How “keystone habits” create a culture of innovation

1: The telephone rang in the middle of the night.  Paul O’Neill awoke in an instant.  He was the new CEO of Alcoa, the largest…

A plant manager in Arizona was calling.  

“A young man who had joined the company a few weeks earlier, eager for the job because it offered health care for his pregnant wife—had tried a repair,” Charles Duhigg writes in The Power of Habit.  “He had jumped over a yellow safety wall surrounding the press and walked across the pit.  There was a piece of aluminum jammed into the hinge on a swinging six-foot arm.

“The young man pulled on the aluminum scrap, removing it. The machine was fixed. Behind him, the arm restarted its arc, swinging toward his head. When it hit, the arm crushed his skull.  He was killed instantly,” Charles writes. 

2: Fourteen hours later, Paul gathered the plant’s executives and Alcoa’s top leaders in Pittsburgh for an emergency meeting.  They spent the day reviewing video of the accident and diligently recreating what had happened.  

“They identified dozens of errors that had contributed to the death, including two managers who had seen the man jump over the barrier but failed to stop him; a training program that hadn’t emphasized to the man that he wouldn’t be blamed for a breakdown; lack of instructions that he should find a manager before attempting a repair; and the absence of sensors to automatically shut down the machine when someone stepped into the pit,” writes Charles.

“We killed this man,” a grim-faced O’Neill told the group.  “It’s my failure of leadership.  I caused his death.  And it’s the failure of all of you in the chain of command.”

The executives in the room were caught off guard. 

“Sure, a tragic accident had occurred, but tragic accidents were part of life at Alcoa.  It was a huge company with employees who handled red-hot metal and dangerous machines,” Charles reflects.  

A top Alcoa executive Bill O’Rourke remembers that day.  “Paul had come in as an outsider, and there was a lot of skepticism when he talked about safety.  We figured it would last a few weeks, and then he would start focusing on something else. But that meeting really shook everyone up.  He was serious about this stuff, serious enough that he would stay up nights worrying about some employee he’d never met.  That’s when things started to change.”

Within a week of the meeting, the safety railings at all of Alcoa’s plants were repainted bright yellow.  New policies and rules were written up so no one would attempt unsafe repairs.  Managers instructed associates to speak up and suggest proactive maintenance.  The new policies and mindset brought out a short-term, noticeable decline in the injury rate.  

Then Paul pounced.

“I want to congratulate everyone for bringing down the number of accidents, even just for two weeks,” he wrote in a company-wide memo.  “We shouldn’t celebrate because we’ve followed the rules, or brought down a number.  We should celebrate because we are saving lives.”

“Workers made copies of the note and taped it to their lockers,” Charles writes.  “Someone painted a mural of [the new CEO] on one of the walls of a smelting plant with a quote from the memo inscribed underneath.” 

But praise wasn’t what Paul was seeking.  The real impact of the focus on safety was about what happened next.  The company’s efforts began to snowball into other changes not related to safety.

Paul told all of Alcoa’s workers: “If your management doesn’t follow up on safety issues, then call me at home, here’s my number.  Workers started calling, but they didn’t want to talk about accidents.  They wanted to talk about all these other great ideas.”

The small wins which resulted from the focus on safety created an environment where all kinds of new ideas came forward.  One day, a front line associate made a suggestion to the general manager: “If they grouped all the painting machines together, they could switch out the pigments faster and become more nimble in responding to shifts in customer demand,” writes Charles.  Profits on aluminum siding doubled within a year.

“It turns out this guy had been suggesting this painting idea for a decade, but hadn’t told anyone in management,” an Alcoa executive told Charles.  “Then he figures, since we keep on asking for safety recommendations, why not tell them about this other idea? It was like he gave us the winning lottery numbers.”

3: The focus on safety was the “keystone habit.”  Paul understood “some habits have the power to start a chain reaction, changing other habits as they move through an organization,” notes Charles.  “Some habits, in other words, matter more than others in remaking businesses and lives.”

What resulted was a culture of innovation at Alcoa.  Over the next ten years, the value of the company increased 5X.

“Companies and organizations across America, in the meantime, have embraced the idea of using keystone habits to remake workplaces,” Charles writes.  “At IBM, for instance, Lou Gerstner rebuilt the firm by initially concentrating on one keystone habit: IBM’s research and selling routines. At the consulting firm McKinsey, a culture of continuous improvement is created through a keystone habit of wide-ranging internal critiques that are at the core of every assignment.  Within Goldman Sachs, a keystone habit of risk assessment undergirds every decision.”

More tomorrow.

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Reflection:  Apply the idea of “keystone habits” to my organization.  What is one area to focus on that might snowball into other innovations across the organization?

Action:  Lead a discussion with my team or with a colleague about the question above.

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