Habit Formation: The Toughest Task in Business

Beware sailing these waters, as many monsters lie within the waves

This is part 1 of a 2-part series on innovation and habit change.

Habit change is a hot topic these days. At a time when people seem to have less time to read, over 5 million copies of Atomic Habits have been sold worldwide. There’s a good chance that this book or others, such as The Power of Habit and Tiny Habits, are sitting on your real or virtual bookshelves. Why the appeal? Well, most of us want to lead better lives and realize that willpower alone won’t get it done—we need help.

While the business of selling habit-making and habit-breaking books might be profitable, if you’re in a business that aims to change customer habits, you know the pain that the picture above represents. Starting a new business or innovating on a current one often depends on nudging customers toward your novel solution, which depends on them behaving differently. And no challenge is greater than convincing customers to change their habits. The picture above is a walk in the park compared to the reality you’ll face. The purpose of this post is to scare the hell out of you and share two paths that might help you find a path to innovation success.

The First Rule of Marketing

I’ll never forget the first Marketing class case study that I was assigned back when I got my MBA. The case study covered the launch of a new product. One of the giant food companies of the time created “Eggs in a Cup”—a product aimed at making it easier for people to enjoy scrambled eggs in the morning. Lots of us love scrambled eggs, but getting out the pan and cooking is a pain when you’re bleary-eyed and stumbling around to get yourself and the kids out of the house. With Eggs in a Cup, you just crack an egg into the package, pop it in the microwave for a minute or two, and enjoy the breakfast you love. It was launched with a multi-million-dollar media budget, and hopes were high. But Eggs in a Cup crashed and burned.

With a painful expression in his eyes that came from years of real-world marketing work before his academic path, our professor explained: “Habit change is hard.” In this case, the product sounded and tasted great, it was much easier to prepare than traditional cooking, and people said the price was fair. But it was “new work” that involved a change in habit. Most people don’t eat scrambled eggs in the morning, so the food company depended on converting people from other choices. Instead of pouring cereal or opening a yogurt, they would have to embrace a new breakfast ritual. It was just too much change for most people who liked the idea, and the product died. Today there are a few products like this on the market, but it’s far, far smaller of a category than originally hoped.

Unfortunately, I didn’t learn my lesson fully in that class, and I’ve been a part of many failed attempts to launch innovations that required customer habit change. My first marketing job at Procter & Gamble was on Fit Fruit & Vegetable Wash—a soap made from natural ingredients like baking soda that cleaned produce much better than water alone. Among many issues with that product was the fact that most people were just fine with the habit of washing with water alone, and convincing them to suddenly start pulling a soap from under the counter to prepare a meal was way too much to ask. The CEO of P&G later wrote that Fit was the worst new product launch in the company’s +150 year history.

I later started a company that provided concept testing research for startups, bringing a proven methodology from my big company experience down to the pre-launch stage. It was a way for founders and investors to save tons of time and dollars by learning from customers before they built an app or funded a team. I had real-world predictive evidence, and the cost was less than $3,000. But founders are in the habit of building stuff, and investors are in the habit of making decisions based on their gut instincts. I shut it down after less than a year.

After that, I co-founded a startup called Ahalogy to help brands grow through Pinterest marketing. Pinterest was rapidly becoming a habit with consumers, who were using it millions of times daily to make everyday and big-ticket purchase decisions. Pinterest was an incredible place for a food or fashion brand to lean in and win. It brought the best-of-both social media and search engine marketing, and brands that moved early—with our company’s software and service to support them—could lock in huge ROI. Alas, it was easier for most brands to stick to their current habits, like Google search and Facebook social ads. No one gets fired for buying Google, Facebook, or IBM because of the many supporting habits that buttress them in a business world that punishes failure much more than rewarding success.

So, yeah, habit change is a bitch, and I’ve got these and more scars to prove it.

Why is it so hard? Well, because humans are lazy—and that’s an evolutionary advantage. Our brains take huge energy resources to run and have LOTS of things to think about, so our nature is to find solutions that work well enough and stick to them. We don’t want the “cognitive load” of making new decisions and learning new routines, and if we tried even a fraction of the innovations that are pitched to us by advertisers 3,000 times a day, we’d never get anything done.

Make it 10x Better…

But there is hope, dear innovator. Our fellow humans are always on the lookout for ways to improve their lives—that’s actually a big part of what the brain is programmed to do. But at the idea, execution, and use stages, only major improvements make it through our inertia. Startup founders frequently quote Peter Thiel, who suggests that winning companies are 10x better than current leading competitors. It’s a very high bar but a useful way to think about whether you’ve got a winner on your hands or need to head back to the whiteboard.

How do you make something 10x better? The best starting point is to dig into the problems and pain points that customers struggle with. That’s the coaching Paul Graham shares with each Y-Combinator class, what has driven Jeff Bezos and Amazon through decades-long innovation success.

“Customers are always beautifully, wonderfully dissatisfied.” - Jeff Bezos

Think about your favorite new product or the most widespread innovations that suddenly become billion-dollar brands. TikTok is 10x better than Facebook (more fun, less anger), Slack is 10x better than email (more collaboration, less inbox), and Uber is still 10x better than trying to flag down a taxi on a city street. Pickleball is taking off as a new habit because it’s 10x more fun and easier to play than tennis.

Back at our Pinterest marketing startup, it took us a few years to see the writing on the wall. After raising and wasting millions of dollars on that idea, we had to let many team members go and quickly come up with a product pivot to save the company. Our remaining team looked for new avenues to repurpose our approach and eventually met with a big brand agency that said, “You guys are like Influencer Marketing with a twist.” We said, “Yeah, you’re right!” and then we scrambled to figure out what the hell Influencer Marketing was. Our team looked at the pain points in this growing category—fake followers, poor ROI data, weak insights, crappy images, and self-service tools—then we put together a better solution. Customers loved it, we got profitable, were named a tech Leader in the category by Forrester, and were acquired for $50 million.

You can vastly improve your odds of success by reducing pain and/or improving results in an existing category where customers are already in a habit of spending money.

…or Make it 10x Different

Humans pay attention to ways to improve their lives, but we also love shiny objects. That’s why new forms and formats also tend to have a higher chance of success in the marketplace. Two factors are at work here. First, we are curious creatures that are compelled to investigate new things. Second, a new form is a reason to believe that the product will perform better in practice.

Oxiclean’s infomercial demos and Tide Pod packaging are much more interesting looking than a “New & Improved” sticker on a bottle of Tide Liquid. Airbnb is a lot cooler sounding and looking than a local vacation rental company website. The iPhone’s all-glass color screen kicked the hell out of the Blackberry’s black-and-white screen and physical keyboard.

The best product innovations combine both improvement and uniqueness. While my work on Fit Fruit & Vegetable Wash was a disaster, I got to keep my job and later had the opportunity to launch Mr. Clean Magic Eraser. It’s a product in many households today because it combined a significant improvement in cleaning—including eliminating impossible cleaning problems like crayons on paint—with a novel new product form.

And Magic Eraser proved another reason that these habit-busting products succeed: Word-of-mouth. Humans are a social species programmed to share success tips with other people. We want to help our peers—and gain status as a person who is ahead of the game.

We couldn’t afford TV commercials, so we spent almost all of our tiny launch budget on free Magic Eraser samples in hopes that people would share with others. This was back in 2003, way before social media ruled the world. But it became a viral sensation, and that’s why you’ve got at least one in your home right now.

Whether you’re in a startup or corporate innovation role, you’re in the business of changing people’s habits. Here lies guaranteed pain and likely failure, but it’s the white space where you have a chance to carve out competitive disruption and monopoly-like profits. That’s why we’re going to keep carrying that boulder—but we can do better.

In part 2 here, I share some tips on how to improve your odds of habit change.

Bob Gilbreath is a 2x-exit entrepreneur and co-founder of Hearty, a curated matchmaking service that combines top software developers with early-stage, venture-backed startups.