Great Strategy Depends on Good Habits

How can understanding the psychology of habits improve the way we do strategy? Biting your nails. Chewing on a pen. Twirling your hair. These are behaviors we commonly refer to as habits. But these are only the obvious ones. Last week I read Charles Duhigg’s new book, The Power of Habit, in which Duhigg argues that people don’t even make conscious decisions most of the time. Instead, we’re merely acting out of habit. On a personal level, this is fascinating and empowering stuff. It also made me think about how habits affect businesses.

Understanding Habits

Humans naturally experience cravings, are motivated by triggers, and fall into routines to reap rewards. These phenomena are the foundations for what Duhigg refers to as the habit loop.

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The behaviors of a dedicated runner are a good example of the habit loop. The runner doesn’t wake up early and sprint around the block merely because he enjoys the exercise. The runner confronts a series of urges that fulfill his running habit.

Habits Are Changeable

Despite the occasional shin splint, most Americans would benefit from a daily run; as far as habits go, running is a good one. Of course, we all suffer from bad habits that negatively impact our lives (smoking, drinking and overeating are extreme examples). But here’s the good news:

Habits are not destiny.

If you understand the habit loop and recognize the cravings and cues that form your habit, then the habit becomes malleable. Instead of smoking a cigarette if you crave social activity, call a friend. Instead of perusing Facebook for a fifteen-minute break, listen to a podcast you’ve been saving.

Habits for Businesses

As consultants, our job is to identify holes, gaps and opportunities for our clients. To do this effectively, we have to go deep into our clients’ worlds. What better way to get to know a new business than by thoroughly investigating and understanding their habits?

Habit loops break down complicated situations into their basic parts, making understanding a situation easier.

Take Undercurrent, for example. A few months ago we realized that our office is quiet. Too quiet. This was a big problem for us, as we believe that a collaborative work environment produces the best possible work. If everyone chooses to sit at their desk and work independently, we can’t exercise our internal business strategy.

Once we identified the problem, the habit responsible for this behavior was easy to nab: we had become a headphone culture. Almost all of us put on headphones immediately after settling into our desks in the morning, and as a result we stopped talking to each other.

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To change our office dynamic, we needed to get people talking (out loud) again. So we installed a Sonos music system and started playing and controlling music in the office together. This simple change in habit resulted in a completely different energy level at work. Instead of listening to our favorite bands on repeat, we’re learning about new ones. Instead of pinging the person two desks down, we’re shouting (softly). Come 6pm, we’re jamming to 90’s rap.

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No matter the problem, plotting habit loops allows us to:

• Organize behaviors into context
• Shock our audience by highlighting the small details commonly overlooked
• Create a framework for behavior that is incredibly actionable

Habit loops break down complicated situations into their most basic parts, resulting in a much more intriguing and digestible understanding of a situation. To identify habit loops, look for individual actions that are high in frequency and produce a domino effect. These actions might not be obvious at first, but if you look hard enough, and trace behaviors from one cause to another, chances are you can discover underlying cues, routines, and rewards.

The headphone/Sonos shift is an example of a small habit that we’ve identified in our office, but I’d love to see this applied to an important part of a client’s business.

Something To Think About

• How do habits inform big, consequential business decisions?
• Are a company’s habits interfering with or aiding the strategies we design for them?