Hopefully, you’ve spent some time working on your habits as
you’ve started the new year.  If you’re
just joining the discussion, you may want to catch up by reading  the previous posts on this topic (1,2,3).

We’ll finish up this series by introducing the concept of a
“keystone habit.”  From a holistic
perspective, this concept has the greatest application to real estate organizations
and individual offices.

In his book, Charles Duhigg introduces this concept in a
chapter he calls “The Ballad of Paul O’Neill.” 
If you’re a political buff, you may remember that Paul O’Neill was
Treasury Secretary during President Bush’s first term.  However, he is more famous for his work as CEO of
Alcoa during the late ‘80s and ‘90s. 

Here is a quick summary (as written up by Keren Threlfall
) of what happened at Alcoa:

Investors and employees alike were shocked when Paul O’Neill
shared this in his speech of acceptance as the new CEO of Alcoa:

“I want to talk to you about worker safety. Every year,
numerous Alcoa workers are injured so badly that they miss a day of work. I
intend to make Alcoa the safest company in America. I intend to go for zero
injuries.”

Some people thought perhaps he had a touch of dementia.
Investors called their clients and advised them to sell their stock
immediately. (Those who did so would later realize that was some pretty bad
advice.)

What O’Neill was doing was introducing a keystone habit.

“O’Neill believed that some habits have the power to start a
chain reaction, changing other habits as they move through an organization.
Some habits, in other words, matter more than others in remaking businesses and
lives. These are “keystone habits,” and they can influence how people work,
eat, play, live, spend, and communicate. Keystone habits start a process that,
over time, transforms everything.”

As the company focused on safety, employees and investors
were amazed at the other areas of change, as well. Alcoa eventually rose to new
heights in production, employee satisfaction, and in their portfolios, as well.

By the time O'Neill retired in 2000 to become Treasury
Secretary, the company's annual net income was five times larger than before he
arrived, and its market capitalization had risen by $27 billion. Someone who
invested a million dollars in Alcoa on the day O'Neill was hired would have
earned another million dollars in dividends while he headed the company, and
the value of their stock would be five times bigger when he left.

There is a lot more to his story—more than I can write here
and stay within the reasonable bounds of a WorkPuzzle discussion.  If you want to delve more into the
details, read the lengthy article
published on keystone habits in the Huffington Post last year. 

There are two principles that I took away from the Ballad of
Paul O’Neil:

1.  The organizational
habits that matter the most are the ones that, when they start to gain momentum,
dislodge and remake other patterns.

2.  Keystone habits
encourage change by creating structures that help other organizational habits
to flourish.

As a business leader, the challenge is to identify the
keystone habit for your organization. 
Obviously, it would not be appropriate to select the same one that Paul
O’Neil used (safety).  Instead, look for ones that would impact your organization as described above.

Any ideas?  

Here’s what I’ve noticed after working with hundreds of real
estate managers and organizations over the last seven years:  the keystone habit for most real estate organizations
is recruiting.  

In the years ahead, the keystone habit that will increasingly impact the real estate industry will be new agent recruiting.

Why?  This is the one habit that best fits the two principles
outlined in Duhigg’s research for a real estate organization. New agent recruiting has the capacity to dislodge and remake other patterns.  Also, new agent recruiting has the unique ability to encourage change through the creation of new structures.

What are your thoughts?  Do you see new agent recruiting as the keystone habit that can help your organization prosper?

Bonus Materials:  As we wrap our discussion on habits, you may have an interest in referencing this cool infographic on habits (some of you may remember, I really like infographics).  If you're serious about changing habits, this breaks down the process and helps in the diagnosis of each stage.

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Editor's Note: This article was written by Ben Hess. Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle. 

I hope each of you had a wonderful Christmas holiday and are looking forward to a prosperous new year. Our crew took a couple of weeks off from our normal writing schedule over the holidays, and we’re excited about kicking off a new season of insight and dialog in 2013. 

As you may remember, I started the discussion on habits in December with the assumption that many of you would be doing some strategic planning around this time of year.  If you need a refresher, you may want to reference the previous (Part 1, Part 2) discussions. 

Common sense tells us that real change will not happen in our lives unless we learn how to dislodge bad habits and cultivate new ones. Using the process that I outlined in my last blog, have you identified one or two bad habits you’d like to address? 

If not, I encourage you to go through the process of sketching out your own cues, routines, and rewards cycle for the habits you’ve identified. Then, start the trial and error of testing your hypothesis.  If you haven’t personally gone through the “habit loop” process at least once, you may have trouble understanding the next part of our discussion.

If habits have a profound impact on our own personal lives, it only makes sense they’ll also have an impact on professional relationships. As a leader, understanding the influence that habits have on others can significantly increase your level of effectiveness.

 For today’s discussion, we’ll consider two areas of professional relationships that are common to most real estate owners and managers:

1.  The habits of those you manage and coach.

2.  The habits of the clients your company serves.

Habits for Coaching

If you’re struggling to understand and manage your own habits, you can bet the people you coach are struggling, as well.  Or worse, they are not struggling because they are completely blind to the influence of habit in their own lives.  Many agents are dragged along by influences of which they are not aware. 

In either case, your role as a coach can take on a new level of effectiveness with an understanding of how habits control behavior.  While it is easy to identify poor outcomes, it is not easy to pinpoint the causes of poor outcomes.  

Try looking at poor outcomes through the framework of the “habit loop.”  What are the cues that
agents are reacting to during the day?  Which of these cues lead to routines that produce poor results?  What false rewards are agents typically pursuing that cause them to continually repeat the cycle of ineffectiveness?  

Like you did for you own habits (part 2 of this discussion), try sketching out a couple of “habit loops” for the agents you coach and then discuss these issues during your next coaching session.

Habits for Clients

Studying the habits of consumers (ie. those that buy your services) is not something that most people have considered.  However, I found this topic the most intriguing part of Charles Duhigg’s book.  Much of what has been discovered in this realm has not been yet been applied to the real estate sales industry.

Here’s the basic premise of habit theory as it applies to customers: Since all human beings are controlled by their habits, understanding typical cues, routines, and rewards can help a company optimize the sales process. In the real estate industry, it would be particularly interesting to know who will be buying or selling a home in the near future.

In his book, Duhigg documents an extensive case study involving Target; the popular nationwide retailer. The case study illustrates how Target has become very good at predicting what products a person will buy.  How? By figuring out what is going on in a unique customer’s personal life. For example, Target can often tell if a female customer is pregnant and how far along (ie. what trimester) she is in her pregnancy after she spends some time in the store.

They find out this information by studying habits.  For example, women often change from using scented lotions to non-scented lotions in the second trimester of a pregnancy.  A cue changes (scents become irritating) and that causes a routine change (buying a different product) that leads to a
reward (healthy skin) women don’t want to give up.  

This piece of information, combined with several more data points, equip Target to guess (with a surprisingly high level of accuracy) when a woman is in the second trimester of a pregnancy.  Once Target has this information, they can focus on specifically marketing to that person for the large number of purchases she’ll make  in the months just before and after the baby arrives.

I’m summarizing a concept that took the author about half of the book to describe, so this concept may still seem cloudy at this point.  If you want to learn more, here are a couple of articles from Forbes and the New York Times Magazine that describe this in more detail.  By the way, Target is not the only company doing this.  Many companies in various industries are starting to apply these principles of human behavior to optimize their sales efforts.

So, what application does this have for the real estate industry?  I think many of the answers to this question are yet to be discovered.  But I do know this: there will be big rewards for those who innovate in this arena. Also, I’ve had several meetings in the past couple years where real estate executives ask very similar questions.  If you don’t figure this out, your competitors probably will.

Spend some time learning about habits—both your agents and your clients will benefit.   In our final chapter of this series we’ll discuss the concept of a “keystone habit” and how these theories will help you improve recruiting.  Stay tuned.

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Editor's Note: This article was written by Ben Hess. Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle. 

The first step to “minding our habits” (as Meryl Streep
advised to do in my previous blog) is understanding how habits work and drawing conclusions on why
they have a powerful impact on human behavior.

Early in his book, Charles Duhigg points out that good habits are actually an essential part of an individual's existence.  While bad habits seem to attract the most attention in a typical discussion concerning performance, good habits quietly perform their role without much notice. However, their importance should not be diminished–the
human brain would be unable to effectively function without the widespread use of good habits.  

For example, think about backing your car out of the garage.  Most of us can do this task with
very little thought or focused attention. 
However, as I’ve tried to teach my teenagers to perform this task, it’s
amazing how much mental energy it takes for them to negotiate all the variables
in the process (how much speed, where’s the brake, watch the mirrors, how far to the back wall, etc.)  However, after a few dozen
times, they (and most other people) can perform this task
with very little thought.

So, good habits empower humans to perform hundreds of tasks each day
with very little mental energy and focus. If we had to think about each of these
behaviors every time we did them, even the basics of life would be debilitating.

However, anything that has the capacity for this much good
also has the power to create and sustain undesirable actions.  Bad habits are just as strong as good
habits.  Once the brain goes on
autopilot, it is very difficult to get it out of what Duhigg calls the “Habit
Loop.”   

The Habit Loop is the way of explaining what happens in the
brain as a habit is executed.  The
following diagram helps describe this process:

The diagram above is fairly intuitive—the cue is something that your
brain notices, the routine is something you automatically do to solve the
problem, and the reward is some benefit you get for solving the problem.

For example, Duhigg points out that most of us brush our
teeth as the result of the habit loop.   
When we wake up in the morning, the surface of our teeth feels fuzzy
(the cue).  To solve the problem, we
brush our teeth (the routine).  After
brushing our teeth, our mouths feel fresh, minty, and clean (the reward).  This good habit leads to healthy teeth.

As you probably guessed, bad habits follow the same
process.  A cue ignites the brain’s
craving for a certain reward and launches a routine that quickly and
efficiently makes the reward a reality. 
Duhigg does a great job of explaining the bad habit process in the
following video:

So, the key to mastering habits is recognizing that certain cues
exist and these cues lead the brain to anticipate a certain reward.  This craving for the reward can be strong and unrelenting–so much so that an individual's willpower to change is, in the long term, rendered ineffective.   To
change a habit, the habit loop must be disrupted by altering the routine.

Once you watch the video and think about how this process
works, take some time to identify one of two habits you’d like to change.  As the author suggests, sketch out your own
habit loop and try to diagnose the cues, routines, and rewards that make your
habit come to life.

In our next discussion, I’ll show you how understanding the
habit process can make you a more effective sales person (why do your company’s
clients do what they do?) and a more effective coach (why do your agents do
what they do.)

Join the WorkPuzzle Discussion at the Tidemark Online Community (TMOC)

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By joining TMOC, you'll get to see who else is in the group and your comments will only be seen by those whom you trust.   Joining TMOC is quick, easy, and free (no kidding…this takes less than 2 minutes).   To get started, click here.

Already of a member of TMOC?  If so, join the WorkPuzzle Dialog Group by clicking on the WorkPuzzle Group icon on the left side of your TMOC homepage.  Questions?   Email the WorkPuzzle editor (workpuzzle@hiringcenter.net) and we'll walk through the process.

Editor's Note: This article was written by Ben Hess. Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle.