Change management — in the context of sustainability — with a cup of green tea

I have been supporting out companies to transform their entities — for a number of different purposes. Partially growth, partially profitability. Sometimes for effectiveness/employee health, and utilize digital as a form of “how” to enable the transformation. Recently, I had a previlage to work with a company’s transformation on sustainability.

1. It was important to understand the transformation’s purpose. What do we want to achieve in the long term? Why do we need sustainability?
2. It was important to “quantify” and “transparently” show-case what’s “in the game”. We looked at several dimentions:
   a) What’s the impact in revenue?
   a1) What’s the impact in 2030 through value disruption? (revenue decrease)
   a2) What’s the impact in 2030 through value creation? (revenue increase)
   b) What’s the impact in cost?
   b1) What’s the impact in 2030 through carbon pricing measures? (emission level in 2030 * assumed carbon pricing)
   b2) What’s the level of emissions that could be further reduced, to avoid carbon pricing?
   = Summing all the values up from a1 + a2 + b1+ b2 (a1 and b1 are negative numbers to EBITDA, and a2 and b2 being positive numbers) — we understand the “rough value at stake” as of 2030.
   c) beyond this, there’s also another category called “value disruption from physical climate risk” — we did not calculate this one this time, due to the timeframe we had
3. During this exercise, it was extremely helpful- to understand the magnitude of each lever. a product that has “potential revenue uplift” can be great — but we found out that “carbon pricing measures” could immediately wipe-off the revenue generated from a new planned product. This was eye-opening for us, making us believe that “emission reduction” is a must, in order to avoid those consequences potentially from being charged carbon pricing.
4. Finally — beyond that, the key theme was “change management” — how do we manage/make sure that we change the organization? In McKinsey, we have something called the “influence model” for change management and transformational change. This helped frame up our discussion

Influence model framework from McKinsey

The framework was very helpful — it is important to consider a few steps in change management;

1. Fostering understanding and conviction — making sure that the organization “understand” the “why” “what” and the “how” we make change — in this case, it was the sustainability related transformation — however, a lot of organizations stop here — rather than going further
2. Reinforcing mechanisms — making sure that there’s KPI’s, governance structures, incentive mechanisms — so that people move and act for change
3. Developing talent and skills — very important that we have enough “training programs” etc — so that people “do change and “can” change” — skill building is an essential part of the transformation
4. and finally — role modelling — this is perhaps “one of the most important” factors that is required for change — your manager, your boss, your direct report — ACTUALLY acts for change and demonstrates it — without this, the organization will NOT move. A lot of organization starts off with 1, sometimes 2, often forgets 3, and a lot do not implement 4 — the role modelling.

The transformation journey has just started with this company — I am sure there’s a lot that will come out in the process of it, and would be willing to share some key learnings out of the transformation ahead in this blog post again.

PS: the picture is not related — but every month, I go learn tea ceremony off a 90 years old “sensei” — Japanese word for teacher. The longevity and the sustainability of the “tea ceremony act” has made me think a number of times on how I should implement the transformation in an everlasting, successful way….!