In 1987, Paul O'Neill became the CEO of Alcoa, the aluminum company. At his first meeting with shareholders, who were eager to hear how he planned to turn the ailing company around, O’Neill shared that he had only one objective: eliminating employee injuries. Investors thought he had lost his mind. No mention of revenues or profit? Blasphemy. A number of high-profile investors gave the order to immediately sell all stock in Alcoa.
Had O'Neill lost sight of financial goals? To the contrary. Rather than share a laundry list of changes Alcoa needed to make, such as raise operational efficiency, reduce the number of people needed for tasks, and increase the speed of machines, O’Neill understood the necessity for focus to cause organizational change.
“You can’t order people to change,” O’Neill said. “That’s not how the brain works. I decided if I could start disrupting the habits around one thing, it would spread throughout the company."
O'Neill also understood that he couldn't stop at identifying a single objective. He would need to consistently reinforce this goal in every way possible. In talking with his management team, O’Neill exclaimed, “From this day forward, we will not budget things that need to be done to improve safety conditions. If you have identified something that needs to be done, you should go and do it – not put it into next year’s budget and in the meantime hope that no one gets hurt."
Not long after O'Neill's announcement about the priority of safety, an employee was killed on the job. O'Neill knew it was an important moment to demonstrate he was serious about safety. He gathered all of his top executives and told them, "We killed him. How can we have a culture where that behavior is acceptable?” He took swift measures, including firing an executive who wouldn’t take responsibility for his employee’s safety.
O’Neill’s efforts paid off quickly. By 1991 employee injuries had been reduced by 50% and the company’s revenues and profits were up. There are important lessons in the story of how Paul O’Neill turned Alcoa around by transforming the company’s culture. He was successful because he understood three critical aspects of change:
1. People need a single mandate to focus on.
It’s too much to ask people to remember numerous objectives. Let alone act on them. They’re busy enough dealing with what’s currently on their plate to figure out what they need to do differently to hit multiple objectives. Give people a single thing to focus on if you want them to actually change.
2. Successful organizational change requires individual change.
O’Neill understood that to transform the company he needed everyone within the organization to be involved. Mandating new processes wasn’t going to cut it. No one person could know all the changes that would need to be made in every corner of the company. Employee safety, however, was something everyone could comprehend and rally around, which would in turn inspire problem solving and action within individuals.
3. New behavior erodes quickly if not reinforced from the top.
O’Neill paid close attention to his own behavior as well as that of other company leaders. He knew employees would naturally be looking at executives to see if the talk of change was just lip service. If O’Neill or his executives slipped in what they said or did, the whole effort risked being for naught. They had to walk the talk. O’Neill looked at all he could influence – from compensation to language to hiring and firing – to make sure everything was in line to support and encourage employee safety.
O’Neill got that because change is hard he needed to focus all energy on just one thing. It paid off for all involved. All except the analysts who told their clients to sell Alcoa stock. One such detractor lamented later on, “It was literally the worst piece of advice I gave in my entire career.”
Does everyone in your company know the one thing they are to focus on?
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