Small Wins
This is an excerpt from The Power of Habit: Why We Do What We Do in Life and
Business, on sale February 27th, 2012.
On a blustery October day in 1987, a herd of prominent Wall Street investors
and stock analysts gathered in the ballroom of a posh Manhattan hotel. They were
there to meet the new CEO of the Aluminum Company of America -- or Alcoa, as it
was known -- a corporation that, for nearly a century, had manufactured
everything from the foil that wraps Hershey's Kisses and the metal in Coca Cola
cans to the bolts that hold satellites together.
A few minutes before noon, the new chief executive, Paul O'Neill, took the
stage. He looked dignified, solid, confident. Like a chief executive.
Then he opened his mouth.
"I want to talk to you about worker safety," he said. "Every year, numerous
Alcoa workers are injured so badly that they miss a day of work.
"I intend to make Alcoa the safest company in America. I intend to go for
zero injuries."
The audience was confused. Usually, new CEOs talked about profit margins, new
markets and 'synergy' or 'co-opetition.' But O'Neill hadn't said anything about
profits. He didn't mention any business buzzwords.
Eventually, someone raised a hand and asked about inventories in the
aerospace division. Another asked about the company's capital ratios.
"I'm not certain you heard me," O'Neill said. "If you want to understand how
Alcoa is doing, you need to look at our workplace safety figures." Profits, he
said, didn't matter as much as safety.
The investors in the room almost stampeded out the doors when the
presentation ended. One jogged to the lobby, found a pay phone, and called his
20 largest clients.
"I said, 'The board put a crazy hippie in charge and he's going to kill the
company,'" that investor told me. "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," he
said.
Within a year of O'Neill's speech, Alcoa's profits would hit a record high.
By the time O'Neill retired in 2000 to become Treasury Secretary, the company's
annual net income was five times larger than before he arrived, and its market
capitalization had risen by $27 billion. 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.
The idea behind this book (i am not finished yet) is that if you change something in your life, one habit one process one routine it can have some powerful side effects. If people have small wins doing something that is not so important they might get use to win and start wining in more important stuff. Apparently Mayor Giuliani "broken window" theory of government is something like that. If you eradicate Graffiti there is a big fall in all criminality as a side effect. I guess the message is start somewhere and don't fail on that.
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