The Awesome Secret Behind Habit Formation and How to Unleash it in Business
I am a neuroscience junkie. There is nothing that intrigues me more than learning just how incredibly marvellous and mysterious our own brains are. So after finishing the book "The Power of Habit - Why we do what we do in life and business" by Pulitzer prize-winning reporter Charles Duhigg, I was excited to discover the underpinnings of habit formation, and just how powerful they can be in success at work and home.
It's unfortunate, but most of the most amazing discoveries in neuroscience are often the result of analysing damage to the brain. Just as Phineas Gage's rail road injury revealed the importance of pre-frontal cortex in personality, Eugene Pauly damaged medial temporal lobe was a critical discovery into understanding both memory and habit. After contracting viral encephalitis, 71 year Pauly lost a small part of his medial temporal lobe resulting severe short term memory loss and an inability to remember anything prior to 1960... Let's just say you wouldn't have a problem if you only knew one joke..
To cut to the point, a critical discovery was made as a result of Pauly one day disappearing from his home. His frantic wife was terrified for Pauly's safety, after all he couldn't even locate his own kitchen on a map, until he eventually turned back up at home safe and well. You see, each day for a long time Pauly and his wife had embarked upon the same walk around the block, despite him never consciously remembering it. The fact that Pauly successfully performed the exact same walk alone was incredible - how did he remember it? That is when neuroscientists began to understand that habits are formed and operate entirely separately from the part of the brain responsible for memory! Essentially, we make many unconscious choices without having to remember anything about the lesson or decision making in an attempt by the brain to save effort. Driving a car, brushing our teeth or cooking a meal involve multiple decisions and separate actions, however many of us do these things without a second thought... The process is a type of loop, a habit loop. It is comprised of a cue, a routine and a reward. If any one of these components is missing the habit breaks down.
Ok... This is all fine and well, but how does it affect success and business? Now the fun begins. Duhigg's book explores many many examples of how habit formation has resulted in incredible success, from toothpaste companies to NFL teams, however in this post I would like to highlight an excellent business example within the fortune 500 company Alcoa in the late 1980s. In this case study, we will explore not only how habit formation was responsible for reducing the number of work place injuries from once a week to a worker injury rate that was one-twenteith the national average, but how habit formation was simultaneously responsible for rising Alcoa's income 500% and market capitilization by $27 billion... Let's see just how.
O'Neill was a disruptive new CEO when he entered Alcoa. Unlike his predecessors who tried to mandate quality improvement, which unsurprisingly resulted in epic failure, O'Neill preached about the importance of safety and safety alone. It wasn' surprising that the majority of the company's shareholders questioned this strategy, not to mention his sanity. How on earth could fire exits and incident reports lead to high annual revenues? Well you see, O'Neill understood what many leaders don't - you can't simply demand change and expect it to happen. True change needs to be innovative, it needs to get deep within the minds of each and every person working within the company. For O'Neill in order to achieve this meaningful change, it needed to be the result of what Duhigg refers to as "corner stone habit" - a habit that causes a chain reaction of habit disruption. O'Neil had grown to understand how key institutional habits governed process. Essentially, he introduced a better habit loop within the company that had ripple effects across many KPIs.
At Alcoa, whenever an injury (cue) occurred, the personal responsible for that unit had to report it together with a report to explain why it happened and a plan to ensure it wouldn't happen again to O'Neill within 24 hours (routine). Whether or not an employee was promoted was dependent almost solely on the success of this procedure (reward).
But here is where things get even more clever... In order for the head of the unit to meet the strict deadline, he needed to get the information from the VP immediately. As a result, this meant that VP had to be in constant and effective communication with the floor managers, from where the floor managers become hugely reliant on the safety feed back and communications of those working on the ground, as they would help form the action plan. In a nut shell this meant that everyone had to have a much better understanding of how the process and the company worked, what affected what and who was involved. These factors combined resulted in a much improved system of communication, transparency, understanding and planning all through creating one corner stone habit loop based around work safety - pretty funky huh? By shaping just one key habit, the rippled effects across the organisation were significant.
So how can habit be implemented in your startup or business? Here at Tada, a lot of our internal processes have become habits. From daily scrum meetings to the process undertaken to hire talent to the way in which we test our product. These "habits" within our company ensure as much "goes to plan" as possible with less mental effort than if nothing was repeated. We don't lose time questioning the procedure, every member of our constantly growing team understand the process, understands the expectations and means that management runs a lot smoother. When things run smoothly everyone has more time to focus on what truly matters, making the company more productive and inevitably more successful.