How to Find 1 Keystone Indicator that Needs to Dominate on Your Scorecard

Still looking for a perfect set of KPIs? Look for a keystone habit! It works as a leverage, it starts a chain reaction and creates a cultural shift towards the performance excellence in a company.

How to find a keystone indicator and start a chain reaction of achieving excellence in your business

What if someone were to tell you that to improve the overall performance of your company, you need to focus all your efforts on … worker’s safety? Your current safety indicators are in the green zone and their values are even better than the ones all over the industry. What a surprise when a new CEO is talking to the investors and shareholders not about ROI, investments, and financial efficiency, but about … safety.

Safety as a keystone – Alcoa story

That’s what Paul O’Neill did when he came to Alcoa in 1987 as a chairman and CEO. Alcoa deals with a molten aluminum, and their injury rate per 100 worker per year was 1.86 (quite good compared to the national rate in US that was 5 incidents per 100 workers). The new CEO established a goal – “achieve zero injuries level” at the organization where people handle molten metals.

Did the company achieve this goal? Today Alcoa publishes their safety data in real time[1], when I was writing this article the rate was at 0.120. In other words, on average, workers at Alcoa take less of a risk in getting injured than employees of a software company or a legal office.

How did this company do this?

  • They became “obsessed” with safety!

Any safety incident was reported within 24 hours to the management. The reports contained an analysis of the situation, and the prevention plan for the future. They were really serious about it, and one top manager was even fired for not reporting a safety incident. Safety was not just a part of the bureaucratic reports, it was in the focus.

  • There was always a budget for improving safety – from installing new sensors and proactive maintenance to training people about safety; they even implemented email system to … report about safety problems more efficiently.

There was a “side effect” of this focus. People started sharing other ideas and some of them lead to some significant process improvements. And more important, the financial results of the company were improving as well.

To learn the full story you can start with this article[2] by Pulitzer Prize–winning business reporter Charles Duhigg. If you liked the story, I do recommend reading a book[3], where Charles Duhigg explores the nature of habits (or their business analog – routines) by giving some great examples of how to improve organizational performance.

Keystone term

The term “keystone” came from architecture, where it was the final piece placed in an arch that supported the weight of the whole construction. The term is often used to underline the importance of the dependencies, for example there are keystone species that significantly impact on the ecosystem and other species.

Keystone habit

In his book Charles Duhigg talks about the “keystone habit.” It is a habit that:

  • Can start a chain reaction of remaking other patters;
  • Works as a leverage allowing small changes become big ones;
  • Can create a cultural shift.

An example of the keystone habit:

  • safety habit that was introduced at Alcoa and that started a loop of the improvements in other areas;
  • Food journaling or daily exercise that for some reason cause people eat healthier food and change their financial habits as well.

Are there some other keystone habits?

After reading this article someone might argue:

  • OK, I see how safety worked for Alcoa, but we are not in the metal industry, and safety can hardly be a keystone habit in our case…

I do agree and I suggest that organizations and persons need to find a keystone habit that is applicable in their very own case. For example, why not take “happiness” as a keystone habit? Tony Hsieh, CEO at Zappos and author of “Delivering happiness”[4] argue that using the happiness of employees and customers as a principle can actually help leaders to guide the company along the way towards long-term success.

If “happiness” doesn’t sound like a word that one uses in daily business talks, then replace it with “trust.” Think about achieving trust by creating reliable customer service with a fast response, and building relationships with employees and partners.

How to find a keystone habit for a business?

Although we can find the keystone habit by analyzing past results, there is no way to predict what habit will appear to be a keystone in your business or your personal life. But there are some hints:

  • Most likely it will be just one habit/business routine, focusing on many different things proved not to be so effective;
  • The habit might make things more tangible/visible in some or other way – like food journaling does;
  • It should matter for people – CEO probably won’t achieve good results if speaking to unions about market share;
  • In the most cases it is about change achieved via education, not by giving a list of orders;
  • Most likely it will replace some old (bad) habit/routine.

How did Paul O’Neill find the keystone habit for Alcoa? Here is what he said about this in one of the old interviews[5]:

  • “Human beings have what I call discretionary energy and they give it to you or not. I don’t think they would give it to you if they don’t feel that you treat them with dignity and respect every day.”

What might be the best way to be respectful with a customer?

  • Give them a high quality product or service. Not just fix the problems quickly, but think about the reasons for these problems and prevent them in the future.
  • Give them reliable customer service. Update your website with some fresh information; train managers at the call center; think about user experience.
  • Hire sales people that educate, not those that repeat marketing pitches.
  • Be respectful with your internal customers (your team). Boost engagement by giving them the best tools and training, cultivate a culture of excellence.

The bottom line

I like to share Alcoa’s story as an example when someone is asking about a good KPI for a certain aspect of their business. The lesson that we can learn from it is that it is necessary to do a root-cause analysis and look for the patterns that can work as a performance leverage.

How does the keystone habit look in your business? How did you find it?

References

  1. ^ Zero Is Possible, Alcoa Worldwide website.
  2. ^ How ‘Keystone Habits’ Transformed a Corporation, Charles Duhigg, 2012, The Huffington Post.
  3. ^ The Power of Habit: Why We Do What We Do in Life and Business, Charles Duhigg, 2014, Random House.
  4. ^ Delivering Happiness. A path to profits, passion, and purpose, Tony Hsieh, Business Plus, 2010. Book’s website.
  5. ^ Paul O’Neill interview worker safety at ALCOA.

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Strategy and KPIs Scorecard Expert | Speaker | CEO. Aleksey Savkin (LinkedIn, @bscdesigner) is helping companies to better formulate their strategies and make the process of strategy execution more tangible with KPIs. New book by Aleksey: 10 Step KPI System

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