Florida Power and Light Brings Principles Back to US

In the early 1980s, Marshall McDonald, CEO of American utility company FPL (Florida Power and Light), recognized that his industry was in for some major changes as a result of impending deregulation.

When McDonald imagined how his company would fare in this new competitive landscape, he found that his embedded costs were too high and service levels were too low. He knew he needed revolutionary ideas.

But after searching within his and other American industries, he discovered a profound lack of inspiration. However, in the three decades since Deming’s visit, Japan had developed a worldwide reputation for quality management systems.

McDonald thus turned his search overseas and, in 1984, brought several Japanese counselors who had studied under Deming to Miami to help engineer a massive organizational turnaround of the 15,000-employee utility.

Through years of study, application, and very hard work, FPL did manage to achieve its vision to "be the best run electric utility in America and to be recognized by its customers as such," as measured by five benchmarked key performance measures.

The performance breakthroughs achieved through this new policy management method occurred in many key corporate priority areas.

From 1984 until 1991, FPL:

• added one million new customers (33% growth) without increasing the number of employees
• was able to avoid base rate increases to customers for the entire period (by contrast, rates were raised seven times from 1972 to 1984)
• saw service interruptions and customer complaints drop by 75%
• improved productivity and reduced costs by 12%
• exceeded their ROI cap for three straight years (not previously done since 1970)

Learn more about:

• More on FPL's Contribution
• The "Strategy Execution Evolution" organizations experience
• Balanced Scorecard Basics
• 5 Common Hindrances to Successful ESE
• How ActiveStrategy Can Help