ALCOA's Success Story -

ALCOA's Success Story

Dibaca sebanyak :3851|12 Oktober 2015 - 10:12:20 WIB

ALCOA's Success Story

In October 1987, CEO of the Aluminum Company of America (ALCOA), a company that almost a century produces a variety of items from aluminum foil to wrap chocolate Hershey's Kisses, cans of Coca Cola, and screw to maintain the integrity of the sate...

In October 1987, CEO of the Aluminum Company of America (ALCOA), a company that almost a century produces a variety of items from aluminum foil to wrap chocolate Hershey's Kisses, cans of Coca Cola, and screw to maintain the integrity of the satellite.

 

Many people invest at ALCOA. But during the last few years ALCOA's management repeatedly choose the wrong steps, recklessly trying to expand in making new products, while competitors stole customers and their profits

 

ALCOA's new CEO, Paul O 'Neill was chosen to overcome the situation. Like other new CEO, the dominant shareholder curious about the strategy of the CEO. Interestingly during the meeting O'Neill did not mention anything about strategies in maximizing profits. O'Neill simply said, "With the metal as hot as 1,500 degrees and machines that could be fatal, I intend to make ALCOA become the safest company. I intend to pursue zero injury (zero accident)".

 

Questions and answers session was held, one asked about inventory in space division and other ask the company's capital ratios. O'Neil said "If you want to hear from ALCOA, you need to look at the numbers on ALCOA safety. Safety will be a sign that we are making progress in changing habits at all workplaces". Investors rushed out from the meeting room after the meeting ends and rushed to sell their shares.

 

The story continues, O'Neill is very committed to its strategy. Whenever there is an injury, the president of the unit should report to O'Neill and within 24 hours have to present an improvement plan. O'Neill also provide reward and punishment, which will be promoted only to people who follow the system. It seems that this is the worst decision ever taken by investors.

 

Within a year after the O'Neil's speech, ALCOA's profit reached the highest record. When O'Neil retired in 2000, the company's net annual revenues was five times larger than when O'Neil initially lead. Market capitalization rose by $ 27 billion. People who invest $ 1 million to get $ 1 million dollars more in the form of dividends. And the value of their shares was five times greater by the time O'Neil retired.

 

What happened actually, why the FOCUS ON SAFETY generate profits so high? The answer is simple, "Every habit has the power to start a chain reaction".

 

 

Click the link below for further details:

www.huffingtonpost.com/charles-duhigg/the-power-of-habit_b_1304550.html

Part: "How Keystone Habits Transformed a Corporation"