Monday, June 30, 2014

In the review of the book power of habit mentioned earlier we covered the findings by the author on what it is and why we do it. We now look at some of the applications discussed in the book. The author gives examples from successful organizations. He describes habits that are important as keystone habits. He gives the example of Alcoa - an aluminium manufacturing giant that had been dwindling and brought on a new  CEO O'Neill. O'Neill was a former government bureaucrat who wanted the employees to focus on safety and touting it as a habit of excellence. Further, he wanted to make it an indicator of progress throughout the institution.His comment was initially perceived as totally out of context and relevance to the situation the company was in but within a year to the date from his speech, ONeill grew Alcoa' market capitalization to $27 billion and created record profits.  The value of the stock had risen five times larger than what it was. The key to his success was that he attacked one habit and watched the changes ripple through the organization. O'Neill observed that some habits were more important than others. They had the power to start a chain reaction. These are called Keystone habits. Keystone habits say that success is dependent on a few key priorities and fashioning them into powerful levers. Organizational behavioral patterns are quite common. In fact researchers have found institutional habits in almost every organization or company they've scrutinized. What ONeill found was that the decision making was being ceded to a process that occurred without actual thinking. Consequently the workers were not nimble and the quality of the products was poor. When previous CEO had tried to mandate improvements, effigies of managers were burned. ONeill wanted something that everybody including unions would agree was important. By declaring safety as the priority with a metric as zero injuries, ONeill had brilliantly mandated that Alcoa be more streamlined. He used a simple cue : worker injury to institute an automatic routine where the unit president had to put in a place a plan to never let it happen again. And there was a reward, the only people who got promoted were those who embraced the system. The ripple that this created - unions embraced productivity measurements, workers were given more autonomy, faulty equipment were replaced, loss of raw material was reduced with upgrades etc.
The author says that studies have shown such chain reactions with habits even in family life. Families that eat dinner together seem to raise children with better homework skills, higher grades, greater emotional control and more confidence. Habits create a new structure that establish cultures where change becomes contagious.
Habits can be complex and old. Yet every habit is malleable. Its the power in remaking a habit that this book advocates.

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