One of the problems that most startups face is their inability to scale. Scaling is all about standardization and achieving quality. As a startup many founders do not have the luxury of immediately scaling upon inception. But, founders must have an eye on standardization of products, services, processes, and transactions.
What is standardization?
From a business point of view, standardization refers to the process of establishing and implementing uniform practices, procedures, specifications, or guidelines across an organization or industry. It involves developing a set of consistent and agreed-upon standards that govern various aspects of business operations, products, services, or processes.
For example, many startups do not focus on specific markets to be efficient. Instead they always try to address many markets and many segments. This leads to creating lots of product variations and in the process they are unable to meet the expectations of any one segment. This also leads to waste of effort and creates inefficiency. Scaling is hampered.
Standardization plays a crucial role in promoting efficiency, interoperability, and quality assurance within a business or across an industry. It aims to streamline operations, reduce costs, enhance productivity, improve customer satisfaction, and facilitate collaboration and exchange of goods and services.
In a business context, standardization can encompass different areas, including:
1. Product Standardization: Defining specifications, features, and quality requirements to ensure consistent product performance, compatibility, and safety. This can involve establishing industry-wide or internal standards for product design, components, packaging, labeling, and manufacturing processes.
Many startups thrive on managing products. Startups often fail to have a senior empowered person to manage the Product. A service can also be defined as a product. The role can be called as Product manager or Product Owner. By having such a person in the key role, the organization is able to address the customer’s requirement and gear the internal processes and systems of the organization and prioritize actions and deployment of resources.
Therefore, consider having a Head of product in your organization. It is a good idea to have the Founder / CEO play this role.
2. Process Standardization: Establishing consistent and efficient procedures, workflows, and protocols for carrying out specific business processes. This may involve defining standardized methods for tasks such as inventory management, production, customer service, project management, or financial reporting.
This process standardization leads directly to increased efficiency and repeatability of actions and transactions done inside the organization. This will result in the ability to measure the actions and outcomes. This again will lead to efficiency and reduction in overall cost and increase in value.
3. Service Standardization: Setting uniform service delivery standards to ensure consistent and satisfactory customer experiences. This can involve defining service level agreements (SLAs), customer support protocols, response times, and quality benchmarks for service providers.
Service standardization leads to providing better service to your customers. They would be able to predictably engage with you and therefore the trust improves as well as your brand becomes stronger. After brand is an experience that people have with your organization.
4. Data Standardization: Establishing consistent formats, structures, and definitions for data across different systems, departments, or organizations. Data standardization enables efficient data exchange, integration, analysis, and reporting, fostering better decision-making and organizational alignment.
Data standardization and other processes help us to measure the actions and outcomes. This also results in learning about the organization and its effectiveness. Data standardization is an important step to setting goals and achieving.
5. Industry Standardization: Collaborative efforts among organizations within an industry to develop common standards, practices, and protocols. Industry standards facilitate interoperability, enable fair competition, encourage innovation, and ensure consumer safety and protection.
Founders also have to understand how the entire industry locally, nationally and globally works and ensure that products and services
Overall, standardization in business aims to create consistency, reliability, and predictability, leading to improved efficiency, effectiveness, and customer satisfaction. It helps businesses streamline operations, reduce complexities, enhance communication, and drive innovation while maintaining quality and compliance.
There are many reasons why companies might choose to standardize their operations. Some of the most common reasons include:
- To improve quality: Standardization can help to ensure that products and services are consistently produced to the same high standards. This can lead to increased customer satisfaction and repeat business.
- To reduce costs: Standardization can help to reduce costs by eliminating the need to develop and maintain multiple versions of products and services. This can also lead to increased efficiency and productivity.
- To improve safety: Standardization can help to improve safety by ensuring that products and services are designed and manufactured to meet specific safety standards. This can help to reduce the risk of accidents and injuries.
- To increase compliance: Standardization can help businesses to comply with government regulations and industry standards. This can help to avoid costly fines and penalties.
Companies typically make decisions about standardization by considering a number of factors, including the following:
- The size and complexity of the business: Larger and more complex businesses are more likely to benefit from standardization than smaller and simpler businesses. But it is important to start it early. Because often growth will be hampered by non-standardization.
- The industry in which the business operates: Some industries, such as manufacturing and healthcare, are more regulated than others. This means that businesses in these industries may be required to comply with more standards.
- The company’s goals and objectives: A company’s goals and objectives will help to determine which areas of the business should be standardized. For example, a company that wants to improve its quality may choose to standardize its product development process.
Startups can implement standardization during the early stages of inception by following these steps:
- Identify the key areas of the business that need to be standardized. This may include product development, manufacturing, marketing, and customer service.
- Develop standards for each of the identified areas. The standards should be clear, concise, and easy to understand.
- Communicate the standards to all employees. Employees should be trained on the standards and held accountable for meeting them.
- Monitor and review the standards on a regular basis. This will help to ensure that the standards are still relevant and effective.
By following these steps, startups can implement standardization during the early stages of inception and lay the foundation for a more efficient, productive, and profitable business.
Here are some additional tips for startups on how to implement standardization:
- Start small. Don’t try to standardize everything at once. Start with a few key areas, such as product development or manufacturing.
- Be flexible. Standards should be flexible enough to allow for change. As the business grows and changes, the standards may need to be updated.
- Get buy-in from employees. Employees are more likely to follow standards if they understand why they are important and how they benefit the business.
Here are some specific examples of how standardization can be used to improve businesses:
- In the automotive industry, standardization of parts and components has helped to reduce costs and improve quality. This has made it possible for automakers to offer more affordable cars with higher levels of performance and safety.
- In the healthcare industry, standardization of medical procedures has helped to improve patient safety and outcomes. This has led to a decrease in medical errors and a decrease in the cost of healthcare.
- In the manufacturing industry, standardization of production processes has helped to improve efficiency and productivity. This has led to a decrease in the cost of goods and an increase in profits.
As you can see, standardization can be a powerful tool that can help businesses improve their performance in a variety of ways.
If a startup is planning for growth, the founder must have a deep understanding of the need for Standardization within the organization. And find ways and opportunities to implement it, to ensure scalability.
A J Balasubramanian is a serial entrepreneur, with over three decades of startup experience in founding companies, mentoring / incubating startups and writes regularly on topics of interest to startups.