In 1987, Alcoa’s brand new CEO, Paul O’Neill, delivered his vision to a flabbergasted crowd of Wall street investors:
“I intend to make Alcoa the safest company in America. I intend to go for zero injuries.”
Now we’re talking about the steel industry, which is accident prone. We’re also talking about investors who care about profits, not about worker safety. Not surprisingly, some investors ran out of the room after the presentation to tell their largest clients to immediately sell their stocks. They came to regret that.
One year later, Alcoa’s stocks soared, and continued to rise throughout O’Neill’s leadership. When he left the company in 2000, the annual net income of Alcoa was 5 times higher than in 1987. All while Alcoa had turned into one of the world’s safest companies.
What’s this got to do with change leadership and successful systemic change?
70% of change initiatives fail.
Paul O’Neill turned around a huge, old company by attacking one single habit. One new habit led to soaring innovation. And more than that, it created the momentous culture shift which enabled that innovation. How?
O’Neill had a simple vision that everyone would understand and remember. He simplified change, by addressing one simple habit and watching change ripple through the organisation. It transformed the company in ways that not even he fully anticipated.
What he had learnt in his distinguished public administration career was that you cannot order people to change. So he decided to focus on something that both unions and executives would have to agree is important.
Right after shocking the public with his vision, he made one rule:
Any time someone was injured, the unit president had to report it to O’Neill within 24 hours, and present a plan for making sure that this type of injury would never happen again. Only people who embraced this system would be promoted. Boom!
In a nutshell, his recipe for change looks like this:
- Pick something everyone has to agree is important
- Share a simple vision
- Establish one single rule
- Create clarity about the consequences of not adhering to that rule
A deeper change started unfolding
It was not easy for the responsible unit presidents to adhere to this rule. 24 hours pass by in no time and unit presidents are busy. So in order to report an injury AND to present a plan within 24 hours, they needed to be in constant communication with their floor managers. They needed to hear of accidents at once.
Floor managers in turn needed to get workers to immediately flag if they saw a problem. They also needed to keep a list of suggestions at hand, so that when the VP asked for a plan, they’d have a box full of ideas on how to prevent specific injuries from happening again.
This is how a corporate habit of excellence was created. But more than a habit of excellence, innovation rippled through the organisation.
To allow that fast response to happen, all units needed to devise a system of communication that allowed the lowliest worker to get an idea to the loftiest executive – as fast as possible.
And that is how a deeper change started to unfold
Unintended positive consequences – the dream of a change leader
As ideas for the prevention of accidents were invited, workers started to bring in all sorts of ideas that had nothing to do with accidents. Their CEO had previously invited everyone to directly report an accident. And after a while he started receiving direct calls from workers with ideas for any kind of improvements.
A through and through hierarchical organisation increased its safety and prevention awareness and at the same as it transformed its communication culture and structures.
What would be your one rule and why? Here’s O’Neill’s rationale
O’Neill had not picked just any rule to make this change happen:
To prevent injuries, Alcoa needed to understand what was causing the accidents.
To understand what caused accidents meant to understand what went wrong in the manufacturing process.
By tackling worker safety, O’Neill led the organisation to work out its problems and create a more productive and successful company.
This story is from Charles Duhigg’s Power of Habit.
Over to you
What’s your vision for your organisation? And what lever could you use to allow your people to work out how change needs to happen in order to turn that vision into reality?