Just One Undertaking Can Make a Huge DifferenceYonoson Rosenblum
Greater control in one area has spillover effects
Wednesday, September 27, 2017
To prepare for Yom Kippur, the advice of all leading mashgichim is well known: Take on only a few undertakings for the new year, and of realistic size. If chosen properly, kabbalos of this kind can make a huge difference and have ramifications far beyond anything contemplated. The story of one company and its forward-thinking leader provides a case study in the power of choices and commitment.
In Charles Duhigg's The Power of Habit: Why We Do What We Do in Life and Business, we meet Paul O'Neill, who became CEO of the aluminum giant Alcoa in 1987. For nearly a century, ever since its founder invented the process for smelting aluminum, the company held a dominant position in the industry. But by the time Alcoa turned to O'Neill, it had become something of a dinosaur, as newer, leaner, more innovative companies cut sharply into its market share and profits.
At the press conference introducing O'Neill to Wall Street investors and stock analysts, O'Neill set forth his goal for the company: To make it the safest company in America. He said not a word about business strategy or profits. When one perplexed investor asked about capital ratios and inventories in the company's aerospace division, O'Neill replied that the questioner had not been listening. Alcoa, he reiterated, would be judged by whether it significantly lowered its number of workers injured on the job.
One portfolio manager rushed from the meeting to advise his twenty largest clients to sell Alcoa shares, as it was clear the new CEO had no clue what he was doing. That proved to be bad advice. Over the course of O'Neill's tenure from 1987 to 2000, the company's share value multiplied five times, and its market capitalization increased by $27 billion.
And, yes, its worker safety record improved dramatically. Alcoa's rate of worker injuries dropped to one-twentieth of the national average, despite the fact that Alcoa's industrial processes involves working with molten metal at 1,500 degrees and many huge machines that can cause injury.
O'NEILL MADE CLEAR from the beginning that he was dead serious about the goal of reducing workplace accidents. He gave out his private phone number to every Alcoa worker, and invited them to call any time with complaints or suggestions. At an early meeting with senior executives, he expressed his fervent belief that no one should ever have to "fear that feeding your family will kill you." And when accidents plummeted, he sent out a company-wide message: "We should celebrate because we are saving lives."
He put into place a requirement that whenever a workplace accident occurred, the plant manager had to report it within 24 hours, along with recommendations as to how to prevent a recurrence. When one of Alcoa's senior and most successful executives failed to report that several workers had been overcome by fumes at the Mexican plant he managed (they eventually recovered), he was summarily dismissed, though he had already taken remedial action.
And after a relatively new worker was killed while trying to repair a machine, O'Neill summoned all that plant's top executives and Alcoa's top officers to a meeting in the company's Pittsburgh headquarters to review videotapes of everything leading up to the tragedy and to analyze where they had failed. Among the conclusions: the company's training program had not sufficiently stressed that workers would not be held responsible for stoppages due to machine breakdowns. "I caused his death," O'Neill proclaimed.
Though O'Neill had never promised that improved safety would lead to improved profits, the safety campaign helped Alcoa's earnings directly. Duhigg summarizes the results of the emphasis on safety first: costs went down, quality improved, and productivity skyrocketed.
The process of pouring molten metal from huge vats was redesigned to remove the danger of spillages — but that also resulted in savings in raw materials. O'Neill instituted a rule that any machine that was breaking down regularly had to be replaced to reduce the likelihood of a broken gear snagging the arm of a worker. But that, too, paid dividends, as more efficient machines resulted in higher quality products. In short, it turned out that the same factors that made a production process unsafe also made it inefficient.
There were indirect benefits as well. The safety campaign required that plants be able to share information rapidly to discuss what worked and what did not, and to warn of possible dangers in the production process. In order to facilitate that rapid exchange of information, Alcoa became one of the first companies to introduce a company-wide e-mail system.
The unions, which had always resisted any productivity initiatives, stopped doing so when they saw the linkage between efficiency and safety, and when they realized that the latter was no less important to Alcoa than the former. When workers saw that their safety suggestions were taken seriously and acted upon, they began to offer suggestions in other areas as well. One worker recommended placing all the machines for painting aluminum siding in the same area of each plant to facilitate switching between colors, as customer preferences changed. The profits of the aluminum siding division doubled as a consequence. It turned out that the worker had been discussing the idea with his fellow workers for years, but had not done so with management because he did not believe anyone would pay attention to him. The response to the safety suggestions convinced him otherwise.
NOW, OBVIOUSLY, O'NEILL'S LASER FOCUS on safety at Alcoa was much more complicated and multifaceted than any undertaking we are likely to take on. Still, there is much to learn from Alcoa's experience. Most of O'Neill's career was spent working at the US Office of Management and Budget (OMB), where he discovered that great gobs of money were being spent without any rational decision-making process. Thus, health sector allocations tended to be spent on building new hospitals, without any real inquiry as to whether the area in question needed more hospital beds.
While at OMB, O'Neill was relentless in his quest to discover the whys of a given policy — if there were any. One admiring former employee declared he would never work for him again, and described him as someone who has 20 new questions for every answer. For instance, disturbed by the high rate of infant mortality in the United States, despite the country's great wealth, he was told it resulted from the high percentage of premature births. And the rate of premature births, it turned out, was often caused by poor nutrition among mothers.
But counseling expectant mothers on nutrition, studies showed, was of limited utility, as better nutrition needed to start before pregnancy. And why was that not happening? Well, it turned out that many high school biology and health teachers in rural areas were themselves so badly trained that they could not properly teach nutrition. So O'Neill increased expenditures on teacher education in life science subjects.
So too the process of making kabbalos requires thinking in a deeper fashion about the problems they are meant to address. In addition, the kabbalos themselves can be an effective means of gaining new insight into the challenges to be addressed.
Duhigg quotes studies showing that dieters who kept a food diary lost twice as much as those who did not. I have no doubt that a similar diary of Internet use — number of times checking e-mail, visits to different sites, etc. — would yield equally helpful insights, and with them an approach to limiting usage dramatically.
Second, the Alcoa example shows that success in one area can often have widespread repercussions well beyond anything anticipated. And that is because things are interconnected: an inefficient production line is often an unsafe one, and vice versa.
And that is no less true of human beings. Everything is interconnected. And as a consequence, when we gain greater control in one area, it has spillover effects in all other areas as well. Small victories pave the way for others to follow.
May the example of Paul O'Neill's success at Alcoa encourage us all to think seriously about an area of focus and a specific kabbalah related to it for the next year. And may we experience as many positive results as Alcoa did.