Why Standards Matter

Two-sided markets, such as Amazon.com, depend upon open standards to allow components to interact in ways where different firms add value in a transaction which may be controlled by another. This sharing of process is certainly better for the customer as they may benefit from the core competencies of different vendors. It does however present a bit of a prisoner's dilemma for the vendors. In a shared or open market, all vendors compete relatively equally based upon the value of their contribution. If the barrier to entry for their particular area of expertise is low, you can expect the margins to be equally depressed. Conversely, a firm that creates its own standard, and disallows others from working with its clients, commands higher margins. The results are usually weaker for the customer with a dominant vendor scenario unless the dominant vendor pushes the quality of their offerings farther than needed. The need to push quality is driven by the likelihood of a true competitor. In areas with high barriers to entry and a long sales and development cycle, upstart competitors are few. Organizations such as OSCRE, who create standards in a non-profit, industry run consortium, help develop two-sided markets. By creating standards, they lower the barrier to entry for startups thereby increasing the competition. Increased competition, in theory at least, leads to more efficient pricing and rapid innovation.

Social networking is helpful tool in the evaluation of potential projects. By eliminating the boundaries between management, staff, clients, and prospects, the communications resulting in the design and prioritization of features and solutions can be dramatically accelerated and broadened. James Surowiecki's The Wisdom of Crowds explores the structures needed to avoid group-think and promote the best values and benefits of shared intelligence and democratic decision making. By encouraging an open and honest dialog about features and policies, management can hear the ideas and concerns of its most important constituents. By quickly reviewing the content of blogs, chats, and tweets, that feedback can be quantified and re-queried for greater depth and understanding. By allowing employees to critique, the confident and humble manager can better listen. Then the manager can work to gain clarity on what they are hearing. It's a great opportunity to hear employees' ideas about missed opportunities in areas that would benefit clients and therefore the firm. Careful listening exposes solutions that can be applied to business processes, policies, and systems.

Listening carefully is a delicate task. Communication styles need to be crafted for differing generational sensitivities. Authenticity in communications is critical in managing the perceptions of all generations. Some leading firms have begun to pay attention to these informal channels and have allowed corporate communications staff to regularly use Twitter, LinkedIn and even Facebook on company time. They are working to develop strategies for employing social networking in managing their brand. Many firms block access to these tools as well as instant messaging, hampering the effectiveness of their employees, creating a restrictive culture. The restrictions can push employees to potentially more disruptive behaviors as they strive to communicate. A balance is needed to allow the culture of openness while minimizing down time. Long trusted techniques of managing for output are best, as staff that abuse these tools and fail to get their work done need to be punished for lack of production. Employees who are focused on achieving specific goals will find ways to use social networking tools to accelerate their success.

Social networking, combined with outsourcing allows your organization to tie together in-house and vendor staff. This link is critical for the success of outsourced software developments. A downside of outsourcing can be an 'out of site, out of mind' mentality. While an outsourcing vendor is better able to focus on their area of specialization, it is critical for the success of any assignment that your management and end users stay tightly integrated with the project. Long term relationships between vendors and your organization can help ensure a continuity and expansion of understanding of your goals and culture. Business side participants must drive any project if it is to provide real value. An experienced vendor with a track record of success will insist upon strong management involvement and usually includes checkpoints along the way to allow for a reassessment and modifications in the design. A focused group of test users must be incentivized to actively participate in design and review prototypes to ensure that solutions that meet the specification, and the needs of clients.

 

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