The Entrepreneurial Case for ISO Standards

“Why should I care about ISO standards if my entrepreneurial company isn’t a manufacturer?” This is a great question and illustrates the common belief that ISO is only for manufacturers, or huge conglomerates, or global enterprises. As an entrepreneur who founded several companies (Leo) and a quality-management specialist (Ralph), we have experienced how ISO standards have helped our various companies and benefited our clients.

Reasons to Use ISO Standards

  • Reduces risk: The underlying reason for ISO compliance is that entrepreneurial companies are at a greater risk than established organizations – and thus have a more compelling case for minimizing risk. If a young company doesn’t have policies, processes and procedures that are standardized, it risks wasting its precious resources. And that doesn’t result in just missing the numbers – it can mean going out of business.
  • Builds in consistency: It isn’t enough for fledglings to operate with a “general knowledge” of the details involved in turning out first-rate products or services. Typically the founders and a few employees have the needed knowledge but it is not communicated consistently across the organization. ISO standards, by contrast, put policies, processes and procedures in writing so that everyone is aware and able to work within common directives.
  • Measures ROI: In addition, ISO standards serve as a checklist against which a young company, whose financial talent and systems might not yet be up to par, can measure critical entrepreneurial objectives, namely return on investment, or ROI.
  • Builds credibility: Finally, standards function as an imprimatur, convincing partners to engage with, and customers to buy from, an untested entity.

About ISO

ISO derives from the Greek root, “iso,” meaning equal. In 1947, when groups that set quality standards in individual countries first got together and proposed formulating standards that would be recognized globally, they targeted major manufacturers. Today, however, the International Organization for Standardization, a non-governmental group with 140 member bodies from as many countries, targets all businesses.

De-Mystifying ISO

Some entrepreneurs believe that ISO standards would force their products or services into a preset mold that isn’t practical, natural, or achievable. However, nothing could be further from the truth. ISO standards aren’t rigid dicta, but rather guidelines into which each business inserts its particulars.

An analogy would be a road map, say, from Ralph’s home in Holland, Michigan, to Florida. The road map would direct the traveler to take I-75, the quickest and most efficient route. In this case, Ralph would need to amend the road map to include the state highway connecting Holland to the interstate. If he were traveling for pleasure, he might further tinker with the document to include forays on scenic highways paralleling I-75.

ISO standards are analogous to the road map; how the road map is applied is up to the individual company. Consider the case of an entrepreneurial enterprise that provides valet parking services at airports. ISO standards stipulate that companies have a written job description for each position. However, this company, whose valets meet customers at the curb and take the cars to be parked (as well as provide services, such as oil and filter changes, while customers are traveling), would tailor its job description for the valet according to its requirements.

In this case, the valet company sought ISO certification to secure bank financing. In another, a three-person design firm wanted to get a grip on the business side of its endeavor. One ISO standard calls for polling customers for feedback on invoices. In doing so, the design company found that its clients wanted a more detailed description of the time spent on each task, as well as a listing of the charges for materials. When the firm complied, it discovered that it got paid faster and with less hassles, and was attracting more repeat business.

Steps to Standardization

Achieving compliance with ISO standards isn’t easy or inexpensive. The first step is becoming familiar with the lingo. The most important buzzword is ISO 9000, the benchmark that has for years applied to most companies. In November 2000, it was updated and renamed ISO 9001:2000 to align more effectively with the needs of process and service companies, and with another guideline that governs environmental issues.

Next, entrepreneurs need to make time for the process, which usually takes 18 months. Sometimes companies hire a third party, such as our consulting firm, but that route is expensive. A company would spend $10,000 or more depending upon its size and complexity.

In either case, whoever is designated to lead the initiative must follow a proscribed set of 13 steps outlined by the Organization for Standardization. These include identifying the goals the company wants to achieve, such as improving profitability or market share; obtaining information about the ISO standard for each; determining whether the company meets the standard, and, if not, how to bring it into compliance. (A full list of the guidelines appears on the ISO Web site).

To Certify or Not to Certify

Once in compliance, a company must then determine whether or not to go for certification, which means being approved by an independent accredited registration or certification entity, apart from the International Organization for Standardization (which doesn’t handle the job of certifying.)

Many foreign countries require businesses to be certified. In the United States, however, this step is optional, and companies could instead simply align their processes and procedures to ISO standards and declare themselves in compliance.

In our opinion, even companies in the United States should pursue certification. Taking that step, after all, would make the best use of the resources it has expended to undergo the process. In addition, certification signals forthrightly that the company cares about adhering to a level of quality that is unsurpassed in the world.

In sum, the rewards of being in sync with an internationally recognized quality standard is more than worth the exacting journey to get to that point. A benchmark against which a company can measure progress, a credential on the calling card: these are reasons enough for founders to pursue the ISO compliance and certification. The case is airtight — ISO amounts to an entrepreneurial statement.

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