How did one CEO increase his company's market capitalization by $27 billion? He changed its habits. And when he arrived in late '87, Alcoa was a company that needed changing.
During his tenure, Paul O'Neill increased Alcoa's net income by five times. According to O’Neill, “I knew I had to transform Alcoa. But you can’t order people to change. That’s not how the brain works. So I decided I was going to start by focusing on one thing. If I could start disrupting the habits around one thing, it would spread throughout the entire company.” That one thing for O’Neill was safety.
Habits are powerful drivers of human behavior. What’s less apparent is that organizations have habits. And the habits of a company are the responsibility of its leadership.
How powerful are habits?
If we stop and think about it we might agree with philosopher William James who wrote, “All of our life is nothing but a mass of habits. Ninety-nine hundredths of our activity is purely automatic."
What do we know about habits?
- Habits save us time and conscious thought.
- Habits come in two flavors, good and bad.
- We can choose our habits. With effort, we can change our habits.
Habits are the things we do without thinking. Habits are learned behaviors that function as decision-making short-cuts. Our brains have had to find a way to expedite the million-plus choices we must make to navigate a day. Habits are an unconscious process we use, well....habitually.
Companies have habits as well. Company habits can drive improvement or, if left unattended, wreck havoc.
Leaders of organizations are responsible for influencing which habits perpetuate and which cease.
In his new book “The Power of Habit” Charles Duhigg tells how O’Neill changed Alcoa’s habits. Writes Duhigg, “O’Neill believed that some habits have the power to start a chain reaction, changing other habits as they move through an organization. Some habits, in other words, matter more than others in remaking businesses and lives. These are ‘keystone habits’ and they can influence how people work, eat, play, live, spend, and communicate. Keystone habits start a process that, over time, transforms everything.”
Alcoa’s drive to become the safest company in the world meant they had to re-think their routines, or their habits, in every regard. By changing keystone habits, the company's culture and its very performance results were transformed..
IF I HAD ONLY 1 HABIT TO ADOPT, IT WOULD BE: RHYTHM
One of the most impactful habits you can initiate is the habit of communication rhythm. It's one of the three 'Rockefeller Habits' so-named by Verne Harnish the author of "Mastering the Rockefeller Habits." Rhythm has to do with creating a beat, or a pace where everyone is updated and aligned everyday. It starts with a daily huddle of no more than 12 minutes, done standing up, with each work group.
Often, leaders push back on the thought of “more discipline” especially when coupled with the word "meeting." It means doing something they may not want to do, (like eating broccoli). Changing habits requires discipline.
Yet discipline doesn’t encumber you. It sets you free. Discipline brings predictability, which is great for those who don't like surprises.
Learn how to create rhythm in your company. One great story on the subject is Jack Stack's "Great Game of Business." Or for a copy of "Mastering the Rockefeller Habits" click below.