In October 1987, a group of million-dollar investors gathered in a Manhattan hotel to meet the new CEO of the Aluminum Company of America (ALCOA), Paul O’Neill. The company had been struggling with new product lines and stagnant growth, and the investors expected a strategic discussion about increasing profits, reducing costs and expanding into new markets.
Instead, O’Neill surprised everyone with a different focus: worker safety.
He stood in front of the audience—trim, dignified, in a gray pinstriped suit and red tie—radiating confidence. And then he delivered a message no one had anticipated: “I intend to make ALCOA the safest company in America. I want to achieve zero injuries.”
The audience, full of financial experts and stockholders, was dumbfounded. This was not the typical speech about profitability and shareholder value they were expecting. O’Neill didn’t mention profit margins, cost-cutting or new product strategies. Instead, he was adamant: “If you want to understand how ALCOA is doing, you need to look at our workplace safety figures. Safety will be the indicator that we’re making progress and changing habits.”
While the investors were initially confused and perhaps disappointed, what they didn’t know was that Paul O’Neill’s approach would revolutionize the company. Within a year, ALCOA’s profits hit an all-time high, and over the next 12 years, net income increased fivefold. All the while, ALCOA became one of the safest companies in the world, with some plants going years without a single employee missing work due to injury—far surpassing the national average.
The story of Paul O’Neill and ALCOA holds powerful lessons for business owners. It’s a case study in how focusing on a single, deeply rooted Core Value—in this case, worker safety—can ripple through an entire organization and lead to transformational success.
As a business owner, what are the lessons that can be learned from this and applied within your own organization?
The Importance of Core Values in Leadership
When O’Neill took the stage in 1987, he was introducing more than a safety initiative; he was introducing a Core Value that would define his leadership and the company’s culture moving forward. Core Values are the foundational beliefs that guide every decision, behavior and process within an organization. They’re not just words on a wall or in an employee handbook—they are the principles that shape the company’s identity. Within EOS®, we do a quick check on Core Values, defining them as the characteristics that we will hire, fire, review, reward and recognize our people around.
For business owners, identifying and committing to Core Values is critical. Without clearly defined values, decisions can become inconsistent, and culture can suffer. In the absence of values, short-term goals like profits, sales and productivity often take priority over long-term sustainability and well-being. O’Neill understood this and chose to focus on a core value that would not only safeguard his employees but would also lead to better overall performance.
Lesson #1: Choose the Right Core Values
As a business owner, it’s important to carefully select the Core Values that will guide your company. These values should be meaningful, practical and something you’re willing to commit to wholeheartedly. O’Neill didn’t choose safety as a value simply because it sounded good—he chose it because he knew it would force the company to rethink its entire operation, improve morale and create a culture of trust and accountability.
Consider your own business: What values are critical to your success? Is it innovation, customer service, integrity or perhaps sustainability? Once you identify these values, you need to live them. Every decision and every process in your business should reflect your Core Values. To give you an idea of how important Core Values are, these are THE very first items we identify for your organization when we begin clarifying your company vision during Day 1 of Vision Building®. I also like to refer to them as the very first filter in your decision-making process within your organization.
The Ripple Effect of Habit Change
O’Neill’s decision to focus on safety didn’t just improve workplace safety—it created a ripple effect throughout the entire organization. He wasn’t just talking about hard hats and fire drills; he was talking about changing the very habits of the company. By addressing a fundamental habit—keeping employees safe—he forced the company to reevaluate how it operated at every level.
To achieve zero injuries, ALCOA had to rethink everything from the way machines were maintained to how employees communicated on the shop floor. Departments that previously operated in silos started working together more effectively. This new level of collaboration and transparency extended beyond safety and led to improvements in efficiency, productivity and, ultimately, profitability.
Lesson #2: Attack One Habit, Change Many
In business, habits are everything. The daily routines and processes within an organization often dictate the success or failure of long-term goals. O’Neill didn’t try to overhaul the entire company overnight; instead, he focused on changing one core habit. By zeroing in on safety, he created a culture of vigilance and continuous improvement that permeated every aspect of the company.
As a business owner, don’t try to change everything at once. Focus on one critical habit—whether it’s improving customer service, refining your product development process, or streamlining operations. Once you make progress in one area, you’ll often find that other areas improve as well. When you attack one habit, you change many.
Institutional Habits and Long-Term Success
Paul O’Neill didn’t just make safety a short-term initiative; he embedded it into the institutional habits of ALCOA. By the time he retired in 2000, ALCOA was not only one of the safest companies in the world but also one of the most profitable. O’Neill had created a lasting change in the company’s DNA.
Institutional habits are the ingrained processes and routines that define how an organization operates. For better or worse, these habits can be incredibly powerful. Good habits lead to efficiency, trust and progress, while bad habits lead to stagnation, frustration and inefficiency.
For business owners, creating institutional habits that reflect your core values is key to long-term success. It’s not enough to make values and habits a priority for a few months—these need to become part of the company’s DNA and consistently reinforced during your State of the Company Address each quarter. This requires consistent leadership, communication and a commitment to improvement.
Lesson #3: Build Lasting Institutional Habits
To ensure long-term success, business owners need to build institutional habits that align with their Core Values. This means creating systems, processes and behaviors that reinforce those values day in and day out. Whether it’s conducting regular employee training, holding leadership accountable or creating feedback loops to monitor progress, these habits need to be ingrained into the fabric of your business.
The Results Speak for Themselves
By focusing on safety as a core value, Paul O’Neill transformed ALCOA in ways that went far beyond what anyone in that Manhattan hotel in 1987 could have predicted. Profits soared, injuries plummeted and ALCOA became a model for how values-driven leadership can lead to extraordinary results.
The lesson for business owners is clear: Core Values matter. When you commit to the right values and focus on changing key habits, the ripple effects can transform your entire organization. It’s not about short-term profits or quick wins—it’s about building a sustainable culture that drives long-term success.
Final Thoughts
As a business owner, your core values and the habits you instill in your organization will ultimately determine its success. Just like O’Neill, you have the power to transform your company by focusing on what truly matters and by creating institutional habits that support your vision.
What habits in your business need attention? What values will guide your decisions? Get crystal clear clarity on and focus on these, and watch as the ripple effect transforms your business, just as it did for ALCOA.
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*Story adapted from The Power of Habit: Why We Do What We Do in Life and Business by Charles Duhigg
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