Here is an excerpt from a transcript of a video during which Justin Fox interviews Charles Duhigg for Harvard Business Review and the HBR Blog Network. To see/read the complete interview, check out the wealth of free resources, obtain subscription information, and receive HBR email alerts, please click here.

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Welcome to the HBR IdeaCast from Harvard Business Review. I’m Justin Fox. And I’m talking today with Charles Duhigg, a reporter for The New York Times and author of The Power of Habit: Why We Do What We Do in Life and Business. He’s also a graduate of Harvard Business School, for whatever that’s worth.

Charles, welcome to IdeaCast.

Thank you so much for having me.

So what’s such a big deal about habits?

Well, habits are a big deal not only in our lives, because about 40% to 45% of what we do every day sort of feels like a decision, but it’s actually habit. But equally importantly, habits are a really big deal within companies. And we know this because in the last 10 or 15 years there’s been this real wealth of an explosion in research in looking at organizational routines or organizational habits and trying to understand how those influence how work gets done. And what we’ve learned is that a huge amount of whether a company succeeds or fails is based not on sort of the big strategy decisions that people make, but on the habits that emerge within the organization.

Going back to the individual level for a minute, the habits are formed in a different part of the brain than memories, right?

Or at least the unconscious thought. So this is what we know, what we’ve learned in the last decade, about how habits form neurologically. Every habit has three components.

There’s a cue, which is like a trigger for the behavior to start unfolding, A routine, which is the habit itself, the behavior, the automatic sort of doing what you do when you do a habit. And then at the end, there’s a reward. And the reward is how our neurology learns to encode this pattern for the future.

And most people, when they think about habits, they focus on the behavior or the routine. But what we’ve learned is that it’s the cue and the reward that really determine why a habit unfolds. And you’re exactly right.

What happens in our neurology is that most behavior when it starts originates in the prefrontal cortex, the area right behind our forehead. What we think of as thought, that’s where it occurs. It’s one of the most new, from an evolutionary perspective, parts of our brain.

But as a behavior becomes a habit, as it becomes automatic, it moves into the basal ganglia, which is one of the oldest structures in our brain and it’s near the center of our skull. And when things happen in the basal ganglia, it doesn’t feel like thought. That’s why a habit feels automatic, is because it’s happening in this part of your brain that for all intents and purposes, from what we think of as thinking, is completely exempt from that process.

So you talk in a book about how scientists figured this out. It was partly people who had brain injuries, right, or diseases?

That’s exactly right. Right. People who couldn’t remember anything. Because of a brain injury, they were completely amnesiacs, or for all intents and purposes couldn’t think the way that we think about cognition.

And yet they could still learn habits. They could still learn new behaviors. And that’s how we learned that it’s this part of the brain that doesn’t really feel like thought that controls our habits.

And that’s why it’s harder to change your habits, right, harder to get at them?

That’s exactly right, because making a conscious decision occurs in the prefrontal cortex. And to influence the basal ganglia, you have to target these cues and these rewards, these almost kind of animalistic reactions.

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Here is a direct link to the video of the interview and its transcript.

Duhigg is the author of two books: aforementioned The Power of Habit and Smarter Faster Better: The Secrets of Being Productive in Life and Business, both published by Random House. To learn more about him and his work, please click here.

Justin Fox is an American financial journalist, commentator, and writer born in Morristown, New Jersey. He is the editorial director of the Harvard Business Review Group and business and economics columnist for Time magazine.