In the discussion around global standards and global politics, one of the questions we are discussing is:
Under what scenarios will increased political involvement result in strategically adapted national standards, that foster unilateral interests, as opposed to globally coordinated standards, that serve common interests?
The statement reveals a dichotomy: That of national standards vs global standards, in that it assumes there are only two interests in this discussion which are either national or global. However, there is a third – more important motivation for standards – that of companies to solve problems.
But why are we discussing the issue in the first place?
If we take a step back, we find that the discussion of national standards vs global standards has always been in the background. But it was in the context of a much simpler ‘dominating political power’ framework.
In the 1800s, the UK and Europe were the dominant global players and their standards became de-facto global standards.
In the 1900s, the locus of power shifted to the USA with a secondary Eastern block led by the former USSR.
In the 2000s we face a more complex scenario with no single locus of power. Instead, we have multiple centers of influence including the USA, UK-EU and the BRIC economies.
In this context, the question of national vs global needs a third facet – that of companies/enterprises.
When I say ‘companies’ it is tempting to think of large multinational companies. But in a more diverse global scenarios, the picture is not so simple.
Last month, the Economist ran a insightful special report on Emerging market innovation. The special report’s theme can be summarized as below (emphasis mine):
It is hardly news that the world’s centre of economic gravity is shifting towards emerging markets. Buy a mobile phone and it will almost certainly have been made in China. Use it to phone a customer helpline and your call may well be answered by an Indian. Over the past five years China’s annual growth rate has been more than 10%, and India’s more than 8%. Yet even these figures understate the change that is taking place. Emerging countries are no longer content to be sources of cheap hands and low-cost brains. Instead they too are becoming hotbeds of innovation, producing breakthroughs in everything from telecoms to carmaking to health care. They are redesigning products to reduce costs not just by 10%, but by up to 90%. They are redesigning entire business processes to do things better and faster than their rivals in the West. Forget about flat—the world of business is turning upside down.
The Economist concluded on an optimistic note:
Moreover, it is in the nature of innovation to feed upon itself. Innovation in the emerging world will encourage, rather than undermine, innovation in the rich world. Western carmakers learned the techniques of lean production from their Japanese rivals, just as the Japanese had earlier learned the techniques of mass production from the Americans. This great insurrection, like its predecessors, will make us all richer.
My take on this is:
• The discussion reveals a dichotomy between national and global standards.
• The old world of a single or a dual loci of power has changed and with it comes multiple influences to making standards global.
• In contrast, the timeless motivation of companies to solve specific problems is the constant driver even in a changed world.
• The companies driving innovation are often coming from emerging markets ‘turning the flat world upside down’ as the Economist so graphically puts it.
I like to learn from history and as novel as it is, the scenario is not unique. In the seventies and eighties, Japan and other countries worked with the same motivations. But when it came to standards, the Japanese government standards did not prevail. Even today, Japanese company led consortia standards continue to prevail in consumer electronics (such as Sony’s Blu Ray).
This trend will continue. Worldwide it will be companies, and not governments, that will drive standardization to solve problems. Originating from companies, the standards will percolate ‘bottom up’ to their national interests instead of ‘top down’ from global to national standards.
Nevertheless, we are going from a ‘flat world’ to an ‘upside down’ world and as the ancient Chinese proverb goes – We will live in interesting times. But still I believe that history will repeat itself and timeless principles will prevail as they did in the seventies.
