Reviewed by Special K, ETMG Writer and Blogger
What do Target, Alcoa Inc., and Starbucks have in common? These companies have all managed to harness the power of habit to achieve success. This is one of the central arguments at the core of Charles Duhigg’s best-selling book, The Power of Habit: Why We Do What We Do In Life and Business.
An award-winning investigative reporter at the New York Times, Duhigg provides a stunning overview of the last 20 years of research into the science of habit formation, and his book deftly creates conversations between sociologists, psychologists, neurologists, and corporate marketing departments.
Marketers will find the book useful for its insights into the ways companies are using the science of habit formation to understand consumer purchasing patterns better than they understand themselves. Managers will be interested in the relationship between habits and successful corporate cultures.
Understanding and Shaping Consumer Habits
For marketers, Dihigg’s book is a gold mine of information about how companies use the science of habit formation both to study and to influence consumer purchases. For instance, Target knows that spending habits are more flexible when people go through major life events such as purchasing a home or becoming pregnant.
By studying consumer habits, Target’s Marketing Analytics department has been very successful at predicting these events and sending precisely timed coupons and reminders that shape buyers’ habits without them even realizing it. Target’s implementation of its new strategy coincides with its revenue growth from $44 billion in 2002 to $67 billion in 2010.
Changing Organizations with Keystone Habits
Duhigg also writes about changing corporate cultures with keystone habits, habits so powerful they can change other habits. In 1987, Paul O’Neill became CEO of Alcoa Inc., a large aluminum smelting company. When he took charge, Alcoa was experiencing a series of management missteps, failed ventures into new product lines, and lagging performance against competitors.
Instead of focusing on typical business goals like boosting profits or lowering costs, O’Neill iterated and reiterated the mantra that the company’s primary goal was to become the safest company in America. Within a year, Alcoa’s profits hit a record high and by the time O’Neill retired in 2000, the company’s yearlyl net income was five times greater than before he arrived.
By focusing on worker safety, O’Neill created a new culture throughout the company. O’Neill’s genius was in choosing worker safety as the key habit. Focusing on worker safety meant that both executives and the union would have to work together and change communications habits. All employees were now rewarded for understanding why and how injuries happened which meant they had to become intimately familiar with process, quality control, and developing solutions. By protecting workers, Alcoa became the most streamlined aluminum company in the world.
Connecting the Dots…
Throughout his book, Duhigg connects the dots between both organizational and marketing successes and their accompanying habits and is eminently readable. Learn how Febreeze became a best-selling product and how Claude C. Hopkins harnessed the power of habit to convince Americans to brush their teeth daily. The stories rival something you might see on Mad Men. I highly recommend this book.
How Companies Learn Your Secrets – New York Times Magazine