Is there real value in ISO standards?
From any multi-national company’s perspective, ISO standards offer a number of benefits, including:
- Breaking down international borders: through the widespread adoption of standards, products and services are developed according to internationally accepted specifications
- Improving efficiency
- Sharing and proliferation of innovation and technological advances
- Creating a baseline for health and safety and environmental impact
While not a mandatory requirement, ISO standards are a guide to which governments and industries align policy and legislation.
However, it is important for companies to see these standards as more than just a requirement, whether legislated or market-led, and instead view them as drivers of better business performance and organisational growth.
Our March blog “Can the threat of adverse publicity motivate companies to achieve legal compliance?” explored how reputational damage is a motivating factor for achieving certification to certain ISO standards. This type of “fear factor” can help large organisations to realise the importance of standards. But is this the most constructive means of increasing their uptake?
Companies may implement standards as a direct response to legislative changes or reputational damage. While this is a reactive response, proactive implementation of standards can have significant benefits for organisations beyond compliance with mandatory laws and legislation.
The ISO publication “What’s the bottom line?” places a tangible economic value on the benefits of standards. In Germany, the benefits of standardisation made up 1% of GDP, more than patents or licenses. In the UK, an estimated £2.5 billion contribution to the economy and a 13% increase in labour productivity are attributed to the implementation of standards. Estimates by the OECD and the US Department of Commerce in 2012 showed that standards and assessments had an impact on 80% of the world’s trade in commodities.
A study on the global automotive industry in 2009 undertaken by ISO and Roland Berger Strategy Consultants found that the total gross profit contribution of standards for auto manufacturers and parts suppliers was estimated in the range between 1.3% and 1.8% of total sales, translating into between $38 billion and $55 billion.
These examples illustrate the positive impact that implementing and conforming to standards can have on economies, industries and businesses. Instead of waiting for legislators and governments to enact change, organisations must see the broader benefits of standards implementation to drive improvement in their businesses with the potential to increase their bottom line.