Carlson School of Management: Quality Education Session #1

Over four days in 2006, four utility teams participated in a quality training course designed by the Joseph M. Juran Center for Leadership and Quality in partnership with the Galvin Electricity Initiative. The course was the first of its kind, designed to educate the electricity industry on the principals of continuous improvement.

In 1999, Bob Galvin bought the principals of continuous improvement to the health care industry. Armed with this education, health care professionals invented new models and processes that revolutionized their industry and are being widely replicated. Results at individual hospitals include improved financial performance, reduced spending per patient, fewer health complications and reduced emergency room visits and stays.

The utility industry members at the training, like the health care industry leaders who took the first step toward continuous improvement seven years ago, questioned the prudence of pursuing perfection. Galvin Electricity Initiative leadership explained that quality or perfection is achieved through a commitment and dedication to continuous improvement over several decades. Quality or perfection is a journey, not an end state, which over a 10-year time horizon can provide what the CEO of Hutchinson called a durable competitive advantage.

The Galvin Electricity Initiative believes continuous improvement methods can be a strategic lever to instill a focus on customers and to spur innovation in the electric industry.

Each utility team participating in the training brought a unique perspective and demonstrated a commitment to improvement or quality:

• First Energy recently completed a thorough independent assessment of performance and is embarking on a major distribution system improvement program. This program provided an opportunity for the First Energy improvement team to build a shared knowledge on quality and strengthen their project plan.
• Kansas City Power and Light is forming a team and embarking on a project to find innovative ways to meet growing demand without building new infrastructure in a bid to increase asset utilization.
• Public Service of New Mexico embarked on a continuous improvement program over a year ago and now has over 30 managers trained as quality green belts. They have embarked on a number of projects that have improved customer satisfaction and lowered cost. PNM has achieved seven sigma reliability for several customers, measured in terms of cycles not outages.
• The Illinois Institute of Technology, which owns and operates its own electricity distribution and generation system, is in the midst of a major system overhaul and is seeking to provide Perfect Power as defined by the faculty, students, and other stakeholders.

Over four days the teams learned about quality methods and tools, while also working in teams to apply these principals to a specific company project.  What emerged during the course is a number of new metrics that begin to reveal the cost of quality. These metrics also reveal the opportunity for improvements that have an impact on the customer’s service experience.