In 1987, the Aluminium Company of America — or Alcoa as it was called — was in the rough spot. As one of the largest manufacturers of raw aluminium, responsible for Cocoa Cola cans, sweet wrappers and jet engine parts, quality was waning and both investors and employees were agitated and unhappy. To help turn this ship around, the board brought on Paul O’Neill as a promising new CEO.
At the first investor conference, and the weight of a thousand expectant eyes bearing down on him, Paul announced his grand initiative: health and safety. Investors expecting the standard narrative about ‘using alignment to achieve win-win synergistic market advantage’ (p.98) were stunned as O’Neill orated about Alcoa’s safety record and his personal goal of achieving zero injuries. When the presentation ended, the audience practically stampeded out of the room, fighting over telephones to sell Alcoa stock. One investor told their clients that ‘the board put a crazy hippie in charge and he’s going to kill the company’. That investor later said it was ‘the worst piece of advice I gave in my entire career’. (p.99)
By the time O’Neill retired in 2000, the company’s annual net income was five times larger than before he arrived, and its market capitalisation had risen by $27 billion. How?
What Paul O’Neill did was focus on an issue that united both the executives and unions: worker safety. He was able to rapidly implement structures and habits that not only reduced factory injuries and deaths, but also significantly improved efficiency, quality and profitability.
Duhigg refers to the health and safety of Alcoa’s workers as a keystone habit. A keystone habit is one that indirectly impacts a range of seemingly unrelated habits to impart a benefit far greater than the sum of its parts. For example, ‘if molten metal was injuring workers when it splashed, then the pouring system was redesigned, which led to fewer injuries. It also saved money because Alcoa lost less raw materials in spills. If a machine kept breaking down, it was replaced, which meant there was less risk of a broken gear snagging an employee’s arm. It also meant higher quality products because, as Alcoa discovered, equipment malfunctions were a chief cause of subpar aluminium.’ (p.108)
Incidents of injury had to be meticulously documented, communicated and resolved, bridging the gap between high level decision makers and low level factory workers. This facilitated new ideas and empowered workers to take responsibility for their role in the supply chain.
Keystone habits not only help billion dollar companies quintuple their stock price, but also apply to individuals looking to reform their own intricate network of habits. Typically when embarking on significant change (perhaps around the new year), we want to change everything at once: go on a diet, lift weights, reduce social media consumption, stop smoking, start running. Research shows such dramatic shifts rarely result in sustained change.
What Alcoa’s story tells us is that you don’t have to grapple with multiple ingrained habits to see remarkable self improvement. By focusing on reprogramming one keystone habit, wider change occurs as a natural by-product. Duhigg writes ‘typically, people who exercise start eating better and become more productive at work. They use their credit cards less frequently and say they feel less stressed. It’s not completely clear why. But for many people, exercise is a keystone habit that triggers widespread change.’ (p.109)
So the question is, what’s your keystone habit?
I record my favourite non-fiction stories and the lessons associated with them to help practise what I read. If this story resonates, I highly encourage you to purchase the full book. Any direct quotes are referenced with a page number.