Keystone Habits and Powerful Levers
Updated: Jun 16, 2021
I had the pleasure of meeting Paul O’Neill when he was sworn in as Secretary of the Treasury for President George W. Bush in 2001. He was a graduate of Fresno State, now California State University, Fresno (CSUF) and I felt a kinship since the university was in the heart of my Congressional district.
After about a year though, he was forced out of the Administration, accused of being disloyal to President Bush. It wasn't Paul's tenure in the Administration that impressed me. It was his unorthodox and incredibly successful tenure as CEO for Alcoa Aluminum beginning in 1987. Here’s an excerpt from Forbes Magazine article written by Rodd Wagner quoting Charles Duhigg, author of The Power of Habit:
Introduced to a group of investors and analysts in October 1987, he [O’Neill] didn’t talk about revenue and expenses and debt ratios and earnings before interest, tax, depreciation and amortization.
“I want to talk to you about worker safety,” he told the Wall Street crowd.
“Every year, numerous Alcoa workers are injured so badly that they miss a day of work,” he continued. “Our safety record is better than the general American workforce, especially considering that our employees work with metals that are 1,500 degrees and machines that can rip a man’s arm off. But it’s not good enough. I intend to make Alcoa the safest company in America. I intend to go for zero injuries.”
When one attendee asked about inventories and another asked about capital ratios - the standard vocabulary for these kinds of sessions - O’Neill returned to the same theme.
“I’m not certain you heard me,” said the new CEO. “If you want to understand how Alcoa is doing, you need to look at our workplace safety figures. If we bring our injury rates down, it won’t be because of cheerleading or the nonsense you sometimes hear from other CEOs. It will be because the individuals at this company have agreed to become part of something important: They’ve devoted themselves to creating a habit of excellence. Safety will be an indicator that we’re making progress in changing our habits across the entire institution. That’s how we should be judged.”
One of the investors told author Charles Duhigg he bolted for a phone after hearing O’Neill’s declaration. “The board put a crazy hippie in charge and he’s going to kill the company,” the investor said he told his clients. “I ordered them to sell their stock immediately, before everyone else in the room started calling their clients and telling them the same thing.”
"It was literally the worst piece of advice I gave in my entire career.”
A prescient investor would have gone long on Alcoa stock. “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 capitalization had risen by $27 billion,” wrote Duhigg in his bestselling book, The Power of Habit. “Someone who invested a million dollars in Alcoa on the day O’Neill was hired would have earned another million dollars in dividends while he headed the company, and the value of their stock would be five times bigger when he left.”
“What’s more,” Duhigg wrote, “all that growth occurred while Alcoa became one of the safest companies in the world.
Charles Duhigg, author of The Power of Habit developed the notion of keystone habits and devoted an entire chapter telling the Paul O’Neill story:
"So how did O'Neill make one of the largest, stodgiest, and most potentially dangerous companies into a profit machine and a bastion of safety?
By attacking one habit and then watching the changes ripple through the organization. "I knew I had to transform Alcoa," O'Neill told me. "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."
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. Keystone habits say that success doesn't depend on getting every single thing right, but instead relies on identifying a few key priorities and fashioning them into powerful levers….The habits that matter most are the ones that, when they start to shift, dislodge and remake other patterns."
There are two powerful levers, or keystone habits that if pulled, will ripple through this nation, reforming our culture and aligning it with the kingdom of God. Those are the reformation of charity and strenthened bond between child and parent.