Standards Michigan Group, LLC
Standards Advocacy for Lower Costs in the Education Industry
We are the reconstruction of an outward-looking enterprise begun at the University of Michigan in 1993 that focused on making education facilities safer, simpler, lower-cost and longer-lasting with assertive advocacy in ANSI-accredited and open source standards in the global standards system. At the time, there was no education industry trade association advocating the user-interest in consensus document development in any meaningful way so the decision was made to advocate the University of Michigan safety and and sustainability agenda; thereby setting an example for other organizations.
By collaborating with other colleges and universities — and especially incumbent stakeholders — we achieved reductions in the cost of buildings and infrastructure at the University of Michigan which are now shared possibilities for all other colleges, universities and school districts in the United States. We estimate that the original enterprise achieved 1 to 2 percent avoided cost opportunities in annual facility operating budgets by negotiating technical and policy compromises using US consensus standards system administered by the American National Standards Institute. In an industry that spends about $300 billion annually designing, building, operating and maintaining some of the most valuable public assets, a 1 to 2 percent reduction in prospective facility management budgets is meaningful.
In the US standards development system the user interest in the education industry is the final fiduciary — the steward of one of the largest assets owned by any unit of government or private institution trusteeship. In the US standards system administered by the American National Standards Institute the user-interest is granted an equal voice in the development of the technical and business standards that are frequently incorporated by reference into public safety and sustainability regulations. The US National Technology Transfer and Advancement Act compels federal agencies to turn decisively to consensus-based, voluntary standards as alternatives to specifications that had previously been developed only for government use. The goal of the legislation has not been conveyed into the education industry, however — the result obvious in the parabolic increase in the cost of education in the United States.
Educational campuses are the locus of the brand identity and the economic well-being of the communities that hosts them. There are about 1000 – 10,000 of them in the US alone; including K-12 school districts, private colleges and large research universities. Higher education campuses — effectively “cities within cities” — are remarkably affluent. Many believe that higher education campuses in the United States constitute a sovereign nation onto itself.
From the very beginning, we understood that by slicing horizontally through the silos of an industry that runs about 4 percent of US Gross Domestic Product would not be an undertaking for the timid. We would be stepping onto the territory of incumbents — competitor stakeholders, education industry trade associations and standards developers — who had made their business model work for private industry (but not public infrastructure markets). In startup ecosystem parlance, we saw a “gap”. It was obvious that an industry whose costs were running at multiples of the US inflation rate was not in the meetings where technical and business standards were being developed and that participation in the leading practice discovery that takes place in those processes could contribute to cost control. We found that all standards developing organizations welcomed the participation of the user interest in the education industry; and still do. The failure to participate in these global processes — and the opportunities the standardization stream presents for the reduction in redundancy and destructive competition — lies with the education industry itself.
Market incumbents — manufacturers, insurers, accreditation laboratories, labor, etc — have a long, storied and well-financed footprint in the consensus standards system in all nations. Virtually all resources of the US education industry are devoted to enforcement, inspection and compliance whose interests align most closely with market incumbents because they all receive money from the user-interest. There are a few teaching enterprises (i.e. faculty “spreading the gospel” about standards without getting down into the weeds to make the system contribute to cost efficiency by sustaining a grind through the process). More than any other college or university in the US the original University of Michigan enterprise succeeded in proving that the global standards system could work for an industry whose business enterprises needed to look outward.
At the University of Michigan alone, the annual spend on building and maintaining the physical campus ran about three times the annual budget allocation received from the State of Michigan. Advocacy for this allocation was supported by a Government Relations enterprise very much like the government relations enterprises in other public universities. And, very much like the government relations enterprises in most public universities, there was no priority — let alone a skill set that required both technical and business expertise and influence — for managing the cost of their “city-within-a-city” through the global consensus standards process. We can claim with confidence that the original enterprise placed downward pressure of about 1 to 2 percent on the #TotalCostofOwnership in a deep, fundamental and enduring way. The problem, of course, is that the results are described in avoided cost; a number that is difficult to see (though implicit in the “Infrastructure Recovery Cost” on tuition invoices issued by some colleges and universities).
No enterprise is exempt from the need to adapt to changed priorities — especially so when new leadership is put in place. Unlike deep cycle industries such as energy, chemical and pharmaceutical industries that invest in innovations that take decades to realize financial benefit, the lead time for effective standards advocacy spans across the tenure of most college and university presidents. The original @StandardsUMich enterprise was discontinued suddenly in July 2016 as part of a very large University of Michigan reorganization of its business and finance division. (See the historical summary below)
A reconstructed enterprise was formed within 36 hours after the sudden change in organizational geometry — now @StandardsMich — still under construction — but hewing to the same mission — is now a limited liability corporation in order to be receptive to, and innovate upon, the broadest possible span of financing possibilities.
Experience suggests that the non-profit business model may not be optimal for advocating on behalf of the public sector. These trade associations — and there are a surprising number of them — are not in the same business as their members; though they provide an essential platform for communication among members.** They need to be in the standards space just enough to provide content that supports membership and other auxiliary forms of revenue. We are hard pressed to find even one education industry trade association that has been effective in consensus standards development that has resulted in a measurable reduction in #TotalCostofOwnership. Competitor stakeholders employed by individual institutions have been, but not trade associations. We welcome any information to the contrary.
Assertive, streaming, independent advocacy on behalf of the user/owner/final fiduciary work continues; with the seeds of advocacy objectives planted at the University of Michigan in the early 1990’s continuing to bear fruit in the most important consensus standards for building and maintaining education and healthcare facilities. The avoided cost the original enterprise delivered accrues to every college, university and school district in the United States. (Click here: UM Welcomes ANSI 2014) Effective technical and management standards advocacy requires a very long runway — the 6 to 12 year length of a typical college university president’s term in office, for example. Most education industry management structures cannot accommodate the long-lead time undertakings that are common in the private sector. They want to see measurable results on a per-project basis rather than suffer through claims that standards advocacy produces results for all projects and all colleges, universities and school districts. Deep cycle industries such as the energy and pharmaceutical industries routinely invest in projects that take decades to ripen. This perspective informs the raison d’être of Standards Michigan.
One measure of our success in the past 3 years is that leaders of non-profit education industry trade associations have been persuaded by the success of the original University of Michigan enterprise and are now assembling subject matter experts to pull together informed positions from their memberships on how technical and management standards should be developed to lower #TotalCostofOwnership. Since there are 100’s of education industry trade associations — complicating the development of a single position — a component of the value proposition of Standards Michigan will be to serve as a “watchdog” organization that will follow the performance of these trade associations and their advocacy contractors as they scale up their participation in the development of American national standards.
The social negotiation of technological change:
Too much standardization — you stifle innovation and delight.
Too little standardization — you get interoperability crises and destructive competition.
There is an “arms race” going on now in the education industry; with campuses growing to meet the demand from students from developing economies with newer, flashier facilities; coupled with the supply of philanthropic money. Accordingly, the US education industry is building and renovating at a clip of about $90 billion per year — about the gross annual revenue of Microsoft Corporation. Overall, the education facilities industry has an annual spend of $300 billion; making it a Fortune #4 company. Despite the enormity of this industry, virtually all resources of the largest non-residential building construction market in the United States is devoted to conformity and compliance with existing codes and standards largely set by other stakeholders in the global standards system. The education industry is one of the most heavily regulated industries in the US according to IBISWorld and it is a culture of compliance insofar as safety and sustainability standards are concerned. There are exceptions, of course. A few universities free up their best minds to participate in consensus standards development but the efforts and successes of these experts are generally unrecognized and unrewarded in their home organizations. Their work — not unlike watching paint dry because it requires patience and endurance — is recognized by the relatively small ANSI federation and the larger organizations whose revenue is derived from conformity and education , however. Experience suggests that user-participation remains an uphill battle.
The problem the user-interest faces in the the US standards system — and it is a problem shared by the user-interest in all of the global standards systems — is the weakness of participatory democracies. Not everyone wants to get involved. There is more money to be made in conformity and certification and the results show up as revenue not avoided cost. In the public sector especially the underlying reason for non-participation is that “it’s everybody’s money” or “other peoples money”. Executive management of these “cities-within-cities” have demonstrated indifference to the opportunities to leverage the economic footprint of the education industry to reduce its cost structure through national and international consensus standards processes. Perhaps no other industry in the world is immune to the consequences of overlooking a $10 billion avoided cost opportunity than the US education industry. In a speech made at the University of Michigan Ross School of Business, S. Joe Bhatia, CEO of the American National Standards Institute, makes this point:
In the near future we will resume our reports on the progress and results of education industry trade associations. Ahead of that, and concurrently, we will continue participation in the commenting opportunities presented by all global standards development organizations to collaborate with other stakeholders to develop cost effective and sustainable solutions to building and operating real assets that are one of the most important and politically visible assets at any level of government. We will be building state-affiliates. The United States is, after all, a democratic republic of 50 different states; each of which may have other ways of adapting to, and inspiring nationally developed consensus and open source standards.
While this site remains largely “under construction” at the moment, the original network of colleagues remains intact (See Contacts) and are contributing to its reconstruction after funding for the original enterprise was abruptly withdrawn in a division-wide reorganization in July 2016.
SITE UNDER CONSTRUCTION
* In nearly every nation, the user-interest — the final fiduciary — is outnumbered and under-financed compared with the stakeholders (such as producers and general interests) who are able to build the cost of their advocacy (professional time, travel expenses, administrative incidentals, etc.) into the price of the product or service they provide to the user interest. The user-interest in academia should not be confused with faculty who consult with producers and general interests. Multinational industrial conglomerates frequently retain faculty from business and/or engineering schools to advance their economic agenda and consensus standards developers err when they claim that “academia is involved”. The interest for which @Standards Michigan advocates is more accurately described as the tuition-paying student. More information on the categorization of interests is available in Section 2.3 of ANSI Essential Requirements: Due process requirements for American National Standards .
** For example, the University of Michigan was the inspiration and catalyst for the creation of the APPA Standards and Codes Council and for decades financed its first and only vote in ANSI accredited standards so we are familiar — arguably, the discoverer — of the weakness trade associations in asserting the economic interest of the user/owner/final fiduciary. Among those weaknesses are the reinforcement of the Producer and/or General Interest in the global standards system. Many trade associations need the sponsorship revenue from Producers and General Interests.
The wicked problem faced by the public sector user-interest — which we are trying to solve — can be understood from the perspective of two classical economic theories:
The views and opinions expressed on this blog site are those of the authors and do not necessarily reflect the official policy of a trade association or standards developer.
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