Juhani Anttila
Venture Knowledgist Quality Integration
Helsinki, Finland




A lot of projects all over the world have been realized for improving quality in cities or other kinds of local geographical territories initiated and controlled mainly by the respective authorities. Normally they have applied traditional quality approaches originally developed for companies or organizations. However, the regional conditions are essentially apart from the single organization's environments. New innovations are needed. The regional quality should be considered from the viewpoints of both the whole regional community and the individual actors. This paper considers how the traditional quality and quality management concepts and approaches should be expanded, modified, or redefined for these environments,

There are quite little innovative examples available from different countries for regional quality. However, some of these will be highlighted in the paper and additionally some practical experiences will be presented from the case of South-Karelian Province in Finland.

Regions and their actors creating and perceiving quality

There are many different kinds of acting parties (actors) in a geographical region. They all interact with each other, and they all are important from the regional quality point of view as individual actors and through their cooperation. The region is not any single organization, but a network of independent actors. The individual actors may also operate simultaneously in different regions. Each actor has its own reason and interest to exist in the region. Each actor's existence in the region has its own individual life-cycle (see figure 1). In fact, the basic image of a region is created by its actors.

Actors are staying in the region permanently or they are visitors. Permanent actors belong to the following major categories:
- Private manufacturing or service companies
- Public civil service providers
- The third sector voluntary organizations
- Citizens
- Nature, the entire physical universe of a region including landscape, flora, and fauna and their diverse phenomena

A region is in a larger national and international neighborhood with which region's active actors strive for useful interactions. Especially new means of information / communication technology (ICT) link regions efficiently to the other parts of the whole world. Thus, borders of regions are rather vague and larger than the geographical borders of a region. Developing regional quality is very significantly linked with the development of information society as a whole.

Figure 1. Quality offerings to the actors of a regional community consist of services from cradle to grave produced by the organizations of the region

How can we talk about the quality of a region? It is useful to apply the general ISO 9000 definition of the quality concept also in this context: "Degree to which a set of inherent characteristics fulfils requirements". Thus on this basis quality of a particular region means: "Degree to which a set of inherent characteristics of a particular region fulfils the requirements". This definition implies that:
- quality is a relative concept ("degree"), and obviously quality of different regions may represent a great variety of levels
- one should recognize region's inherent characteristics in order to understand and promote its quality performance
- requirements mean all needs and expectations of all interested parties of the region that include region's all internal actors and also certain external parties
- fulfillment is based on genuine perception by the interested parties

With this general quality definition one may further approach to develop measures and indicators for regional quality that may be used to evaluate the development from quality point of view. Performance indicators should cover the whole quality performance of a region, e.g. to indicate the total accumulated value to the region's actors originated in region's total offering to its members. This characterizes the overall quality of the region. Similarly one could consider the corresponding value to region's single individual actors.

Actors of a region perceive regional quality through products being available in the region. Regional organizations produce products (goods, services, and combinations) to the other actors of the region through their business systems.

Regions compete with each others through their offerings. Regions' successful development is very strongly depending on how their actors are increasing and developing. That is motivating especially public bodies to invest to the favorite developments within the region. Regional quality in order to be competitive should be much more than only fulfilling certain minimum requirements or avoiding drawbacks. Performance of competitive regions should be excellent. That means that its overall performance is better than the relevant references and therefore it is appealing to new citizens and companies to move to the region. Also visitors are being lured by this fact.

The entirety of a regional offering ("regional product") may consist of different elements of personal or automatic (Internet) services, or material goods. It may be characterized like any product offering including:
- substantial content of the product
- easiness to use the product
- serviceability (accessibility and sustainability)
- safety and security
- aesthetic aspects
- ethical aspects

Professional quality management of a region

New innovations are needed for realizing quality management covering a whole region because regional conditions differ from company environments. One should apply new or at least modified fundamental principles, tools (including methods), and infrastructure solutions when striving for excellent results and performance in quality considering comprehensively whole geographical regions. Traditionally significant quality management related concepts and aspects, e.g. management, organization, customer, and product, should be redefined for regional quality purposes. Also modern communicational realities should be taken into consideration. Especially e-business penetration - being indicated e.g. through initiatives like eCity, eCounty, eRegion, eChurch, eEurope, etc. - has significant impacts on regional quality.

Figure 2. Regional community and its actors as a network. An actor's role can be characterized by its centrality in the network related to the activity, betweenness, and closeness of the actors

Regional quality management, i.e. how to get through management actions quality happening and developing favorably within a region, is a challenging issue. The reason is that traditional quality management practices, e.g. when applying the ISO 9000 standards and business excellence models, cannot be directly applied in a regional context. Those practices are based on an organization's quality management system and top management's responsibility. However, in a region there is not any single organization but a network of many different and independent actors, and quality is the result of all actors' impact on the characteristics and performance of the whole region (see figure 2). These impacts are based on individual actors' activity, reach, access, control, and power characteristics. The regional network is an ambiguous virtual organization without any clearly defined business entity or structure and without any single top management. Regional networks are unplanned, emergent systems. Their growth is sporadic and self-organizing. In all regional networks there may even be hostile actors, e.g. information hackers or terrorists.

In a regional network there is always a great variety and many different degrees of cooperation. Actors within a region may be each others' interested parties (stakeholders) with their own independent interests, e.g. in the relationship of supplier and buyer. The most useful principle for the mutual benefits and success among the actors is the win / win principle (see figure 3). According to that different actors create added-value to the others through their business realization logics of "management / leadership => business processes => products => satisfaction". Transaction costs of interacting parties are strongly affecting on how regional organizations are operating together and developing.

Figure 3. Win / Win -principle for the sustaining success to the partners (interested parties). The parties have their own interests articulated by their own terms. Value and cost scales of the parties are different, it is essential that both get net value V - C.

One could draw a conclusion that traditional type of quality management is not possible for regional quality but the key responsibility is squarely on many individual and independent actors and on their willingness to contribute for the benefits of the whole regional community. There may be reactive and proactive actions by the members of a regional society that affect positively to the development of regional quality. However, there may also be negative impacts on the offering of a region. As the regional networks are developing as emergent systems, thus, also regional quality is an emergent issue.

Regional quality is related to the cultural development of the region. Quality awareness may be enhanced in a region by professional quality promoting organizations although they have not necessarily any strong authoritative power or position.

Experiences world-widely

There have been a lot of initiatives in different countries for improving performance in cities, provinces, local areas, or other kinds of geographical territories initiated and controlled mainly by the respective authorities. Normally traditional quality approaches that have been originally developed for individual companies or organizations have been applied in these programs.

Most often these initiatives have covered only some restricted - although important - or specialized areas of the regional performance, e.g. environment, nature, culture, employment, training and education, agriculture, traveling and tourism, high tech innovations, aging questions, business clusters, SME promotion, heath care, logistics, etc. There is very little information available on cases where regional development has been considered from a comprehensive quality point of view taking into account all different kinds of actors in the region and extensively the regional performance aspects. Also using professional quality approach or applying modern network-based principles have very seldom been under discussion in these cases.

One may recognize already almost as classical cases those American local area quality developments that were based on Dr. Deming's philosophy and also contributed by him. These cases include e.g.:
- Growth opportunity alliance of greater Lawrence, Lawrence, Massachusetts
- Philadelphia area council for excellence, Philadelphia, Pennsylvania
- Tri-Cities: Kingsport, Johnson City and Bristol, Tennessee

One may find extensive descriptions of these cases e.g. from Deming related literature. In addition to Dr. Deming the group GOAL and its key person Bob King was strongly promoting and facilitating quality development in these regions.

A different example is from Bahia region in Brazil. In this case the core issue was to enhance tourism in the region, and the key agent to promote development was a third-sector organization, The Instituto de Hospitalidade, for providing the necessary tools for society to develop a virtuous cycle based on education and sustainable development. This movement was activated through the improvement of services provided to visitors that directly benefits citizens and the community in general by:
- creating and widening working opportunities
- enabling the development of careers in the tourism sector
- generating income
- improving quality of life

South Karelia as a practical example in Finland

The province of South Karelia lies next to the Russian border in South East Finland. Karelia has been a borderland between eastern and western cultures for centuries. The province is a mixture of high-tech industry, growing businesses, commerce and a natural environment on the shores of Lake Saimaa. The capital of Finland, Helsinki, is about two hundred kilometers away.

The province covers an area of 7,200 Sqkm, water accounting for 1,600 Sqkm. It has about 137,000 inhabitants in two towns, Lappeenranta and Imatra, and 12 other municipalities. There are numerous holiday homes in the lake district. Lappeenranta has a technical university, a technology centre and an airport.

The vast forests of eastern Finland, good floating channels and the proximity of coastal ports attracted heavy wood-processing industry. There are also heavy basic industry and food industry in South Karelia. Due to the industry and the location there is the threat to the environment - pollution of the waters and particularly the air by Finnish industry, the industrial centers across the border and by cities Vyborg and St. Petersburg. Recently the infrastructure of South Karelia has been purposefully built for innovation, IT and communications, and industry and commerce. There is a growing number of ICT companies in South Karelia. About 7% of the region's inhabitants are employed in agriculture

The Russian frontier is an opportunity. The political climate and the position of the border have always affected trade in South Karelia. Finland's accession to the European Union in 1995 further increased South Karelia's attraction as a meeting place for businessmen from East and West. Businesses in Western Europe often approach the Russian market through South Karelia.

The major agent for a professional quality approach in South Karelian region is the local quality section of the national quality association. It has members from the major industrial companies, service organizations, cities, and from the university of the region. The key leaders of the both cities of the region are also actively contributing to the development.

As most important measures for enhancing multifaceted regional quality the local quality section has strived for increasing quality awareness within local actors, supporting change of experiences through benchmarking, and facilitating collaboration between the different organizations. Also the section has been well-connected with the key quality experts outside the region in Finland and also with important partners behind the border in Russian side. One of the most significant events organized already in the four consecutive years has been the "summer camp" event for considering together central topics of quality management and developing initiatives for the regional development. In these events e.g. the following topics have been considered:
- business excellence models and their application
- use of balanced scorecards for strategic regional development projects
- partnership performance development
- innovation and human issues
- possibilities of the information society


Regional quality is a new challenging and comprehensive development area of quality management extending over the single enterprises. Traditional quality concepts and principles may still be used in these cases but one should need redefinitions and new innovative solutions in order to take into account the regional conditions where the organizational structure is a virtual network and the entirety is not managed by a single "top management".

Very essential factor for a successful regional quality development is a recognized quality promoting agent that is an organization that has genuine will and professional competence for the development but that does not necessarily possess a strong formal authoritative power or position.

Regional quality is a challenge for all nations. It may be seen as a natural issue particularly in Europe because its origins may be found already from the local societies of ancient Greece. The key quality message also to a modern regional community was articulated by Pericles in his well-known speech to the dead after the Peloponnesian war: "It should create people living with beauty and wisdom, and loving the mutual good."


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10. www.eKarjala.fi , South Karelian web pages

[This text was presented as a conference paper at the EOQ 2004 Annual Congress in Moscow, Russia in September, 2004]