An Interview with Charles Duhigg
The Center for Operational Excellence talks with the Power of Habit author and Leading Through Excellence keynote speaker about the key lessons in his bestselling book - and the biggest surprise in his own research
COE: In The Power of Habit, you present Alcoa as an example of a company that saw sweeping, even life-saving change as the result of changing a 'keystone habit:' Safety. Why are some organizations, such as Alcoa, more successful than others in efforts like this?
Duhigg: I really think it’s a leadership question. With Alcoa, obviously hiring Paul O’Neill was the key. The previous CEO at Alcoa had been fairly well thought of as a CEO, he’d been a traditional CEO, and he had failed. If they had hired someone traditional into that role I don’t know if it would have had the success that it did. The board gave O’Neill a lot of rope and structurally, the company’s stock was sturdy enough that there wasn’t a huge amount of pressure for an immediate earnings increase.
COE: Is there more to it than that?
CD: The other piece of it, really, was the good luck of Paul O’Neill. Industrywide, (the aluminum trade) had just gotten really lucky because aluminum prices spiked over the next two years starting about three or four months after O’Neill took the position. That gave him a cushion. … Really, I think you can explain maybe six to nine months of Alcoa’s success from a structural perspective. The fact is, O’Neill had an over decade-long run where he completely transformed the company’s revenue. He said, ‘We want to get as lean on accounting as possible’ – and their accounting methods were much better than most companies. This is a genuine transformation of a company. Obviously, worker injury rates went down – but really, I haven’t spoken to anyone who’s pointed me to a reason beyond fundamentally Paul O’Neill. You have be smart and lucky to hit it out of the park. Paul O’Neill was lucky, but he was smart, too.
COE: O'Neill never promised this safety focus would increase profits, but it obviously worked. Is it easier to secure the buy-in you need if the keystone habit you set out to change can be directly linked with an increase in profit?
CD: I think it’s the other way around. If it doesn’t add to profit, obviously it’s not gonna work in the long term. But one of the things I heard all (my interview subjects) say is that they chose these metrics very deliberately, and they initially were divorced from profitability. If your back is against the wall, you don’t get a lot of leeway for long-term play. … Fundamentally, you can’t control your share price or your return on capital, but what you can control are internal variables. Over the long term – say, three years – you can say, ‘Judge me by that first year, or wait, and by two or three years (this initiative is) going to translate into a higher profit.
COE: For Alcoa, the keystone habit that drove change was safety. For Starbucks, it was devising a standard response to customer complaints. How do I, a leader at my organization, go about finding what my company's keystone habit could be?
CD: One of the things I’ve found in terms of common things identifying keystone habits is that they disproportionately seem to be some kind of pattern that should not be frightening to an individual or an organization but almost irrationally are. Looking at exercise as a keystone habit that can help people stop using their credit card as much and stop procrastinating, the people for whom that’s true, if you start asking them about their exercise habit … they’ll say they were terrified to start. If it seems disproportionately frightening, that seems to be a clue that the activity’s a keystone habit.
The same thing is true with companies. With worker safety and Alcoa, clearly worker safety habits should have been top of mind at a place where someone was literally injured every day, but there were very few conversations across the company. It was a very uncomfortable, very taboo topic. It was hard to talk about, ‘Oh, we’re gonna have five deaths this year.’ It was an emotional topic for people, and that, again, is a clue that it’s a keystone habit. It seems to be tapping into something deep and meaningful, and those emotions are a clue that something matters a lot.
COE: You dive deep into how deadly errors at a hospital and in an English subway station led to great, sweeping change for the better because turmoil, even tragedy, open people up to change. How do you get the benefits without having someone die on your watch first?
CD: People can create a sense of crisis where one doesn’t exist. I see this happen in companies all the time where something happens and it’s the type of thing that could easily be brushed off, but the department starts saying, ‘This is the first step to bankruptcy.’ They’re probably wrong, but that’s the point. You create this sense of crisis because it makes habits more flexible. Startups do this all the time. There’s no sense of complacency. If you talk to most entrepreneurs, they’ll say ‘I’m always aware of how close we are to the edge.’ I think that’s really important.
COE: Your book shows some true benefits and drawbacks of the silo in an organization. In the end, are they more of a blessing or a curse?
CD: The silo is a tool, it’s an axe. It depends on the hands of the person it’s put into. Obviously, you need silos, usually to make logical sense of things. There has to be a hierarchy. But it’s something that everyone struggles with.
COE: What truly surprised you the most over the course of your research?
CD: What surprised me the most was the malleability of habits. The big takeaway is that habits are much more malleable than I initially thought of them as, and I think that’s a really important insight. Most people end up thinking habits are very, very hard to change and once they’re locked in they’re almost impossible to change. But once you start looking at studies … you find that when people take a deliberate approach to behavior change they succeed more often.