What is a CEO responsible for? According to Stever Robbins, everything. But ultimately, the success and failure of the company. But while the CEO has this very important role it doesn’t mean that he or she has to do everything. Robbins suggests that the CEO’s core duties are setting strategy and vision, building culture, team building and capital allocation – setting the budgets and managing the company’s capital.
Underlying these core duties is the responsibility to protect the things that are most important to the success of the business: in most cases this will be the safety of its people, the organisation’s reputation and its ability to produce products and provide services. External and internal events have the potential to cause harm to people, reputation and products at the same time. It’s critical for a CEO to build a culture that is supported by the best resilience and incident management structures.
How Can a Focus on Keystone Habits Improve Your Business?
Scanning the news on almost any given day will yield stories about events inside or outside an organisation that have caused a significant fall in sales or made a massive, sometimes irreparable, dent in their reputation: In New Zealand, the 2013 milk powder contamination scandal continues to have a significant impact on Fonterra’s reputation. More recently Fonterra has had the 1080 and botulism contamination scares, while in Australia Patties Foods has recently had to recall four food products after being linked to infections of Hepatitis A. While these examples show how an event can have a significant impact on reputation and an organisation’s ability to sell products, the ability to protect its people, can also have a significant impact on a company’s bottom line.
In his book The Power of Habit, Charles Duhigg discusses the story of the financial turn-around of the Aluminium Company of America (Alcoa) following the appointment of a new CEO, Paul O’Neill in 1987. In the year prior to O’Neil’s appointment, Alcoa had been losing customers while management had made poor choices. In his first presentation to investors O’Neill stated that his number one priority was worker safety, much to the confusion of investors. However, within a year Alcoa became one of the safest companies in the world and the company’s profits were at a record high.
So how did a focus on the safety of its people result in such a turn-around? According to Duhigg, the result was achieved by focusing on key habits that had such an impact on the organisation that they completely transformed everything by acting as levers. The start of the transformation was O’Neill setting a lofty goal of zero injuries, and Alcoa’s employees buying into the goal as no one could argue that worker safety was not important. For Alcoa to achieve their goal they had to understand why and how injuries were happening and they needed to re-educate staff on best practise. And here lies the beauty of O’Neill’s strategy: to protect its workers, Alcoa had to become the most streamlined and efficient aluminium company on the planet.
O’Neill’s worker safety plan was modelled on a habit loop where every single employee injury was followed by an automatic response: a unit president had to report the injury to O’Neill within 24 hours along with a plan for mitigating the risk of the injury happening again. The reward – only those who embraced the system (habit) were promoted. For the system to support the change in culture they had to remove barriers to escalation and in doing so everything about the company’s rigid hierarchy had to change resulting in the biggest realignment in the company’s history.
As the safety patterns changed, they had a cascading effect across the company. In O’Neill’s first presentation to investors he never promised that the focus on worker safety would increase Alcoa’s profits. However, as new routines moved through the organisation, costs came down, quality went up, productivity skyrocketed and O’Neill was able to fulfil the responsibility of protecting those things most important to Alcoa.
Culture Supported by Process
The story of Alcoa demonstrates that if you focus on changing or cultivating keystone habits, you can create widespread behavioural shifts. Changing keystone habits helps other habits to flourish and establishes a culture where change becomes contagious. What Paul O’Neill achieved at Alcoa was to build a culture, supported by good process that protected the things most important to the business – its people, reputation and ability to make money.
So, as CEO, how do you get it right? Make sure you sign-up to our Blog so that you can read how to build a culture where the safety of your people is paramount so that, like Alcoa, you’ll have one of the foundation blocks for protecting your people, reputation and profitability.