10 U.S. exporters, selling its products and services through about 600 sales and support offices and distributorships in more than 120 countries and through retail dealers. More than 55 percent of its business is generated outside the United States; two-thirds of that is in Europe. Other principal markets include Australasia, Canada, the Far East, Japan and Latin America.
HP's Standardization Program
Since Hewlett-Packard's origin in 1939, industry standards have long been the cornerstone of HP's strategies. HP's products in the early years often were required to meet military standards and later international standards as HP expanded into global markets. HP has firmly held beliefs that standards-based products give customers solutions that increase their productivity and flexibility, as well as maximizing their return on investment.
As with many companies in the early 1990s, HP went through extensive "rightsizing" of various company functions for greater effectiveness. Standardization1 resources became very lean at corporate headquarters and throughout the company, except for a few pockets of standardization excellence in some business units. While the company realized gains from the cost cutting efforts, it unfortunately left the company vulnerable with poor strategic visibility and influence for many new and emerging standards.
In 1993, HP's analysis of standardization data showed rapid growth in the number of standards, regulations and certifications impacting our businesses, particularly for information technology equipment (ITE). We soon discovered that this was a leading indicator of greater standardization complexity, costs and burden that threatened our ability to deliver high-quality, high-value products and services to our customers. Two examples are: Proposed software-sector certification programs for ISO 9000 that would impose unnecessary cost to many companies with minimal value to customers; and proposed European regulatory standards on laser/LED/infrared eye safety that would erroneously classify safe products using light emitting diodes (LEDs) and infrared diodes as "unsafe." This would have resulted in unnecessary redesign of products, and customer confusion regarding eye safety. Shocks like these to our senior management drove the need for change on how HP manages standardization.
Strategic Standardization Management
Presentations on Strategic Standardization Management¬ (SSMTM)2 at the 1994 ANSI Conference fell on HP ears that were ready to listen, resulting in a standardization initiative for the company. With ANSI's help, HP benchmarked with other companies that were recognized leaders in standardization (AMP, Motorola, Polaroid, Siemens, Philips and others). Armed with key learnings and 25+ benchmarking studies of other companies, HP built awareness and sponsorship with the senior managers from the businesses and the geographic operations. HP made significant changes to improve the company's effectiveness in dealing with standardization issues. Two of these included establishing a business-driven, company-wide Standards Strategy Committee (SSC) and an external standards information management system.
HP Standards Strategy Committee
The Standards Strategy Committee (SSC) is comprised of representatives from the major businesses and geographic operations from around the world. The chair of the committee is a senior standards manager from a major business unit. The other members also report into business units or geographic operations. This is to ensure the SSC has a marketplace focus. The Corporate members on the committee serve as the secretariat and provide a cross-business perspective.
Some of the key functions of the SSC are: Determining the "critical few" standardization issues important to HP company-wide, and recommending actions important to HP businesses; and encouraging appropriate engagement and collaboration among the business and geographic operations toward achieving standards-related business results.
Standards Information Management System
The next step was to establish a global information management system on our intranet network. This management tool identifies worldwide standards participants, standards development organizations, consortia, and other standardization bodies. Although the database is still in development, it has proven useful to understand what the standardization issues are, who is engaged in what committee or consortium, and for what purpose.
How HP Benefits by Managing Standardization
The merging of measurement, computation and communication technologies is revolutionizing the way people gather and share information. Emerging global networks and specialized "information appliances" will enable people to share information easily, whether it's text, graphics, audio or video. "HP's success will depend more and more on newly emerging technologies," says Joel Birnbaum, senior vice president of R&D and director of HP Labs. In 1995 more than half of the company's orders were for products introduced in the last two years. To continue this growth, HP is strongly committed to R&D investment ($2.3 billion in 1995) and the company's ability to create a stream of compelling new products.
HP's expertise is helping create and manage these data highways and providing products that let people plug into the networks. The company's capabilities in measurement, computation and communication set HP apart from most other companies that provide either computers or instruments, but not both.
We believe standardization serves consumers by allowing industry to expand into new and existing markets. Consumers benefit by having more choice and more access to products and services, and by gaining confidence in their interoperability, interconnectivity, and quality. Standardization must not slow expansion by posing technological, administrative, or cost barriers.
HP sees standardization as an integral component to the success of serving our customers. It is incumbent for HP to strategically manage standardization so that it creates and supports expanding global markets. We accomplish this by engaging in multiple standardization channels to influence and affect voluntary (formal) standards, mandatory regulations, consortia standards, and de facto standards.
Challenge for Standards Developers
HP believes one of the primary purposes of standardization is to expand markets globally. Standardization must not serve as barriers that regionalize acceptance, burden the industry with unnecessary or redundant administration, or slow economic development and product innovation.
Success can be measured by how cost effectively standardization: (a)Allows industry greater flexibility and freedom in innovation, with fewer barriers to acceptance; (b)Provides consumers more choices and options of products and services that find their way to the market sooner and; (c)Establishes a universally accepted framework for global evaluation and acceptance.
With limited resources, we must selectively choose to participate in those standardization activities that support our goals and to oppose those that do not. Fortunately, there are multiple standards development channels to invest our resources. We can choose to focus on the voluntary system (ASTM, ISO, IEC), consortia, or de facto method where each has its advantages and disadvantages. These alternative standards development channels are competing for valuable resources from HP and others. They realize that if they want to stay relevant in a global economy, they need to support and energize the distribution of products and services all over the world. The current patchwork of disconnected and uncoordinated standards activities is not designed or managed as a global system. It is imperative that all of us initiate frank evaluation and employ innovative change to provide valued standardization faster, better and cheaper than ever before. This challenge is being posed by many, many companies, consumers and governments to standards organizations and to ourselves in the roles we play. It is a challenge that cannot go unanswered.
Strategic Standardization Management at Polaroid
A Proven Model for an Implementation Strategy
by Diego Betancourt
Diego Betancourt is manager of the Office of Strategic Standardization at Polaroid Corp. in Cambridge, Mass. He is a member of the American National Standards Institute, Company Member Council Executive Committee, where he is an active participant in the Strategic Development Initiative-a proactive solution-oriented business initiative to help solve standardization issues affecting U.S. industry. He is a member of the National Association of Photographic Manufacturers' Strategic Advisory Committee and chairman of its Finance Committee.
Overview of the Industry
The photographic industry has been redefined as the "imaging" industry and no longer consists of just cameras and silver halide light-sensitive materials. Imaging has become a major industry comprised of dozens of businesses with estimated revenues totaling $155 billion today. In addition to amateur and professional photography, it includes markets such as copying products and services, graphic arts, desktop publishing, images generated by computer-aided design and manufacturing programs, medical diagnostics, microscopy, printing and consumer video.
What Is an Image?
Today, the term "image" may mean a photograph, a transparency, a photocopy, a facsimile, a computer screen image, an x-ray or a frame from a video. It can be two dimensional or three dimensional, captured electronically or photographed, printed on paper or stored on a computer disk. The imaging systems of today include many nonconventional, complex electronic devices and associated software to provide total systems solutions. These solutions may include charge-coupled devices (CCDs), scanners, printers, digital algorithms for compression and decompression of files (images), transmission algorithms, and image and color management systems.
Polaroid as an Imaging Company
Polaroid Corp., with sales of more than $2 billion, is the worldwide leader in instant imaging. The company supplies instant photographic cameras and films, conventional films, videotapes, and electronic visual communications products to family, business, and technical and industrial markets. Polaroid has been a leader in imaging innovation ever since its founder Dr. Edwin Land invented polarized film in the 1930s, paving the way for the development of its unique instant photography system. Just as Land was committed to innovation and individualism some 70 years ago, Polaroid today is committed to strategic standardization and the key role it plays in integrating electronic, video and hard copy images.
This was not always Polaroid's strategy. As Polaroid Vice Chairman Dr. Sheldon Buckler noted at the American National Standards Institute's (ANSI's) 1991 Public Conference: had Dr. Land "stood before you 10 years ago, he might have told you standards are to innovation like fleas on a dog-a nuisance that doesn't do the dog any good." But both standards and strategic standardization have become major factors in the company's strategic plan because innovation and standardization are invariably connected in the imaging industry. In this newly defined industry, standardization plays an extremely important role.
Many people are familiar with the frustrations experienced with personal computer incompatibilities in the early stages of the industry and the many that still exist today. By learning from past experiences, similar frustrations may be prevented in the imaging industry. The benefits of standardization should provide for the seamless integration of components that create complete imaging systems.
Evolution of Polaroid's Strategic Standardization Program
As a result of changes in the imaging industry, Polaroid began in 1989 to take steps to apply standardization strategically and to use standardization as a tool to enhance its competitive position. Polaroid employs industry leaders in many technologies, such as image science, media and electronics. Standards are enablers of these technologies and essential to our business; they allow Polaroid to lead in the marketplace, maintain current business, and develop new business opportunities. Polaroid uses Strategic Standardization Management (SSM) as a tool to help reach a number of specific business objectives, including:
Maintaining and expanding "old business" by bringing traditional photographic usage into the electronic age. For example, driver's licenses and passports. Creating "new" business, such as computer graphics and medical diagnostic imaging systems. Linking together research, engineering, manufacturing, marketing and business units. Maintaining market and technical leadership; a key to the company's competitive position in the global market. Merging photography, computers, electronics and telecommunications into total imaging systems solutions for specific markets.
Implementation of Strategic Standardization Management (SSM)
Before going any further, it's important to define SSM as a management discipline (a macroprocess) that investigates all aspects of standardization across a business and/or industry, then defines, recommends and implements appropriate strategies and policies by which a firm can gain competitive advantage or avoid competitive disadvantage. SSM is a macroprocess that cuts horizontally across an entire organization driven by a focused business analysis approach leading to the most appropriate decisions on standardization. This definition covers all of a corporation's standardization activities. To accomplish its goals, Polaroid took a 10-step approach to establishing its SSM program based on action principles. The following descriptions and examples are necessarily brief for the purposes of this article.
The 10 Action Principles
Polaroid has already begun to see the short-term benefits of its SSM program. For example, the company is now able to influence future electronic imaging standardization efforts through proactive participation in national and international arenas. The OSS believes the long-term program results will be reflected in Polaroid products, which will have higher acceptability in global markets and enjoy a larger market share than they now have, and thus enhance the company's overall competitive position. To meet its objectives, the OSS will continuously review its Strategic Standardization Management program and modify it as necessary to complement the company's business objectives. By working with standard development organizations, Polaroid has demonstrated a commitment to the voluntary standards process and will continue to do so in the future.
Standards Management and Texas Instruments
by Clyde R. Camp
Clyde R. Camp is director of standards, Texas Instruments Corporate Standards Office, Dallas, Texas. He has been active in standards for 15 years, holding numerous positions on various ISO Technical Advisory Groups and in the Computer Society, IEEE, and the National Committee on IT Standards.
Texas Instruments is a 67-year-old, 10-billion dollar, multi-national company with over 40,000 employees in 26 countries. Historically it has had major product lines in such diverse areas as geophysical oil exploration, consumer products such as calculators and computers, software point-of-sale systems, digital military radar and missile systems and, of course, semiconductor products. 1997 saw a major change in strategic direction as we divested ourselves of ancillary product lines and focused on our core competency-semiconductors and digital signal processing solutions.
Although TI has always been heavily involved in technical standards, it is only within the last decade that we have begun to actively coordinate and manage that participation. The remainder of this article addresses:
External vs. Internal--External standards are those developed outside the company. Internal standards are those standards that are developed by the company for its own purpose. While there are legitimate uses where proprietary issues are concerned, internal standards often exist simply because the implementer did not know that there was an external standard covering the same subject.
Regulatory vs. Voluntary--Regulatory standards are usually written by government agencies and enforced by law with violations resulting in civil or criminal legal action. Voluntary standards, on the other hand, are written by industry professionals. While some voluntary standards become "regulatory" by virtue of their being cited in building codes, regulations, etc., adherence to most is ensured only by market pressure. These pressures, however, are significant and must not be underestimated. Outside the U.S., the distinctions between voluntary and regulatory standards are less defined. Even though they may be developed largely by volunteers, International Standards often have the force of law in many countries.
Accredited vs. Consortia--Accredited standards are those developed under the auspices of a recognized oversight body that ensures that all interested parties have an opportunity to participate and that due process, including the right to appeal, is followed during the development. Consortia standards do not have to meet either of these requirements. There are basic trade-offs of accredited standards versus those developed by consortia (see Sidebar 1). Both types are of importance to TI and we make no real distinction between them as far as our participation.
Within the global standards arena there are overlapping layers of standards developers. There are national standard bodies, one per nation (in the United States it is the American National Standards Institute). Then there are regional standards developers, representing geographical groupings of countries (such as the European Union or Pacific Rim countries). Finally there are the three global standards developers that figure prominently in information technology-the IEC (International Electrotechnical Commission), ISO (the International Organization for Standardization) and the ITU (International Telecommunications Union). ISO and IEC have a Joint Technical Committee (JTC 1), which is responsible for all information technology issues. The ITU is a treaty organization while ISO and IEC are voluntary organizations.
The process by which standards are developed within this environment is perceived, somewhat erroneously, to be both lengthy and complex. However, both industry and the standards developing organizations recognize that the development process can be streamlined. Major improvements have been made over the last 15 years and are continuing to be made today. The growing importance of standards as a world trade tool has led to the existence of a "positive spiral" of industrial participation. The "pump" for new standards comes mainly from industry support of individuals who participate in the standards-making process as well as from the sale of standards and from membership fees charged by the various organizations.(see footnote 1)
There is also, unfortunately, the "negative spiral" of non-participation. Within some companies or industry segments, this amounts to a neutral, negative or even antagonistic response on the part of management to becoming involved in standards development.
It should come as no surprise that in today's marketplace a successful corporate strategy must take global standards into account to ensure international acceptance of products and to successfully address meta-issues such as quality, environment, conformity assessment, health, safety and human factors. But given the sheer number of standards development activities and given that participation in them is expensive in both dollars and time, there is simply no way that Texas Instruments can participate in all of the committees and organizations that affect us. We have to identify the ones that we feel will benefit us the most or provide us with the most opportunity for impact. This brings us to Strategic Standards Management.
Strategic Standards Management-It Takes a Plan
The conversation between Lewis Carroll's Cheshire Cat and Alice is very appropriate when applied to the standards management philosophy of many companies. Just as a world-class company must have explicit programs to manage issues such as quality, product safety and environment, it must also have a program to manage standards participation. You must know where you want to go in order to develop a plan to get there.
As with most companies operating in the voluntary standards arena, TI has a choice to either participate-or not-in the development of standards that affect our business. This is a business decision and inherent in it are the usual pros and cons of any business decision. If we do participate, we have at least some say in and control over the standards that influence our product lines but at the expense of significant short-term costs that have weak traceability on long-term return. On the other hand, if we choose not to participate, then the resulting cost avoidance provides an immediate profit improvement but at the expense of self-determination in our long-term product destiny.
Throughout its 67-year history, TI has chosen to participate quite heavily in the standards community and we continue to do so with over 300 employees participating in over 500 standards-developing committees worldwide. We strongly believe that this represents a long-term strategic investment that more than offsets the short-term expenses inherent in standards involvement. We are managing this activity using the techniques of Strategic Standards Management (SSM).2
Put simply, SSM involves recognizing that standards are more a business issue than a technical one. Global standards are used today as a basic vehicle for communicating requirements worldwide to customers and suppliers. They also serve as fundamental tools in developing marketing strategies: What new products can be developed to standards that already exist? What new standards are under development that affect existing products? How can new standards be used to enlarge existing or create new market spaces?
The benefits to be gained by the strategic management of standards participation can be generally categorized as tangible profitability resulting from increased sales of components and services, and intangible benefits arising from an increased understanding of both user needs and general industrial and competitive directions. Both categories are difficult to quantify, but there is no doubt that planned participation is more to TI's advantage than against it. There is also no doubt that failure to explicitly manage standards participation in the formal strategic planning and global design review processes will result in a competitive disadvantage in today's global marketplace.
Unfortunately, these benefits do not come overnight. Similar to the "Quality Journey" of the '70s, TI considers itself to be on the Standards Management Journey (see Path to Success sidebar). We have moved past Stage One where, although we participated heavily in technical standards, we were essentially incompetent in terms of managing that participation and largely unaware of the incompetence. As we began to more effectively manage our standards involvement, we have moved through Stage Two and are currently in Stage Three. The transition to Stage Four, where the management of standards is automatic, unconscious and as much a part of the TI culture as environment, quality and safety, is much more difficult and we still have a lot of work to do before we arrive. So where are we?
TI's Corporate Standards Program
Even though our corporate culture is one of divisional autonomy and decentralization, there are certain areas where it makes sense to have a corporate office that sets policy for the entire company. These include legal, environmental and product safety policies-areas where we want to have a consistent stance no matter which product line we are talking about. Standards management is a similar subject and there is ample justification for some sort of centralized standards office to serve as a focal point for the variety of standards activities in which we are engaged and to address issues such as:
Corporate Contact Point-Although TI is composed of multiple, semi-autonomous product divisions, it is legally a single entity-Texas Instruments Incorporated. As such it needs to have a stable point of high-level contact within the company that receives external inquiries and invoices and directs them to the appropriate point of action elsewhere in the organization.
Corporate Memberships-Membership in many standards developing organizations is at the corporate level. That is, TI is the member, not our memory division or advanced logic division. Further, the membership dues may not be affordable for any one business sector and multi-year positions on committees may require multi-year financial commitments that may not mesh with business-unit year-by-year funding mechanisms. Having a centralized standards office separate from the product divisions helps resolve these points.
Corporate Representation and Positions-Multiple business sectors may wish to participate in an activity when only one company member is allowed. The standards office serves as an arbitrator when this happens. Similarly, on any technical issue, there may be differing opinions between product divisions. It is important that these be ironed out inside the company before taking a TI position. Note that in this case our position may be one of "TI has two viewpoints, both of which need to be discussed further."
There are also cases where near-term product goals are in opposition to long term corporate success in a particular market area. The important thing is to work issues out internally so that we can present a consistent face to the outside world. On the other hand, while TI does want some level of inter-divisional control, we do not want a large bureaucracy in corporate overhead. This has led us to implement in a standards program consisting of a small centralized Standards Office coupled to the product divisions via a formal Corporate Standards Council. The Council is "corporate" only in the sense that it represents Texas Instruments Incorporated-its membership is representational as will be described later.
Together, the Council and Office loosely manage TI's standards activities as an on-going process. This process includes components for assessing our progress and for tracking those standards in which we are not actively participating today. The bottom-line goal is threefold: To improve our competitive posture with respect to other companies in our industry; To prevent competitive disadvantage and, most importantly; To enlarge existing market spaces or create new ones.
There are seven steps in implementing this process. We must:
Successful deployment of this plan requires two types of people. In TI's case, we have found that approximately 90% of the TI employees participating in standards are technical and about 10% are business. For us, this appears to be the most effective ratio and gives us the best impact in both long-term strategic planning and shorter-term technical product implementations.
By being a member of the appropriate coordination and oversight management committees, we are made aware of upcoming changes in areas of importance to our businesses and this information can be fanned out to the product divisions via the Council. Additionally, by maintaining the visible and sustained presence of Step 7, TI is in a better position to be able to react to rapidly changing events.
As previously indicated, the Council's membership is representational and composed of three types of members: A representative from each of the major product divisions; A representative from each major non-U.S. geographical region, and; A representative from each of the "horizontal" functions (environmental, quality, legal, safety) that affect all products and services. There is also a fourth membership classification for highly focused technical sectors where such representation is needed.
The Council does most of its work, serving as a clearing-house for standards-related issues within the company, via e-mail and an internal intranet that serves as an information distribution mechanism. It is very likely that different product groups will have different needs and levels of involvement in the standards community. This is entirely appropriate. However, without adequate knowledge of what is taking place in the standards arena, they cannot make intelligent decisions about which activities will benefit them the most. Even if the participation level in a particular organization is zero, that organization should still be aware of the interest level of others, both internal and external to TI. The Council helps it do so.
The Standards Office itself, although not large, serves to facilitate the creation of an effective standards-oriented infrastructure that supports the needs of the product divisions by: (a)Setting training requirements for all standards participants important for IPR, liability and image reasons; (b)Maintaining a corporate database of who is working on what; (c)Improving awareness and communication of standards activities throughout the company; (d)Interacting with the legal, human resources, compliance and ethics offices for policy issues, and; (e)Serving as the external point of contact.
The cost of implementing the Standards Office and Council has added about 10% to the previous overall costs of participation, but it pays for itself by eliminating duplication of effort and improving inter-divisional communication. The bulk of the costs associated with participation itself continue to be about evenly split among direct corporate membership fees and all of the direct time and travel expenses of the employees involved in standards development.
While it is clear that the technical participation in individual standards activities must continue to come from the affected product divisions, the Standards Council and Office together coordinate that participation in order to maximize the return on an investment that already exists. If they did nothing more than make everyone aware of what is going on, we would be a major step ahead.
As stated previously, there is a lot of work to do before we reach Stage 4 of the Path to Success sidebar, but it breaks down into three major pieces.
Empowered to act as the process owner or champion for their standards activity, actively communicating with other TI organizations having related interests and actively designated by their management with the authority to commit time and resources on behalf of TI.
Qualified in that they are technically competent, have long-term experience in a variety of different standards activities and are personally recognized and trusted within the standards community. They should also be familiar with TI's ethical and legal policies and practices as well as the policies of the committees on which they are active. The ideal standards participants should understand how the activity fits in with the overall business strategy of their group.
Committed to improving the standards process in general.
Funded appropriately by management. Time and travel represent real expenses but are worth it. There is worldwide expertise represented in standards development and TI cannot afford to miss out on the knowledge transfer and dialogue with other companies and users. Everyone benefits from the innovation and synergism in these meetings. The usual reaction from people first attending a technical meeting is that they have learned far more than they feel they have contributed.
Obviously, such superheroes are rare and many participants require training, especially if they are new to the standards world. Similarly, their immediate management may require education in how to make the best strategic use of the standards and standards participation for which they are already paying. Each participant's technical expertise and product strategy should be combined with appropriate guidance, education, marketing and policy participation from the Standards Council and Office.
THE PATH TO SUCCESS
UTC's Approach to Strategic Standardization Management (SSM)
A Model for U.S. Business
by Richard Forselius
Richard Forselius, P.E., is manager, Engineering Standards and Procedures, at United Technologies' Hamilton Standard division, Windsor Locks, Conn. He is a founding representative to the UTC SSM Council and vice chair of the Aerospace Industries Association, Engineering Management Committee.
United Technologies Corporation (UTC) is a collection of many companies serving different industries. These include Sikorsky helicopters, Pratt & Whitney jet engines, Otis elevators, Carrier air conditioners, Hamilton Standard aerospace components, and United Technologies Automotive, a major supplier of automobile products and components. In most instances, UTC operating units have founded their industries that range from building products to aerospace to automotive, to name a few. Their great legacies are traceable to the brilliant discoveries, experimentation and entrepreneurship of just a few pioneering individuals. Today, UTC operating units take pride in using their individual names on their products rather than the corporate name.
Many of UTC's operating units have been leaders in developing standards globally to which their products must conform. Otis, for example, has had a Codes and Standards Council active for many years to ensure that building codes and other standards are written to reflect the attributes of Otis elevators. With most UTC products, global designs are adequate, that is, there are limited reasons to design products, especially for particular geographical markets. Therefore, UTC is generally in a position to fully support worldwide standardization activities. However, there are vast differences in the types of products manufactured at United Technologies' operating units and the types of customers they serve.
The Challenge at UTC
Due to the great differences in the markets and customers served, and types of products manufactured, coordination of activities related to key strategies can be challenging at UTC. Additionally, UTC tends to be very decentralized in its decision-making processes-operating units act with a great deal of independence with decisions made at local facilities. The activity of managing UTC's standardization interests, activities, and initiatives, now understood as a key strategy, has presented a new set of challenges. Each operating unit's issues are different from the others, and continual internal benchmark assessments are used to determine when working together in step makes sense vs. working independently in support of operating unit and corporate goals.
In addition to decentralized decision making relating to operating unit performance, decisions as to the degree of standardization of products and product families are decentralized not only by operating unit but also by particular product line. Also, the question as to which management systems standards (such as ISO 9000) to register to is a decentralized decision. However, there are many opportunities for individual operating units to gain from the experience of the others so as not to recreate that which has already been addressed. Therefore, UTC units coordinate to form Councils to address issues of corporate wide strategic interest when the need warrants.
To respond to the challenge of more cohesively managing UTC's standardization interests, the UTC Technical Council, composed mostly of the vice presidents of Engineering of the various business units and the corporate vice president of Science and Technology, has chartered the UTC Strategic Standardization Management (SSM) Council. The Technical Council identified standardization as a strategic element for future global competitiveness and requested the investigation and review of the adequacy of UTC's response to global standardization activities that impact UTC's products and markets.
The UTC Technical Council chartered the UTC SSM Council to recommend ways in which UTC can strengthen its global competitiveness through standardization activities. We gained much insight from other company members of the American National Standards Institute (ANSI) Company Member Council and from ANSI when forming our SSM Council. Representatives from many companies went out of their way to assist us in creating a plan for action and success. The rationale was to assist U.S. businesses to be more active in global standardization activities for the collective advantage of U.S. business.
The Mission of the SSM Council
The specific mission of the UTC SSM Council is to: (1)Identify standardization opportunities that will increase operating unit and corporate competitive advantage in the global marketplace; (2)Promote SSM as a key business strategy and advise at both corporate and operating unit level on policies, guidelines, practices and organizational actions. Develop appropriate SSM assessment and implementation models for use by the operating units; (3)Provide leadership to assure active and integrated participation in standardization activities worldwide; (4)Provide a continuing assessment of UTC SSM activities and their impact on corporate and operating unit businesses.
The SSM Council is composed of one or more representatives from each UTC operating unit, along with a UTC retiree with standardization experience who acts as a consultant to the Council and its interests. Meetings are held approximately eight times annually at UTC's Leadership Center in Farmington, Conn. Much work, however, is done outside of the Council's meeting, back at the home operating units of Council representatives.
UTC has taken seriously these words written in the December 1994 issue of ASTM Standardization News by Keith B. Termaat of Ford Motor Company in an article titled "Standards Development: A Competitive Venture": "Since markets and their competitive and regulatory forces have become global, worldwide standards development and deployment are essential for survival of the enterprise." We constantly keep in mind the fact that in the globally competitive arena, survival is not a given. In fact, profitability is requisite for survival. Being profitable for an enterprise demands efficiency. We think there are great efficiency gains to be had through standardization.
The justification for involvement in standardization initiatives is to focus on the following efficiency gain outcomes: Enhance productivity; Reduce costs; Improve product quality; Enhance cohesiveness; Eliminate duplication and duplicative effort; Ensure efficiencies of new technology implementation; Enhance customer satisfaction and expand sales; Enhance product entry and acceptance in global markets; Connect with other companies' representatives to reshape the system to better serve our interests; and Forecast the impact of standards on the enterprise.
Standardization management must be recognized as a business issue to improve competitiveness in global markets. Consider the purpose, management and benefit of standards, also as stated by Keith Termaat: To deploy product performance policies so as to create a competitive advantage or avoid a disadvantage; To unify global markets and operations; To assure connectivity of rapidly advancing technology; To attain cost efficiency through commodity buying of large production volumes; and To institutionalize corporate memory and transfer knowledge and experience across the corporation.
A recent activity undertaken by the UTC SSM Council was a simultaneous inventory and audit of standards developing organization (SDO) committee representatives throughout UTC and establishment of a corporate-wide database of the participants and the SDOs and their committees. The inventory recorded, for the first time, the corporate-wide participation of UTC associates in SDO committees, and their membership status, such as voting or corresponding. The audit assessed the level of engagement in SDO committees relative to UTC's strategic interests.
Prior to conducting the inventory/audit, we first analyzed UTC's key technologies and strategic issues, and then examined the appropriate SDO committees furthering issues involving these technologies. Membership gaps, overlaps and unnecessary involvement were examined. Also, the Council has worked to further cross-representation of associates on SDO committees from one operating unit who can jointly represent the issues of another operating unit, as well as to prioritize issues.
For organizations just starting to manage their standardization activities, starting with a keen understanding of company issues is paramount. Start with analyzing business plans. If technology plans are separate from business plans, be certain they are studied. Consider carefully the steps in the Recipe for Success in Standardization Management (sidebar) and how they might apply to your organization.
This management of essential strategic interests through SDO committee participation is something that many organizations should consider and keep abreast of. This is considered Strategic Standardization Management TM, a phrase to which ANSI owns the copyright. It is more than a phrase, or a time-based management initiative, for we believe that SSM has far-reaching consequences and a reason for permanency in the organization.
Today's Important Standards Issues
Of the issues of primary interest to the UTC SSM Council being discussed in SDO committees, a few have surpassed the others in importance. These are both strategic and tactical and also a mix of management standards issues and technical standards issues. The list is constantly changing and reflects the interests in 1996:
Elimination of government and military specifications and standards, and the transfer of ownership to the SDOs; The government single process initiative/block change proposal; ISO 9000 quality series and registration issues; ISO 14000 environmental series; Occupational health and safety standards; Declaration of Conformity part marking symbol; Skill and education standards; Conformity assessment issues; Open system issues; Product data issues; The National Standards Systems Network and internal digital access to specifications and standards; Global harmonization; Worldwide communication and systems; Reduction in standards development time; and Use of international standards whenever possible, followed by national and industry standards, then customer and, finally, internal organization standards.
This listing does not reflect the particular specific technological interests of UTC as it would be inappropriate to relate this information here. It does, however, list issues of concern to many other U.S. global organizations. The approach to these issues by the UTC SSM Council has been to ensure an adequate level of awareness and understanding and, where necessary, increase the awareness level.
When issues are being effectively addressed by other existing UTC Councils or committees, the SSM Council takes on a monitoring position, to ensure progress is being made and the proper associates are engaged. When gaps are perceived, the Council takes on the issues directly until they can be handed over to an appropriate council or committee. Additionally, the Council prepares and reviews approaches and plans for each operating unit. It actively seeks out these gaps and implements remedial action, if necessary. Where possible, the SSM Council identifies common elements across UTC operating units and assists operating units in implementation. Also, the Council is actively engaged in assessing external benchmarks in an ongoing way, relating SSM to operating unit strategy plans, while separating strategic from tactical issues.
When necessary, the SSM Council acts to inform appropriate UTC senior management on issues that are strategically important to UTC business, along with actions implemented, benefits and risks. The Council reviews UTC's global products and markets and then recommends how to influence SDO committee decisions that will ultimately affect UTC products. This is done by maximizing resources.
To monitor issues as they evolve in the global environment, Council members are personally and actively engaged in a number of standardization committees. Committees dealing with building codes are paramount to Otis Elevator, while technical committees working aircraft and space vehicle issues are of high importance to Hamilton Standard. Mostly, however, the Council reacts to management systems standards issues that apply to many different types of organizations. UTC also is directly engaged in numerous key ASTM Technical Committees in areas such as petroleum products, lubricants, carbon/graphites, copper and alloys, flammability and sensitivity of materials in oxygen enriched atmospheres, fibers, test methods and analytical procedures, structural applications, environmental issues, and thermal measurements. It is in the best interest of all of us for U.S. companies to be involved in technical committees sponsored by organizations such as ASTM.
Walk the Walk, Talk the Talk: Exercise Informed Involvement
UTC operates under the imperative that it is in the best interest of U.S. business to take the lead in both domestic and international standardization activities and that the continued involvement of the U.S. government is essential. We understand the need to educate key associates on the issues and for prioritizing standardization issues. Operating in a cohesive, unified alignment is critical for UTC on many standardization initiatives (especially management systems standards) as all operating units have a stake in the strategies. We have proposed that global approaches usually improve domestic positions and are essential to understanding changing world events and emerging international standards.
There are not many resources to teach one how to effectively promote standardization strategies. In fact, few business and engineering schools recognize the value of or even deal with the issue of standards. It may be necessary to provide specialized training to SDO committee representatives. This is particularly true for subject matter experts (SMEs) joining SDO committees for the first time. Gauging the value of one's training and background may be difficult. An assessment of the SME for technical knowledge, interpersonal skills, and knowledge of the voluntary standards system should be accomplished by the organization. Ideally, this would occur prior to sending the representative to his/her first SDO committee meeting.
It is also a requisite to understand that standards need to bring about market change, not to react to the change. Active and informed communicative participation on SDO committees by UTC associates is essential. For this reason, UTC is implementing communications systems for SDO committee representatives to post issues being addressed and UTC's perspective on those positions. Additionally, strategic alignment with other companies is often gained through key industry consortia and trade associations. UTC tends to analyze involvement in and strategies for consortia and trade organizations the same as for SDO committees.
UTC has launched an enterprise productivity initiative in which significant business process reengineering events are taking place to increase productivity and reduce costs. Through the business process management improvement events, paradigm shifts are accomplished. These are usually accompanied by a significant simplification of approach. We need to clearly link standards issues with productivity goals, along with the businesses and products and technology goals.
Individual SDO committee representatives best serve their organization and committee by being informed with internal and external issues. Additionally, representatives must be communicative with information gained (as timing is everything). If not engaged with the strategies presented, representatives should take it upon themselves to develop their own value to both the organization and committee by improving their skills through training. If the organization recognizes that its strategic interests are furthered, and efficiencies gained through an effective committee representative, it will continue to support the individual.
SSM clearly addresses SDO committee participation as a management issue, where it belongs. How SSM is implemented will influence the shape of the future for industry and society. SSM will determine how effectively and quickly new technologies are made available to the world. The future of U.S. business and the competitiveness of U.S. products will, in many ways, be shaped by the standards to which U.S. products must (and should) conform.
A Recipe for Success in Standardization Management When Starting to Manage Standardization Activities
Plan for Action
Form a council or team, whatever makes sense for your organization, with key associates representing various disciplines.
Ensure key top management cognizance and personal commitment.
Develop an action plan, start with what follows.
Perform a Business Analysis
Continuously Improve--Start the cycle again.
If Gaps Are Found