Adam D. Schwab, CFA, CAIA

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7 Ideas Your Should Know From: The Power of Habit: Why We Do What We Do in Life and Business by Charles Duhigg

The 7 Big Ideas:

  • Three Step Loop: Cue, Routine, Reward

  • Habits Allow Your Brain to Shut Off

  • To Change a Habit, Change the Routine

  • Habits Are Replaced, Not Eradicated

  • Willpower Can Be Used Up

  • The Framework

  • Test Your Routines

My Highlights From the Book:

Three Step Loop: Cue, Routine, Reward:

This process within our brains is a three-step loop. First, there is a cue, a trigger that tells your brain to go into automatic mode and which habit to use. Then there is the routine, which can be physical or mental or emotional. Finally, there is a reward, which helps your brain figure out if this particular loop is worth remembering for the future.

Habits Allow Your Brain to Shut Off:

When a habit emerges, the brain stops fully participating in decision making. It stops working so hard or diverts focus to other tasks. So unless you deliberately fight a habit—unless you find new routines—the pattern will unfold automatically.

The problem is that your brain can’t tell the difference between bad and good habits, and so if you have a bad one, it’s always lurking there, waiting for the right cues and rewards.

To Change a Habit, Change the Routine:

Rather, to change a habit, you must keep the old cue, and deliver the old reward, but insert a new routine.

That’s the rule: If you use the same cue, and provide the same reward, you can shift the routine and change the habit. Almost any behavior can be transformed if the cue and reward stay the same.

Habits Are Replaced, Not Eradicated:

We know that a habit cannot be eradicated—it must, instead, be replaced. And we know that habits are most malleable when the Golden Rule of habit change is applied: If we keep the same cue and the same reward, a new routine can be inserted. But that’s not enough. For a habit to stay changed, people must believe change is possible. And most often, that belief only emerges with the help of a group.

Willpower Can Be Used Up:

Willpower isn’t just a skill. It’s a muscle, like the muscles in your arms or legs, and it gets tired as it works harder, so there’s less power left over for other things.

“If you want to do something that requires willpower—like going for a run after work—you have to conserve your willpower muscle during the day,” Muraven told me. “If you use it up too early on tedious tasks like writing emails or filling out complicated and boring expense forms, all the strength will be gone by the time you get home.”

Employees with willpower lapses, it turned out, had no difficulty doing their jobs most of the time. On the average day, a willpower-challenged worker was no different from anyone else. But sometimes, particularly when faced with unexpected stresses or uncertainties, those employees would snap and their self-control would evaporate.

The Framework:

THE FRAMEWORK: Identify the routine, Experiment with rewards, Isolate the cue, Have a plan.

How do you start diagnosing and then changing this behavior? By figuring out the habit loop. And the first step is to identify the routine. In this cookie scenario—as with most habits—the routine is the most obvious aspect: It’s the behavior you want to change.

Next, some less obvious questions: What’s the cue for this routine? Is it hunger? Boredom? Low blood sugar? That you need a break before plunging into another task? And what’s the reward? The cookie itself? The change of scenery? The temporary distraction? Socializing with colleagues? Or the burst of energy that comes from that blast of sugar? To figure this out, you’ll need to do a little experimentation.

Test Your Routines:

The point is to test different hypotheses to determine which craving is driving your routine. Are you craving the cookie itself, or a break from work? If it’s the cookie, is it because you’re hungry? (In which case the apple should work just as well.) Or is it because you want the burst of energy the cookie provides? (And so the coffee should suffice.) Or are you wandering up to the cafeteria as an excuse to socialize, and the cookie is just a convenient excuse? (If so, walking to someone’s desk and gossiping for a few minutes should satisfy the urge.)

What you need is a plan. In the prologue, we learned that a habit is a choice that we deliberately make at some point, and then stop thinking about, but continue doing, often every day. Put another way, a habit is a formula our brain automatically follows: When I see CUE, I will do ROUTINE in order to get a REWARD