Juhani Anttila
Venture Knowledgist Quality Integration
Helsinki, Finland
www.QualityIntegration.biz

BUSINESS-INTEGRATED QUALITY MANAGEMENT
A Company Case, an example of a long term development of quality integration

Abstract

This paper deals with the development of quality integration through a practical example, the company case of Sonera Corporation from 1960's to the first decade of the 2000 century. Sonera is a leading telecommunications service provider, a telecom operator, in Finland. This case is an example in applying internationally recognized concepts, principles and practices, e.g. the ISO 9000 standards and performance excellence models (quality awards criteria), in an innovative way. Through this kind of long term case experience also general conclusions may be made to help corresponding development in other organizations, too.

Historical background and development

Over the last decades of the 1900 century, generally recognized quality concepts were adopted at Sonera Corporation and within its predecessors (Telecom Finland), and the overall attitude towards quality was developed correspondingly. All this took place along with the overall development in the telecommunications technologies and the business environments of the company, e.g. including the change of the company from a domestic state monopoly organization to a business company in competitive international markets.

One may discern the following dominant stages pertaining to quality development during the decades at Sonera Corporation:
- 1960: Emphasizing technical specifications, ensuring the problem-free functioning of the telephone network and reliability of technical equipment and systems
- 1970: Recognizing international standards (ITU Telecommunications Recommendations and IEC Electrical Standards) for telephony, providing standards based quality services, setting requirements for and controlling suppliers of telephone network equipment and systems
- 1980: Aiming at customer perception and satisfaction pertaining to the company's products, establishing first experiences with the ISO 9000 quality management (QM) and quality assurance (QA) standards already in their early draft phase in the beginning of the decade
- 1990: Entering the Total Quality Management (TQM) approach related to business performance improvement and understanding comprehensively the ISO 9000 standards series and using them simultaneously with performance excellence models (quality award criteria). Creating and introducing the concept "Quality Integration" to express how to bring all quality related aspects in the organization into a close and seamless union with the organization's business management system.
- 2000: Integrating QM by practical means with business management, producing benefits and satisfaction to all stakeholders, striving for excellence in business performance in contemporary business environments, and responding to e-business challenges. ... And experiencing scrumbling away the positive results of many years in a systematic quality management development due to the radically changed management priorities and commitment.

Business foundation for the quality integration approach in the company

The modern concept of quality integration that implies professional quality activities integrated with business leadership and management was created and applied at Sonera. Quality integration was related to quality management principles (guiding ideas for the topic), tools and practical solutions (procedures), and an effective management infrastructure. Especially the quality integration covered the subject areas considered within the internationally recognized ISO 9000 standards and performance excellence models (quality awards criteria). Standards and excellence models were understood as very similar general references for QM. Additionally many other different information sources were used for developing continuously Sonera's quality approach (see figure 1).

Figure 1. Multifarious sources of information were used in developing company's quality integration approach and aiming at satisfaction of all interested parties (stakeholders) and excellence of the company's business performance

The aim of Sonera's quality integration was to support company's striving for excellence in the overall business performance. That included both strategic and operational goals of the business. QM was seen as a special expertise for enhancing effectiveness and efficiency of business management and leadership and business processes. Thus, genuine realization of QM practices took place in real business activities both in company's strategic leadership as well as in the business processes for the operational realization of company's products (telecommunications services). This is just the basic idea of quality integration. In this approach all relevant stakeholders were also taken into account in accordance with their appropriate importance and roles.

Essential features of the company's quality approach during the 1990's included:
- A strong commitment of the president and CEO. E.g. he acted many years as the chairman of the corporate quality council consisted of about ten senior level business leaders and no quality experts. Company's vice president of quality integration, however, was secretary of the council.
- Vice president of quality integration with deep knowledge of fundamentals of quality management and long experience in the company was actively networked with recognized national and international sources of knowledge. E.g. he was a member of ISO TC 176 (the standardization committee for ISO 9000 standards) and assessor of the European (EFQM, European Foundation for Quality Management) and the Finnish national quality award, and he was also active in benchmarking with world-class companies globally.
- Creativity (see figure 2) in applying standards and excellence models and other useful reference materials concurrently for the company's business benefits in an innovative way.

Figure 2. An innovative approach for applying general models and references for the company's quality integration development for ensuring competitive solutions from the business' point of view. The new issues of "Whats" and new ways of "Hows" were strived for. In fact, the "Hows" are more important than the "Whats". There are no restrictions to use general standards (e.g. ISO 9000 standards) in an innovative way and to strive for excellence in business performance.

At Sonera, QM was an area of special expertise for which there were quality experts over the whole corporation. External consultants were not used remarkably. Quality experts formed an internal network, BEST (Business Excellence Support Team), in the corporation. This network also had direct contacts with significant external QM experts all over the world. Thus, the aim of the corporate-wide QM function was to maintain a virtual and network-like quality organization. In practice the realization of QM took place in business processes through the initiatives and measures of business leaders, managers, supervisors, and performing personnel. The responsibility and duty to implement QM principles and tools in everyday business lied squarely on their shoulders. Quality experts acted as advisors and facilitators. They were responsible for the sound and appropriate principles and methodology for quality integration.

Business integration as a comprehensive quality approach

Sonera's quality development was based on practices to support in a consistent way two interrelated areas of managerial quality activities that are familiar from the ISO 9000 standards:
- Quality Management (QM) referring to the internal effective and efficient systematic approach, "systematicity", of the company's management and leadership to strive for business performance excellence
- Quality Assurance (QA) referring to all those measures through which the company creates and strengthens confidence and trust among its stakeholders, especially customers, in company's abilities and products (goods and services). In fact, QA is always a part of QM

In emphasizing the comprehensiveness of a quality approach one could use the concept TQM (Total Quality Management) that has been popular in a lot of literature. However, in practice the both concepts, QM of the ISO 9000 standards and TQM in general, mean the same. Therefore the term TQM is not needed in practice, and it was not formally used at Sonera.

The QM approach was seen essential for company's business success and for relationships or partnerships with customers and suppliers. In fact, quality management equals quality of management, and QA practices to create and strengthen confidence among organization's customers and other stakeholders. The well-known standard-based concept of Quality Management System (QMS) was factually understood as a good or even excellent systematic management. Consequently, quality integration is necessarily an organization-dedicated solution and it places great demands on continual business improvements. The concept quality system was not in use at all because it may easily lead to separation of quality from business management. Quality system was in the 1990's deleted also from the ISO 9000 standards.

Quality integration was also the important approach to get different expert resources in the company to work together and to avoid many isolated specialized management systems. These resources included quality, finance, human resource, risk management, environmental management, information security, knowledge managment, etc. experts of the company. This kind of multidisciplinary business integration requires strong general management responsibilities and business system. It is, however, a necessity for organizational identity and diversity.

A challenge for QM realization was to enhance positive flavour into Sonera's "Smart Partner" business brand through various professional means that were consistent both with respect to one another and aligned with the company's strategic course. In this respect, the marketing catch phrase used by Sonera, "Make Things Click", was most appropriate for QM and QA purposes, too. Company's guiding principles were defined from this basis. The principles consisted of following statements:
- Focusing on supporting the strategic goals of the business
- Ensuring consistency of different QM measures in order to strengthen one another
- Aligning the whole business vertically and horizontally along with the main business issues
- Aiming at comprehensiveness and a scope covering the entire corporation
- Integrating operational QM measures with management of business processes
- Striving for a comprehensive and systematic approach, "systematicity", instead of building any separate systems such as quality systems

These Sonera's QM principles provided a company-dedicated supplement to well-known eight quality management principles of the ISO 9000 standards and to the core concepts of the business excellence models.

Sonera's QM approach was well harmonized with the company's business values. On that basis also the quality policy was defined in accordance with the general concept of the ISO 9000 standard. The following intention and direction towards quality were considered by the quality policy statement of the company:
- We always act so that the customer receives what he or she needs.
- We do what we promise.
- We improve our activities and their results continually so that they will be better and more effective and efficient.

Corporate-wide infrastructure for continual development of the QM

In order to realize QM objectives in all parts of the company and at all levels of business and business management, an organization-wide management structure, a leadership infrastructure framework, was defined and developed. The framework model (see figure 3) was created at Sonera in early 1990s. This model covered company's all business functions in a natural and flexible manner. Over the years, the model also abled to accommodate efficiently to various organizational changes as well as various new emphases in the business and in quality thinking. This made it possible to develop QM in a more sustained manner than being based on the formal organizational structure and continually depending on numerous and frequent organizational changes. This framework model utilized the most exemplary international ideas and was based on what had been learnt over decades particularly with business partners and by global benchmarking. This model was also the foundation for applying the ISO 9000 standards and performance excellence models.

Figure 3: Sonera's QM realization model and management framework consisting of four levels of QM competence, responsibility, and learning within the corporation

There was no distinct quality systems or QM systems in use at Sonera, and nor should there had been anything of the sort, as the aim was that QM was an integrated part of business. Indeed, quality management system is also in the ISO 9000 standards understood as a concept for a systematic approach and principally a knowledge system but not as a distinct, physical system. At the corporate level the quality management system was understood as Sonera's QM realization model (figure 3). In the different strategic business units and supporting units and at the operational level, the quality management system was realized through the systems of interlinked business processes.

Performance excellence tools

Clear guiding ideas and principles concerning quality and QM as well as a comprehensive, company-wide realization model for organizing the "ideas" were not enough for getting quality happen. Practical means, tools, methods, etc., especially relevant to multifaceted management methodology, were available to get the approach concrete in practice. For this purpose, a collection of management tools was created at Sonera during the years. Only partly these tools were created and maintained by quality experts. In addition to direct quality-minded tools, Sonera's "Business Excellence Tool Kit" included also tools for financial, human resource, and risk management, as well as technology management, acquisitions and marketing. There was a systematic procedure for the maintenance and development of the tools (including tool hierarchy, tool descriptions, tool owners, and tool-management process). The most essential quality-originated tools of Sonera were:
- Process management model
- Project management model
- Malcolm Baldrige self-assessment procedure
- Process auditing (assessment procedure of process performance)
- Benchmarking procedure
- Sonera Smart Strategy Card (a company-dedicated scorecard) procedure
- Problem solving and improvement procedures

Business process management methodology had a central place in the implementation of Sonera's QM. Indeed, process improvement measures constituted the most important area for realizing quality integration. There was a particular process management model at Sonera. This model was developed consistently during many years from 1987 on through implementing practical solutions and learning from numerous international exemplars. Sonera's benchmarking procedure was also primarily aimed to improve process performance. In benchmarking, the organization learnt from best practices already used in other organizations, especially in other fields of business

The overall intention was to seek actively original sources of information for QM methodology (see figure 1) in order to be able to avoid too extensive use of services of external consultants. For example, the ISO 9000 standards were utilized through participating right from the start in their drafting as Finland's national representative and expert in the international standardization committee ISO TC 176 for QM and QA.

QA innovatively and consistently as a pair of quality activities with QM

Because QM implied effective and efficient realization of business management and leadership in a systematic way and QA constituted a part of QM, there was at Sonera no intention to do anything "extra" in order to implement QM or QA, e.g. according to the ISO 9000 standards. According to figure 4 QM and QA:
- Were based on the continually improved business processes and activities that support company's strategic direction
- Strived towards customer-focused solutions to provide added value to customers
- Utilized principles and practices that were internationally regarded as superior

Figure 4: Consistency of Sonera's integrated QM and QA approach

Concerning QA, it was understood at Sonera that this, too, was to be utilized innovatively. QA could not be based solely on customer's stated requirements. QA provided information of process effectiveness and efficiency tailored to the needs of the individual customers or customer segments. In general assurance was achieved through customers':
- Confidence to delivering: Products were delivered timely according to the specifications
- Confidence to performing: Products function the way it was supposed to
- Confidence to cooperation: Product that had been delivered to customer was looked after. Information security was treated appropriately
- Confidence to future competence: Technology and trends were actively followed up and taken innovatively into account in products development

In a modern way, QA was understood as a service that provided added value to customers. In a competitive situation, the aim here, too, was to create superior solutions. A general point of departure for QA was provided by the clauses of the ISO 9001 standard but the standard does not set any restrictions for innovative solutions (see figures 2 and 5).

Figure 5. QA is factually quality related communication between supplier and customer (or other stakeholders). It may be realized in an innovative way e.g. utilizing new communication means. "e-Certificate" implies QA solutions using e-business technology, especially Internet.

The emphasis at Sonera was on bilateral QA plans and agreements between the customer and the company instead of third party certifications. Another reason for this emphasis was that there was no genuine formal obligations pertaining to certification or registration and thus neither there was any real need for general certifications. Major stakeholders had the following priorities in their interests:
- Consumers: They expected a good product performance and low price. No formal QA was needed.
- Business-to-business customers: They expected confidence relating to company-dedicated advanced and tailored solutions. General type of standards or certificates based QA were not adequate.
- National authorities: They were responsible about the minimum national performance level (or grade) of basic services. Appropriate performance reports from the service providers were necessary and enough for QA. However, the service provider could not be competitive only by fulfilling these minimum requirements.
In fact, A comercialized third party quality system certification may be even harmful for a genuine quality integration development.

Comprehensive QM development through organizational learning

Successful achievements of the operational business performance results through the QM approach were based on the following three corner-stones of the "Domain of action" (see figure 6):
- Understanding the issue, i.e. the ideas and principles directing business activities excellently
- Innovativeness of the corporate-wide leadership system
- Effectiveness and efficiency of management tools



Figure 6: The overall business excellence development model, "The Pump Model", for Sonera's QM approach. This diagram presents a recognized approach of organizational learning developed by Peter Senge, MIT.

Quality was enhanced via two intentions. Reactive development was achieved through problem solving based on facts. However, more was achieved when opportunities, challenges and innovations were the basis of performance development and taking proactively into account the existing strengths, competitive advantages, and opportunities ("Domain of change" in figure 6). The reactive method in its backward-looking nature is never as effective as the future-orientation. The improvement was done through utilizing well established methods including e.g. performance evaluation, analyses, and benchmarking (see figure 7).

Figure 7. A comprehensive QM approach for establishing foundations of operational business activities and their continual improving

The regular evaluations of the existing business performance, and the strategic decisions on goals and actions were important measures in improving continually company's business performance. Implementing measures took primarily place through increasing effectiveness and efficiency of business processes. All this belonged to the operational side of QM, i.e. the domain of action (figure 6).

Assessing process performance constituted a central element of operational QM. The assessment procedure was developed on the basis of ISO 9000 auditing principles as described in the standard ISO 19011 and by combining ideas from business requirements and performance excellence models. In assessing process performance, the focus was on the critical evaluation of procedures applied in the processes and process results achieved through their implementation. Based on assessment results, Sonera had a corporate-wide process performance reporting practice, with which it was possible to track how the performance of all business processes had been developed as entirety (process framework) and per single business processes in the corporation.

In order to assess comprehensively the overall development of a whole business and its organizational learning, the performance excellence model (quality award criteria) approach was applied. These assessments were applied at Sonera as internal self-assessments by boards of directors in different businesses. The assessments were based on the American Malcolm Baldrige criteria, which had been used as basis in developing Sonera's own approaches and assessment tools. The American model was more clear, effective and efficient that the European one (EFQM, European Foundation for Quality Management). By utilizing general performance excellence criteria, a business unit was able to be placed on a "global map" of overall business performance.

Sonera's business units applied during the 1990's three times the Finnish National Quality Award in order to "calibrate" its internal self-assessments with a more general assessment scale. Thus, even participation in the quality award competition was understood as a part of self-assessment to improve business performance.

Unique solutions for the future

General conclusions and lessons learnt may be drawn from Sonera's experiences of company-dedicated QM implementation. When implementing QM, clearly recognized QM principles and effective professional methodology are useful to be employed in a natural and innovative manner integrated with company-specific business emphases and management infrastructure. General ISO 9000 Quality Management Principles and Core Values and Concepts of the performance excellence models are useful when creating bases for the company-dedicated approach. When striving for competitiveness practical experiences underscore:
- Recognizing business performance excellence instead of a narrow quality thinking
- Striving for flexible realization of quality of management and leadership instead of distinct and vague quality management (i.e. management of quality)
- Adopting organizational learning instead of problem solving and continual improvement
- Applying the "systematicity" (systematic approach) of the quality of leadership instead of formal and distinct quality systems
- Using business-related principles and actions of the quality of leadership instead of formal and general quality assurance requirements only
- Setting stretched business objectives instead of minimum standard requirements
- Aiming at innovative and unique solutions instead of stereotyped systems
- Relying on internal business performance self-assessments instead of third party audits and certifications of "artificial" quality systems
- Getting advantage of tacit knowledge instead of only documents and records of explicit data and information
- Having genuine impacts on the company's quality approach and success by the behaviour of the top management.
- Using company's own internal expertise and effective cooperation with world-wide quality experts' network instead of external consultants

Basically, effective implementing company-dedicated business integrated QM does not call for any extra measures or investments. General information sources especially ISO 9000 standards and performance excellence models may be utilized as reference materials for appropriate measures. Experiences prove that it is always worthwhile to improve the existing quality of management "systematicity" of the company based on a systematic methodology. For QM the company must be always ready but never finished.

Managing for sustained business success through quality integration is only possible if the responsible top management is aware and actively and practically committed in his / her own role to get quality happen in the whole company. Additionally, it is needed a productive cooperation between business leaders and quality experts.

Epilog

Through the 1990's the CEO of Sonera was genuinely interested in developing QM in the corporation in a professional way. He retired by the end of year 2000. After that the company got a completely different kind of CEO and President. His emphasis was on bold investments into the international markets of the next generation of mobile telecom technology and services, and the real expertise (including quality related methodologies) was no more appreciated. In this business direction the company lost a huge amount of money and also its credibility in a very short period of time. As a consequence the company was merged into the Swedish Telia Corporation, and Sonera continued its activities as an operational country unit in Stockholm, Sweden based TeliaSonera Corporation. Major part of the quality related development results and investments of the 1990's were also lost. Now after several years' depression and disorder, TeliaSonera Finland Ltd. is aiming again start from the existing reality its new QM journey but it is not seen any strong commitment from the top management or innovative approach. E.g. the company has strived for a formal ISO 9001 certification within some isolated business areas by quality experts and the third party.

References

1. Anttila, J. (1998). "Creating a corporate culture that embraces performance measurement - A case study from Sonera Corporation, Finland." Focus on Change Management, issue 46, July/August
2. Anttila, J. (1998). "What TQM is and what should it be?" The Best on Quality, vol. 9, Milwaukee: ASQ Quality Press
3. Anttila, J and Vakkuri J. (2000). Good Better Best. Helsinki: Sonera Corporation.
4. Anttila J and Vakkuri J: (2001). ISO 9000 for the creative leader. Helsinki: Sonera Corporation
5. ISO TC/176: ISO 9000 standards family.
6. National Institute for Standards and Technology: Malcolm Baldrige National Quality Award, Award Criteria. Washington: National Institute for Standards and Technology
7. Senge P., Roberts C., Ross B., and Kleiner A. (1995): The Fifth Discipline Fieldbook. London: Nicholas Brealey Publishing Limited
8. Kaplan, R. and Norton, D. (1996). The Balanced Scorecard. Harvard Business School Press

[This material has been presented in different forms in differerent international seminars or conferences, e.g. in London, UK 1998, Mumbai, India 1999, Moscow, Russia 1999, Lahore, Pakistan 2000, New Delhi, India 2001, and it has been several years as a case example at the iimt in Fribourg University, Switzerland]