Organization Habit Loops

From Charles Duhigg’s The Power of Habit: Why We Do What We Do in Life and Business:

That’s when [Alcoa CEO Paul] O’Neill’s education in organizational habits really started. One of his first assignments was to create an analytical framework for studying how the government was spending money on health care. He quickly figured out that the government’s efforts, which should have been guided by logical rules and deliberate priorities, were instead driven by bizarre institutional processes that, in many ways, operated like habits.

Healthcare in a nutshell, from the tippy top of Medicare and the FDA down to the hospitals and institutions. It’s all path dependence. We are where we are because of where we’ve been, but we’d never choose to be here doing it like this in the first place.

Bureaucrats and politicians, rather than making decisions, were responding to cues with automatic routines in order to get rewards such as promotions or reelection. It was the habit loop—spread across thousands of people and billions of dollars.

This has always been true, but the optimist in me always hopes that a big event–like a generation-defining pandemic–might shock people into cohesive collective action focused on outcomes instead of the typical saber-rattling over competing values.

Leave a Comment.