Habits, Beliefs, and Business Success: Crafting Your Company’s Reality

In modern business, success is not merely a product of market forces and strategic planning. It’s increasingly clear that the habits and beliefs cultivated within an organization play a pivotal role in shaping its trajectory. These intangible elements form the bedrock of a company’s culture, influencing everything from daily operations to long-term vision. In this blog post, we’ll explore how habits and beliefs intertwine to craft a company’s reality, and how successful businesses have leveraged these elements to achieve remarkable results.

The Power of Habits: Small Actions, Big Impact

At the heart of every successful organization lies a set of habits — routines and behaviours that, when consistently applied, can lead to extraordinary outcomes. These habits, often seemingly small or insignificant in isolation, compound over time to create a powerful force that shapes a company’s reality.

One of the most striking examples of the power of habits in business comes from Alcoa, the aluminium manufacturing giant under the leadership of Paul O’Neill. When O’Neill took over as CEO in 1987, he didn’t focus on traditional metrics like profits or market share. Instead, he honed in on a single habit: workplace safety.

O’Neill believed that by focusing relentlessly on worker safety, other positive changes would naturally follow. He instituted a policy where any workplace injury had to be reported to him within 24 hours, along with a plan to prevent similar incidents in the future. This simple habit — consistent reporting and problem-solving around safety issues — had far-reaching effects.

As employees at all levels of the organization began to habitually think about and act on safety concerns, communication improved, innovation flourished, and efficiency increased. Workers felt more valued, leading to higher job satisfaction and lower turnover. The focus on safety required modernizing old equipment and rethinking production processes, which led to improved product quality and reduced costs.

The results were staggering. During O’Neill’s tenure, Alcoa’s annual net income increased fivefold, and its market capitalization rose by $27 billion. By focusing on cultivating a single, powerful habit, O’Neill had transformed Alcoa’s entire operational reality.

This example illustrates how habits can serve as a keystone, holding together and influencing multiple aspects of an organization. The safety-first habit at Alcoa didn’t just reduce workplace injuries; it reshaped the company’s culture, improved operational efficiency, and ultimately drove financial success.

Beliefs as the Foundation of Corporate Culture

While habits shape the day-to-day reality of a business, beliefs form the foundation upon which those habits are built. The collective beliefs held within an organization — about its purpose, its capabilities, and its place in the world — can profoundly influence its trajectory and success.

Southwest Airlines provides a compelling example of how strongly held beliefs can shape a company’s reality and drive success. From its founding, Southwest has been guided by a core belief that air travel should be accessible, enjoyable, and human-centered. This wasn’t just a marketing stance — it was a deeply held conviction that influenced every aspect of the company’s operations and culture.

This foundational belief manifested in several unique ways. While other airlines focused on premium services and complex pricing models, Southwest maintained a steadfast belief in democratizing air travel through simple, transparent pricing and no-frills but friendly service. The company’s belief in treating employees as their most valuable asset led to unprecedented practices in the airline industry — Southwest has never had a mass layoff in its 50+ year history, even during industry crises like 9/11 and the 2008 financial downturn.

Southwest’s belief in the importance of company culture has shaped its hiring practices in distinctive ways. The airline is famous for hiring for attitude first and skills second, operating under the belief that technical skills can be taught but personality and cultural fit are innate. This belief led to unconventional hiring practices, such as group interviews where candidates are observed for their ability to demonstrate humor, teamwork, and customer service orientation.

The company’s belief in maintaining a positive, fun-loving workplace culture has become legendary. Southwest encourages flight attendants to inject humor into safety announcements and empowers employees at all levels to solve customer problems creatively. This stems from a core belief that happy employees create happy customers, which in turn creates a successful business.

The impact of these beliefs on Southwest’s reality has been remarkable. The airline has achieved 47 consecutive years of profitability prior to the COVID-19 pandemic — an unprecedented achievement in the volatile airline industry. Southwest’s emphasis on employee satisfaction has resulted in one of the lowest turnover rates in the industry and consistently high customer satisfaction scores. The company has repeatedly been named one of the best places to work, demonstrating how strongly held beliefs can create a distinctive and successful corporate culture.

By allowing its core beliefs about accessibility, employee value, and positive culture to guide its decisions and practices, Southwest has created a unique reality in an industry often characterized by impersonal service and volatility. This alignment between beliefs and actions has not only shaped the company’s culture but has also driven its long-term success in a highly competitive market.

Aligning Habits and Beliefs: The Key to Sustainable Success

While powerful on their own, habits and beliefs reach their full potential when they’re carefully aligned. When an organization’s daily habits reinforce its core beliefs, and those beliefs in turn justify and motivate its habits, a powerful synergy emerges that can drive sustainable success.

Patagonia, the outdoor clothing and gear company, offers an excellent example of this alignment in action. From its inception, Patagonia has held a core belief in environmental stewardship. This belief isn’t just a marketing slogan; it’s deeply ingrained in the company’s DNA and manifests in numerous habits and practices throughout the organization.

One of Patagonia’s most famous habits is its repair and reuse program. The company actively encourages customers to repair their old Patagonia gear rather than buying new items. This habit, which might seem counterintuitive for a retail business, stems directly from the company’s belief in reducing environmental impact. Patagonia even sent a truck on a cross-country tour to repair people’s clothing for free, regardless of the brand.

This alignment of belief and habit extends to Patagonia’s product development. The company has a habit of rigorously testing the environmental impact of its materials and manufacturing processes. This habit led to innovations like using recycled polyester and organic cotton, which align with the company’s environmental beliefs while also creating high-quality products.

Patagonia’s beliefs and habits even extend to its approach to growth and profit. The company famously ran an ad saying “Don’t Buy This Jacket” on Black Friday, encouraging consumers to consider the environmental cost of their purchases. This radical move, driven by the company’s environmental beliefs, paradoxically strengthened customer loyalty and boosted sales in the long run.

The alignment of Patagonia’s beliefs and habits has created a unique reality for the company. It has cultivated a fiercely loyal customer base that values durability and environmental responsibility. This has allowed Patagonia to thrive in a highly competitive industry while staying true to its core values. As of 2023, Patagonia is a billion-dollar company that continues to grow while maintaining its commitment to environmental causes.

By ensuring that its daily habits — from product design to customer service to marketing — consistently reinforce its core beliefs, Patagonia has created a sustainable business model that resonates deeply with its target market. This alignment has shaped a reality where business success and environmental responsibility are not just compatible, but mutually reinforcing.

Transforming Beliefs Through Intentional Habit Formation

While beliefs can shape habits, the reverse is also true. By intentionally cultivating certain habits, organizations can shift their collective beliefs and, by extension, their reality. This process of belief transformation through habit formation can be a powerful tool for companies looking to adapt to changing market conditions or overcome internal challenges.

Microsoft’s transformation under CEO Satya Nadella provides an illuminating example of this process in action. When Nadella took the helm in 2014, Microsoft was struggling to adapt to the mobile and cloud computing era. The company’s belief in its dominance of the PC software market had calcified into a rigid, defensive posture that was hindering innovation.

Nadella set out to transform Microsoft’s beliefs by instituting new habits. One of the most significant was the habit of embracing a “growth mindset,” a concept borrowed from psychologist Carol Dweck. This mindset emphasizes learning and improvement over fixed abilities or established successes.

To cultivate this habit, Nadella encouraged employees to replace “know-it-all” attitudes with “learn-it-all” curiosity. He instituted regular learning sessions where employees could explore new technologies and ideas. He also changed the company’s performance review system to reward learning and collaboration rather than just individual achievement.

Another habit Nadella introduced was openness to partnering with competitors. This was a significant shift for a company that had long seen itself as a lone giant in the tech world. Microsoft began collaborating with Linux, a former arch-rival, and made its .NET framework open-source.

These new habits gradually shifted Microsoft’s collective beliefs. The company began to see itself not as a defender of its Windows and Office empires, but as an innovative player in cloud computing and artificial intelligence. This belief transformation opened up new avenues for growth and innovation.

The results of this belief transformation have been remarkable. Under Nadella’s leadership, Microsoft’s stock price has increased by over 600% as of 2023. The company has become a leader in cloud computing with its Azure platform, and has successfully pivoted to a subscription-based model for many of its services.

By intentionally cultivating habits of learning, openness, and collaboration, Nadella transformed Microsoft’s beliefs about its role in the tech industry. This in turn reshaped the company’s reality, allowing it to thrive in areas where it had previously struggled. Microsoft’s journey demonstrates how targeted habit formation can be a powerful tool for belief transformation and organizational change.

When Habits and Beliefs Misalign

While aligned habits and beliefs can drive remarkable success, misalignment between the two can lead to significant challenges. When an organization’s stated beliefs conflict with its habitual actions, it can create confusion, demotivation, and even crisis. Navigating these misalignments is a crucial skill for business leaders.

Wells Fargo’s account fraud scandal, which came to light in 2016, provides a cautionary tale of the dangers of misalignment between habits and beliefs. Wells Fargo had long proclaimed a belief in putting customers first, with a stated vision of wanting to “satisfy our customers’ financial needs and help them succeed financially.”

However, the habits cultivated within the organization told a different story. Aggressive sales targets and a cutthroat internal culture led employees to open millions of fraudulent accounts in customers’ names without their knowledge or consent. The habit of prioritizing short-term sales goals had become so ingrained that it overrode the company’s stated belief in customer service.

The consequences of this misalignment were severe. When the scandal broke, Wells Fargo faced billions in fines, a tarnished reputation, and a mass exodus of customers. The company’s CEO was forced to resign, and Wells Fargo is still working to rebuild trust years later.

The Wells Fargo case illustrates the importance of regularly auditing organizational habits to ensure they align with stated beliefs. It also demonstrates how powerful ingrained habits can be, even when they conflict with an organization’s professed values.

Recovering from such a misalignment requires more than just changing policies or making public statements. It necessitates a fundamental reevaluation of organizational habits and a concerted effort to bring them into alignment with core beliefs. For Wells Fargo, this has meant overhauling its incentive structures, strengthening ethical training programs, and working to rebuild a culture of customer trust — a process that is still ongoing.

This example serves as a reminder that crafting a company’s reality isn’t just about articulating the right beliefs or instituting the right habits. It’s about ensuring that beliefs and habits work in concert, reinforcing each other to create a coherent and positive organizational reality.

Conclusion

The habits we cultivate in our organizations — be they related to safety, innovation, environmental responsibility, or learning — can profoundly influence our daily operations and long-term success. Similarly, the beliefs we foster — about our purpose, our capabilities, and our role in the world — can guide our decision-making and shape our corporate culture.

When habits and beliefs are thoughtfully aligned, they create a virtuous cycle that can drive remarkable success. This alignment allows companies to navigate challenges, seize opportunities, and create a distinctive identity in the marketplace.