The following is an excerpt from the book by Charles Duhigg, The Power of Habit:
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.
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. What’s more, all that growth occurred while Alcoa became one of the safest companies in the world.
- Whitehead, Lorne (1983). American Journal of Physics, Vol. 51, p. 182. Retrieved from: https://popperfont.files.wordpress.com/2013/01/dominopaper.pdf
- Keller, Gary and Papasan, Jay (2012). The ONE Thing. Bard Press.
Duhigg, Charles (2012, February 27). How ‘Keystone Habits’ Transformed a Corporation. Huffington Post. Retrieved from: http://www.huffingtonpost.com/charles-duhigg/the-power-of-habit_b_1304550.html