SAVITZ: CHAPTER 10

Sustainability &
Organizational Change
How Do We Go About Change?

Sustainability is not just about supply chain management, HR processes,

product design, etc. Its also about changing the organizational culture of
your organization because culture change starts with people! The following
outline will help you understand our presentation and expand on details
that we may not be able to cover in class.

Why Do Organizations Change? : Reasons for Change

A. THREE DIMENSIONS OF SUSTAINABLE CHANGE
There are three dimensions of change and they all suggest that when there
is something wrong, instead of asking what do we need to change around
here, managers need to ask three other questions instead:
- Who you are?
If you aspire to change, one thing you must do is reflect on what
your organization stands for and what it truly aspires to accomplish.
It cant always be about what the problem is on the surface, you
have to get to the root of the problem.
Are you, as an organization, a cost-leader, product differentiation
oriented, customer oriented, etc.
To be sustainable, you must re-identify yourself to become the
change you want to see in the world.
This would include adjusting your mission statement and re-defining
the values of your organization to reflect this change
o In 1990, Walmarts mission statement was: to become a $125
billion company by the year 2000 (Walmart,2014) its
practices nonetheless reflected this which has recently been
the topic of many ethical protests. This has resulted in a
review of the mission statement.
o The mission statement of Walmart to date is to help people
save money so they can live better (Walmart, 2014)
- What you do?
If you aspire to change, another consideration is that you must
ensure that what you make or the service that you deliver also
reflects that change.
These changes can be dramatic or they can be small and
incremental
o Incremental changes would include using less packaging for
your product, perhaps making it 100% disposable. Dramatic
changes would include completely changing your product to
ensure that it is sustainable inside and out.
- How you do it?
If you aspire to change, you must also consider changing the
processes, practices, and methods you employ and your triple
bottom line impacts
These changes can also be dramatic or they can be small and
incremental
o Incremental changes would include starting a recycling
program and work. Dramatic changes would include
completely changing your supply chain to ensure that each
and every member of the chain is conducting sustainable
practices.

Class Discussion Question: Do you think these 3 questions

accurately describe all thats needed to conduct change in an
organization to make it more sustainable?
B. PROBLEMS WITH THESE QUESTIONS
- One major problem with these three questions is that they dont consider
the people inside and outside the organization. These questions are
extremely concrete and only consider the impact of the product and the
practices of conducting sustainability.
Ignores the most important part people
- People are the core of these strategies and if you do these three things,
you will not achieve sustainable change unless the people within the
organization and outside the organization support you.
- Surprisingly, doing these three things wont ensure that there will be
change to change culture, you must change the foundation of the
culture which is people
b. Walmart
- Walmart is an example of a company which has addressed all three
questions in their strategy approaching sustainability
Who you are?
o They have redefined their mission statement to reflect their
strategy, which goes beyond making profit
What you do?
o They provide organic food products and recyclable products
How you do it?
o According to a study by the Stanford Graduate School of
Business (2007), the company has made numerous efforts to
conduct sustainable supply chain management, going to the
extent of using trucks that use hybrid energy
- However, despite addressing all these questions, Walmart has not been
successful in marketing itself as a sustainable organization
The biggest reason why is because they have not been able to
integrate the people within its organization and that has reflected
badly on people outside the organization
Meeks&Chen (2011) discuss whether or not Walmart will ever be
able to move from sustainability to sustainable business
o This is a profound statement because it shows that Walmart
recognizes the basic ideas of sustainability but has not
incorporated it into its business strategy itself, which,
according to the congruence model, is a must.
o Business strategy integration requires the engagement of
people, which has not happend in this case
- Walmart has recently been in the news, because its employees have been
protesting low wages and fair working conditions, some of them even
saying that they are unable to afford tissues....sometimes [we] have to
go without showering (Greenhouse&Tabuchi, 2014)

 Thus, although the company has addressed these three questions,

they have yet to have found their place in the world of sustainable
business. Conducting sustainable business is not only about
adhering to environmental doctrines, social and financial doctrines
are important to.
Moreover, you have to engage employees because mission
statements are just words, what you do with them is what matters.
c. Walmart videos
- http://www.youtube.com/watch?v=P_zgtlW2TWY
This video shows how Walmart is addressing these three questions
Length: 2:56 minutes
- http://www.youtube.com/watch?v=COMh7AXRFCM
This video shows Walmart employees addressing their concerns
Length: 1:10 minutes
C. CONCLUSION QUESTIONS FOR CLASS
- What do you think Walmarts priority should be dealing with
these recent issues or engaging in sustainable change? Or, do you
think that dealing with these issues is a part of sustainable
change?

Types of Change
A. INTRODUCTION

Change occurs when what an organization is currently doing is no longer

working
In terms of change for sustainability, this is usually spurred on by an
incident
o i.e. Shells partnership with Greenpeace and other
sustainability-motivated companies after Greenpeaces
allegations of toxic oil rigs under Shells control.
o These changes usually stem from danger (like the Shell
example) or opportunity (like breaking into a new market that
values sustainability)

B. AD-HOC CHANGE

Ad Hoc Change is basically change that occurs as a reaction to

opportunities or danger without a detailed plan in place.
Example Not Pertaining to Sustainability: WWE releases WWE
Network as a response to Netflix success
Example Pertaining to Sustainability: Staples implementing ink
cartridge recycling as a response to competitors refilling and
recycling for ink.

Class Discussion Question: Can you guys think of any other Ad Hoc
changes in industry?
C. SYSTEMATIC CHANGE

Change that occurs as a result of an alignment of business strategy,

sustainability strategy and HR strategy.

NBA Green
Week and
Sustainable Arenas: (Jessop, 2014)
Business Strategy benefits from Sustainability: Revenue from ticket
sales, TV revenue and merchandise sales.

o Sustainable arenas appeal to more consumers

o Jerseys and T-shirts made from recycled goods appeals to
both the regular NBA consumer as well as more
environmentally conscious consumers
o NBA Green Week initiative attracts more viewers as it is
considered a TV special

How Do We Change? : Kotters 8-Step System

A. Kotters 8-Step Change System:
- Establishing a Sense of Urgency
Examining the market and competitive realities
Identifying and discussing crises, potential crises, or major
opportunities
- Creating the Guiding Coalition
Putting together a group with enough power to lead the change
Getting the group to work together like a team
- Developing a Vision and Strategy
Creating a vision to help direct the change effort
Developing strategies for achieving that vision
- Communicating the Change Vision
Using every vehicle possible to constantly communicate the new
vision and strategies
Having the guiding coalition role-model the behavior expected of
employees
- Empowering Broad-Based Action
Getting rid of obstacles
Changing systems or structures that undermine the change vision
Encouraging risk taking and nontraditional ideas, activities, and
actions
- Generating Short-Term Wins
Planning for visible improvements in performance, or wins
Creating those wins
Visibly recognizing and rewarding people who made the wins
possible
- Consolidating Gains and Producing More Change
Using increased credibility to change all systems, structures, and
policies that don't fit together and don't fit the transformation vision
Hiring, promoting, and developing people who can implement the
change vision
Reinvigorating the process with new projects, themes, and change
agents
- Anchoring New Approaches in the Culture
Creating better performance through customer- and productivityoriented behavior, more and better leadership, and more effective
management
Articulating the connections between new behaviors and
organizational success
Developing means to ensure leadership development and
succession

B.
-

Things to Think About When Developing a Change Program

The kind of change being sought
The size, structure, and culture of the organization
The nature of the specific industry, whether product or service centered
and
whether business-to-business or business-to-consumer, and the firm's
overall
position in the value chain
- The demographic characteristics, attitudes, values, and culture of the
workforce
- The strengths and weaknesses of the key leaders
- The current status of the organization in terms of its age, place in the
market, and
financial stability
C. THINGS TO THINK ABOUT
- This model outlines a process for driving change that is independent of
the specific
direction that the change is being sought
- Can also serve as a road map for implementing changes in a systematic
format
- Last step is the most complex/challenging: culture change comes easiest
for many
organizations when it reinforces a new direction that is already under way.
- Examples:
American Electric Power (AEP) or sustainability at GE
o Model may be misleading because it implies that change must
always occur the same way - however that is not always the
case with companies.
o We want to completely eliminate fatal accidents in our
facilities. Goals like
these may become part of a broader change vision for the
company (Step 3) but individually they help produce the
performance improvements (Step 6)
o Companies start with a sustainability strategy that they
believe will give them a competitive advantage in the
marketplacefor example, Starbucks' development of a
worker-centric approach to doing business, with the goal of
having thousands of engaged and energized baristas making
Starbucks coffee shops into lively, welcoming community
centers. Strategies like these reflect the kinds of major
opportunities growing out of market and competitive
realities (Step 1)
o Other organizations start at the bottom, empowering broadbased action by
encouraging employees to take risks (step 5)

D. PepsiCo Case
- Sustainability effort started with companys top leadership - CEO Steve
Reinemund
(Step 1) followed by creation of a committee consisting of 25 senior senior
leaders in the
company/divisions (Step 2)
- The company then promoted its Performance with Purpose vision (Step 3)
- Communicated aggressively throughout and outside the company (Step
4)
- Now in process of developing systems, hiring and training programs, and
cultural
changes to institutionalize the shift toward sustainability (Steps 5 to 8).
- Norm at PepsiCo that emphasizes the desirability of underpromising and
overdelivering:
postponed setting out any major sustainability goals for the program and
deciding
instead to focus on certain specific initiatives until it gained a deeper
understanding of
the issues involved in setting and meeting global goals
- 2011 - the company delivered 47 separate Promise Goals to provide a set
of meaningful
objectives to its Performance with Purpose mission and is working to
develop detailed
accountability and specific metrics for each.
E. Pros and Cons of Using Kotters (Applebaum et al., 2012)
- PROS
Outlines a process for driving change that is independent of the
specific direction that the change is being sought
Serves as a road map for implementing changes in a systematic
format
Recognizes short term achievements while working towards long
term goals - motivates employees
- CONS
Certain steps may be more difficult - i.e. Step 8: Anchoring new
approaches in the culture

Model may be misleading because it implies that change must

always occur the same way

No measurement of success in each step

Implies that change usually starts from the top - what about bottom
up approaches?

Which Strategy Do I Choose? : Top Down vs. Bottom Up

A. HRs Role: Top Down Vs. Bottom Up
- Top-down:
Leads the change since leadership has not paid attention to the
issue
change that occurs when the focus on sustainability, the direction,
the strategy, and the specific programs are set forth by the top
leadership team
- Bottom-up:
Facilitate or accelerate the spread of sustainability throughout the
company
o Increase support of senior leadership and empower frontline
employee to experiment with sustainability projects
Provide platforms for sharing and spreading ideas throughout the
organization
change that occurs when individual departments, divisions, groups
of workers, or even individuals begin to experiment with sustainable
strategies
B. Key Takeaway
- Top-down and bottom-up communication is equally as viable as long as it
is consistent with the organizational structure and culture. Communication
is the most effective when there is a consistently flow of top-down and
bottom-up in order to generate a feedback system. HR can be the initiator
and leader in order to capture input and feedback throughout the
communication system.
- Class Discussion Question: Which do you think is better? What
works better in organizations? Think about the organizations you
are involved with.
C. TD vs. Procter & Gamble : Our Experiences
- TD uses a Top-Down strategy for its Green TD concept
In the actual workplace, it is not emphasized. Theres tens and tens
of sheets of paper that print out unnecessarily when you print
things. A lot of paper is wasted. This is partly because its not a part
of who we are as TD employees. We focus on the customer
experience aspect, the Green TD department is something thats
completely separate; it is not incorporated into our jobs day to day.
But we have ideas of what we could do to make the idea of Green
TD more prominent use Samsung tablets instead of paper
- Procter & Gamble uses both Top-Down and Bottom-Up strategy to yield a
successful feedback system
In 2014, the Procter & Gamble (P&G) Canadian office began to move
its office space into the Digital 2.0. The Digital 2.0 space was an
open office space that fostered a paperless environment and

sustainable waste disposal. The initiatives of the Digital 2.0 came

from an intern project, given by the President, to explore the
feasibility of creating an open, productive, sustainable and
collaborative workspace. The result of the recommendation was
dependent on surveys done on employees throughout all levels of
the organization. Therefore, although the idea sprung from the top
of the organization, employees throughout the organization had an
impact of overall results of this initiative. In addition, HR was
responsible for the execution and implementation of the Digital 2.0
space, notably in the feedback system. Throughout the stages of
implementation, team meetings gathered feedback from
employees, after determining that the feedback was common
amongst most teams, improvements are made along way.

Do Feelings Matter? : Appealing to Hearts

A. Do Feelings Really Matter?

There is a tendency for the management to focus on the business case for
sustainability when incorporating sustainability into an organization
Emphasis on profit-based arguments and financial benefits that
sustainable management can create
Savitz point out that there is usually a powerful business case for
sustainability that can be identified and articulated even when it cant be
precisely measured or demonstrated
After all, sustainability is meant to turn responsibility into
opportunity by identifying the Sweet Spot
However, appealing to emotion produce a greater long-term impact than
simply appealing to their heads
The most successful change programs rely heavily on emotional,
experience-based appeals in addition to rational appeal
According to Kotter, it is critical to influence peoples emotions if
you want them to change their behaviours and speaking to peoples
feelings is the most successful way to promote change
o See and Feel Change vs. Analyze-Think-Change
Examples:
Mike Morris, the CEO of AEP (American Electric Power) appealed to
both the hearts and the minds of employees by emotionally
connecting with the families of the victims rather than relying on
hard facts or statistics to make his case for a safety culture. The
safety program that was implemented at AEP also proved to be the
Sweet Spot for the company, saving millions of dollars by reducing
the number of accidents on the job.
Teck Resources, a large Canadian metal and mining company
created a culture of sustainability by conducting in-depth interviews
with employees across Canada to gain further inputs on how to
develop a clear vision and strategy and gain buy-in. It then
populated a cross-functional working group to set the tone for
engagement and involve employees at all levels of the organization.
This relates to Kotters third step, which is to create a vision to help
direct the change effort.
Caesars Entertainment, world-wide gaming, hotel and resort
Company rolled out sustainability programs to focus on design of a
more energy-efficient hotel rooms and soap recycling partnership
programs. Through sharing stories and showing videos of deaths
caused by hygiene-related illnesses around the world and

demonstrating how used soaps can be repurposed to help people

stay healthy, they were able to engage its housekeepers, helping
them understand why a small action, such as collecting used soaps
instead of throwing them out mattered to the larger world.
B. Engage the Heart Appeal to Emotions Facilitates Change
(Seiits&Farrell, 2003)
- Discuss the success and failures of change efforts by applying Kotters 8step change system
- Change efforts fail because the idea of organizational change is an
illusion
Organizations are made up of hundreds and thousands of
individuals formed into subunits, departments or divisions, all of
whom need to be influenced or persuaded to change their behavior
Therefore, it is the individuals in the organization who change not
the organization
Unless the need to change is perceived as an effort to create
positive outcomes including, but not limited to, the expansion of
personal power and a more interesting job, individuals can be
expected to resist the initiatives that are part of the overall change
effort.
o Critical point: change is really about an individual change
-

Class Discussion Question: Do you agree with the statement Most

individuals will consider changing their behaviors and routines if there
is a clear, heartfelt reason for them to change?
As a person leading the change, how do you get the individuals to
change their behavior?

How Do We Communicate Change?

A.
-

The Basics
Set specific, clear, simple goals and guidelines
Break down daunting task into small goals
Complaining: nagging and negative connotations around what not to do
(reducing negative impacts instead of stressing positive change)
Find and build on the bright spots that already exist in the
organization
B. Heath & Heath, 2010
- Direct the Rider
Follow the bright spots
o Look where the company is succeeding
o Find out how they got there (history, culture, underlying
processes)
o
Use that as a model for future change
Script the critical moves
o People may look resistant to change when in reality they
have no clue how to change
o Set clear, simple goals
Point to the destination
o Develop and communicate the ultimate vision
- Motivate the Elephant
Find the feeling
o Emotions play a big part in driving change forward
o Get people excited
Shrink the change
o People are easily demoralized by big changes
o Set small goals
Grow your people
o Make them feel strong and competent
o Prepare them for and by accepting of failure
- Shape the Path
Tweak the environment
o Fundamental attribution error: Tendency to attribute others
failure to their internal faults rather than to the external
environment
o Change behaviour by making the environment easier to
operate in
Build habits
o Habits are regularly performed
o They can be an anchor for resilience once they become a part
of normal procedure
Rally the herd

People tend to change behaviour when they see others doing

it
o Organize opportunities for people to see others exemplifying
the desired changes
o

"There's only one corner of the universe

you can be certain of improving, and
that's your own self. So you have to
begin there, not outside, not on other
people. That comes afterward, when
you've worked on your own corner. "
-Aldous Huxley, Time Must Have a
Stop

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