Our character is a collection of our habits, and habits have a powerful role in our lives. Habits consist of knowledge, skill, and desire. Knowledge allows us to know what to do, skill gives us the ability to know how to do it, and desire is the motivation to do it.

The Seven Habits move us through the following stages:

1. Dependence: the paradigm under which we are born, relying upon others to take care of us.
2. Independence: the paradigm under which we can make our own decisions and take care of ourselves.
3. Interdependence: the paradigm under which we cooperate to achieve something that cannot be achieved independently.

Much of the success literature today tends to value independence, encouraging people to become liberated and do their own thing. The reality is that we are interdependent, and the independent model is not optimal for use in an interdependent environment that requires leaders and team players.

To make the choice to become interdependent, one first must be independent, since dependent people have not yet developed the character for interdependence. Therefore, the first three habits focus on self-mastery, that is, achieving the private victories required to move from dependence to independence. The first three habits are:

• Habit 1: Be Proactive
• Habit 2: Begin with the End in Mind
• Habit 3: Put First Things First

Habits 4, 5, and 6 then address interdependence:

• Habit 4: Think Win/Win
• Habit 5: Seek First to Understand, Then to Be Understood
• Habit 6: Synergize

Finally, the seventh habit is one of renewal and continual improvement, that is, of building one’s personal production capability. To be effective, one must find the proper balance between actually producing and improving one’s capability to produce. Covey illustrates this point with the fable of the goose and the golden egg.

In the fable, a poor farmer’s goose began laying a solid gold egg every day, and the farmer soon became rich. He also became greedy and figured that the goose must have many golden eggs within her. In order to obtain all of the eggs immediately, he killed the goose. Upon cutting it open he discovered that it was not full of golden eggs. The lesson is that if one attempts to maximize immediate production with no regard to the production capability, the capability will be lost. Effectiveness is a function of both production and the capacity to produce.

The need for balance between production and production capability applies to physical, financial, and human assets. For example, in an organization the person in charge of a particular machine may increase the machine’s immediate production by postponing scheduled maintenance. As a result of the increased output, this person may be rewarded with a promotion. However, the increased immediate output comes at the expense of future production since more maintenance will have to be performed on the machine later. The person who inherits the mess may even be blamed for the inevitable downtime and high maintenance expense.

Customer loyalty also is an asset to which the production and production capability balance applies. A restaurant may have a reputation for serving great food, but the owner may decide to cut costs and lower the quality of the food. Immediately, profits will soar, but soon the restaurant’s reputation will be tarnished, the customer’s trust will be lost, and profits will decline.

This does not mean that only production capacity is important. If one builds capacity but never uses it, there will be no production. There is a balance between building production capacity and actually producing. Finding the right tradeoff is central to one’s effectiveness.