What Matters Most: A Keystone Habit

In Charles Duhigg’s great book, The Power of Habit, he recounts the story of Alcoa’s CEO Paul O’Neill who stood up before investors and declared that the company would focus its entire strategy on bringing workplace injuries to zero. The investors were stunned to say the least with his announcement. O’Neill did not discuss profits or the latest marketing strategy that CEOs usually talk about during these “dog and pony” shows. He focused on a topic that was mundane and not really valued by investors. But O’Neill’s emphasis worked spectacularly because when Alcoa’s employees were asked to suggest ideas, this singular topic revealed other important issues that had been buried for a long time. Duhigg noted that when O’Neill finally left the company, its market cap had increased to $27 billion. In Alcoa’s management history, he was one of the most successful CEOs ever. How did this happen?

According to Duhigg, O’Neill had the discipline to focus on a “keystone habit — a deep organizational vein that, once tapped, has the power to drive other downstream improvements as it reverberates through the organization.” While many management teams devise elaborate score cards (one company I know has 19 metrics!), isolating a single topic that drives everything else is not easy. As Albert Einstein said, “the definition of a genius is taking the complex and making it simple.” But correctly identifying a keystone habit in mortgage banking is critical because of all the external changes that are reshaping the industry.

There are obviously countless initiatives that could be designated as a keystone habit, but I would like to suggest two: reducing originator turnover and improving the lending process.

For senior management, proactively addressing turnover — whether involuntary or voluntary — is a keystone habit. In mortgage banking, turnover is generally not a top priority although many companies will say that it is. Many management teams falsely assume that turnover is inevitable and impossible to correct. When total turnover numbers are over 40 percent and in some cases, as high as 60 to 80 percent, companies reach a tipping point where they can no longer replace departing originators fast enough. The result is that companies eventually hire lesser quality originators who are not talented enough to be self–sourcing originators.

High voluntary turnover indicates a significant problem in the culture and the management team. The commonly held belief that good originators leave for more money is simply not true. Good originators will tell you that the real reason is typically something else, such as having a poor direct manager or not feeling appreciated or listened too. When your best originators are ignored, there is trouble ahead for the sales organization. High involuntary and voluntary turnover percentages are symptoms of a dysfunctional company that must be corrected if a sales organization is to succeed in the long run.

Another keystone habit that must be a top priority is improving the lending process to make it quick and easy. In the new world of selling where everything is just one click away, consumers place a high value on speed of goods and services, even at the expense of quality. For example, a recent health care study published in Advisory Board stated that “patients consistently rated access and convenience higher than quality and other attributes when deciding on a primary care physician.” One way the the health care industry has responded to consumer demand for speed and access is to build Urgent Care clinics, something that was not even imagined five years ago!

In my opinion, speed and ease of use are no longer competitive advantages but minimum requirements for financial services and mortgage banking. From the consumer’s first contact to closing, the customer experience will be evaluated in terms of access, timeliness and ease of use. As a result, it should be a keystone habit for a mortgage company if they want to be successful in our Amazon Prime world.

What are your keystone habits?