Venture Knowledgist Quality Integration
QUALITY APPROACH INTEGRATED WITH BUSINESS
Integrating performance measurements into quality management
Development of the company's quality approach as well as of the performance
measurement methodology and practices should be understood alongside
with the general development of Sonera's business conditions and culture.
During the almost one hundred year stretch of monopoly status concerning
telecommunications in Finland, the grade of the services reached a
top level globally. At the same time the prices of services were amongst
lowest. This was brought about especially by the professional skills
of technical experts and the utilisation of the most modern technology.
Despite this, Finnish political decision-makers wanted to provide
alternatives and options in the telecommunications market. At the
end of the 1980s dissolving regulative measures and a step-by-step
opening up of the telecommunications business to competition. Finland
has been amongst the first countries in dismantling regulation within
Also Sonera thus found itself in a situation in which it would have
to make entirely new competition-strategic decisions. The most important
options concerned were:
- cutting costs and right-sizing the needed number of personnel,
- a redetermination and reorganisation of business,
- creating customer focus and
- expanding its business outside of domestic markets.
Business course adjustments were made: emphasis on customer focus
(quality), reutilisation of technological know-how, implementation
of a culture emhasizing accountability, intentional recruitment from
outside of the company, uniting a scattered regional organisation
into a country-wide organisation, and the creation of a new corporate
During the monopoly era all the quality activities related mainly
with the technological performance of telecommunication network and
the control the suppliers of technical systems. At the end of the
1980s the topic of quality started to acquire explicitly more features.
This occurred first at the customer interface level and in business
units responsible for service deliveries, who were the first to encounter
real customer requirements and their significance to business. At
the turn of the decade the topic of quality surfaced also at the corporate
Coming into the 1990s quality was already understood in Sonera in
a modern way as customer satisfaction. Over the ongoing decade this
basic definition of quality remained, but it has gained new, more
thorough and broader meaning. As time goes by, the satisfaction of
other stakeholders (owners, personnel, partners and society) has also
been better appreciated. For example, work satisfaction and work climate
measurements were commenced in a way similar to customer satisfaction.
This way of thinking has also been influenced by the latest international
interpretation of the concept of quality as "business performance
excellence". In a competitive situation the business objective
can only be the satisfaction of all parties and the excellence, i.e.
competitiveness, of the company based on this. One must also be able
to evaluate performance critically and to express it clearly with
measures and indicators. Superiority refers to surpassing one's own
objectives, performing better than competitors and comparable performance
even outside of one's own field of business.
The adoption of modern quality approaches was positively influenced
by Sonera's broad international expert contacts in the field of quality.
For instance, Sonera is the only Finnish company that has been actively
involved right from the beginning in formulating ISO 9000 standards
as a member in the international ISO TC 176 standardising committee.
Sonera has also participated actively in the development and evaluation
of both the European and Finnish quality awards. Moreover, the organisation
had already studied the American Malcolm Baldrige criteria in the
USA even before these later involvements. Internationally recognised
approaches were naturally implemented within the organisation's own
total quality management (TQM) model to integrate corporate's quality
intention with the business management. Thus, it was possible to avoid
the problems which many organisations have frustratingly had to face
when concentrating on quality expert-based construction of distinct
so-called quality systems.
When implementing Sonera's quality intention into use, an company-specific
four-tier TQM model has been used as a basis. This model consists
of the following four levels: corporate (normative issues), businesses
(strategic issues), processes (operational issues) and individuals/teams
(personal issues). The corporate-level quality council has played
a significant role in adopting quality management means and developing
operation models (e.g. related to performance measurement and assessment).
The CEO acts as the chairman of the council, which consists of business
leaders from different businesses and a corporate-level quality expert
(director of corporate quality improvement) acts as the secretary.
The most important part of the TQM activities from the corporate's
business point of view has been contributions relating to process
Through the significance of business performance due to the big changes
in the business of Sonera it has also been natural to realise the
need for systematic self-assessment approaches in order to improve
one's business. In fact, self-assessments deepened the understanding
of business performance when in 1992 Sonera started implementing internal
Malcolm Baldrige assessments and 1993 company's own model for evaluating
business process performance developed on the basis of ISO 9000 auditing
principles. A benchmarking procedure has also been developed in connection
to both of these. It was especially through the Malcolm Baldrige assessments
that in 1996 a need to manage business results in a systematic and
balanced manner was recognised. For this purpose a practical operation
model was created on the basis of general balanced scorecard (BSC)
principles. Implementing the BSC was first commenced in a business
unit but has then been taken into use also at the corporate level
and in other business units. The BSC has proved to be an excellent
tool in understanding and implementing vision and strategies in practice,
all the way from the corporate level to businesses and processes.
Hoshin Kanri or Policy Deployment ideas from Japanese and American
quality heritage have been useful in implementing BSC principles effectively.
The measures of the BSC were also linked to business managers' personal
remuneration based results according to the so-called MIDO matrix
which had been in use already previously. The next interesting issue
being considered in connection with performance management is knowledge
The basis for internationalising was the relatively small size of
domestic markets and limitations concerning growth potential. Due
to free regulation Sonera has acquired new competitors constantly.
In order to utilise product development efforts and the know-how gained
from domestic competition, the direction of growth was aimed abroad.
A strong internationalisation trend also entailed Sonera's next great
metamorphosis. The objective is that a significant proportion of turnover
in the next few years originate from abroad. Sonera started utilising
these capabilities by entering into minority share ownerships in several
foreign operator companies in 1993.
The owner's point of view has been at the background of developing
Finnish telecommunication markets up until the present time. The reasons
for this can be found in the existing telecommunications companies
in the country when competition started; on the one hand there was
a governmental civil service organization and on the other hand non-profit
regional independent companies. The emphasis has been less on increasing
the value of business, which can be seen e.g. in fierce competition
in prices, an overemphasis on the significance of market share and
investing practices akin to an arms race. The privatisation and listing
on the stock exchange in 1998 have forced Sonera to change ways of
thinking and operating models. The owner point of view has clearly
gained in strength. Another significant change will be an expansion
in the field from traditional telecommunications services to new service
entities based on the integration of telecommunications, information
processing and digital media. Telecommunication networks will change
into interactive information networks and application bases for virtual
businesses. In this respect, the challenge comes from a change in
All these different changes in the business environments and the
increasing importance of all the stakeholders' interests relating
Sonera's business have emphasized the importance of systematic and
comprehensive approaches (e.g. covering all BSC perspectives) for
performance measurement and performance management. In fact just here
are the natural contacts to the professional quality discipline. The
principal aim of quality management is to develop and maintain systematic
methodology striving for the quality management principles of e.g.
ISO 9000 standards: customer focused organizations, leadership, involvement
of people, process approach, system approach to management, factual
approach to decision making, continual improvement, and mutually beneficial
1. Anttila. J., Creating a corporate culture that embraces performance
measurement - A case study from Sonera Ltd, Finland, Focus on Change
Management, Issue 46, July/August 1998
2. Anttila J. and Vakkuri J., Does it pay to be good? (Helsinki: Sonera
3. ISO 9000:2000, Drafts (CD 1) for the revision of the ISO 9000 series
standards, (Geneve: International Standardization Organization ISO,
Malcolm Baldrige National Quality Award, 1998 Award Criteria, (Washington:
National Institute for Standards and Technology, 1997)
[This text was presented as a conference paper in London, UK in 1998]