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The Hagen-Wilhelm Change Matrix

There are a number of different diagrams out there to help companies understand where they are in their sustainability journey. However, none truly captured what I felt companies wrestled with as they moved from one phase to another in their adoption of sustainability. It turned out, though, that a few months into my writing of this book, both Kevin Hagen and I had started on new matrices that provided more detail, context, and the characteristics of change as companies implement sustainability. So we combined efforts and created the Hagen-Wilhelm matrix illustrated in Figure 7.4. This is designed to visually help a person or company understand what the dominant characteristics and drivers are in each stage of sustainability implementation.

Figure 7.4

Figure 7.4 Hagen-Wilhelm Change Matrix.

Ultimately, the objective is to get the company all the way to phase five, and by having a map of the journey and what is involved in each phase, this should facilitate the process and help companies to avoid the pitfall of skipping a step or stalling out. I’ve detailed the information in Table 7.1 about each phase and described the unique characteristics to help you identify where your company is along the journey and the challenges you will face.

Table 7.1 Hagen-Wilhelm Matrix Phases and Skills

Muscle and Skills to Develop

 

Phase 1

Phase 2

Phase 3

Phase 4

Phase 5

Skills

Leadership

Status quo.

Typically mavericks, or martyrs, are working independently trying to make things happen.

Strong personality, probably at/near the top or with endorsement of CEO. Begins to be a team effort. Need the ability to lead without budget or full authority. Leader needs to give credit to others.

Moved from charismatic leader to execs. Need to make them think it’s their idea because it helps them make better business decisions. Lead without recognition.

Leadership no longer accepts compromise. Tension arises because innovation is required. Leadership now means outside the walls—leading industry work, collaboration with NGOs.

Radical collaboration with industry and stakeholders is required for company to take next steps. Policy agenda is aligned with company outcomes on sustainability. Engage with networks of nontraditional partners on key issues (e.g., Starbucks joins BICEP).

Data

Raw data might be around utility bills but not organized. Just starting to ask about social and environmental data. Not tracked well.

Baseline work of gathering and tracking social and environmental data. Likely in Excel. Begin to match cost and savings to these issues. Build confidence in data accuracy.

Develop systems beyond Excel. Metrics and KPIs are developed. ROI and cost-saving info required. Metrics become forward-looking tools.

Sustainability integrated into ERP systems. Metrics completely shift from historical to future forecasting and planning.

Data is essential to management and long-term planning. Part of business decision process.

Processes

None.

Processes discussed and begin to be introduced. People are encouraged to look at things holistically.

Processes launched, procurement guidelines created, etc. Cross-silo functional teams used to attack key opportunities and risks.

Processes in place. They work independently of CSR/green team. Processes enforce actions.

Culture. Just how things are done. It would be foolish not to use this way of thinking now—it delivers better results. Embedded in strategic and business-development conversations.

Mind-Set

Prevailing Mind-Set

Business as usual.

Do less bad instead of do good. Cost mitigation and bottom-line focus. Start showing solid ROI with solid rigor.

Leaders begin to see little trade-off between sustainability and financial benefits. Attitudes shift to innovating and delivering new solutions. Focus begins to be on top line. Company has the data to make public statements with confidence.

Challenge to the business model and value proposition of company’s products/services. Long-term thinking is “let’s choose to do things with positive side effects” (e.g., the textile mill that makes clean water; the soda bottling plant that is restorative to its watershed).

Let’s change the world! Think like an ecosystem. Industrial ecology is used. Regenerative products and services. Let’s outperform the competition because we have an inherent competitive advantage.

Characteristics

HR

Benefits not part of formal sustainability policy or strategy. HR not involved with green team.

Employees have no pride of being in an organization that cares about what they care about.

Some benefits such as commuting incentives/wellness added. HR rep on green team and CSR/sustainability directors hired. Sustainability skills become needed for key roles (e.g., LEED AP for real estate or facilities team).

HR formally involved. Begins to show up in evaluations and compensation. CSR dept. and HR start hiring sustainability expertise in all departments as these skills become part of job descriptions. Recruiting gets easier—people want to work for this company.

Sustainability incorporates everyone’s compensation, job description, and evaluation. People join the company to be able to bring their whole selves to their profession and to be part of something bigger than themselves. Concern begins that people might try to “game the system” by setting easy-to-achieve goals.

Sustainability fully embedded in HR. “Gaming” concern is resolved.

Accountability

Individual responsibility. No corporate goals. Random acts occur by individuals.

Green team established. Shared responsibility with CSR director. Corporate goals created but no teeth.

Responsibilities begin to be delegated. Corporate and department goals are given teeth. Top leaders participate in annual sustainability goal setting as part of strategic planning process.

Goals trickle all the way down to individual level; they are embedded in company expectations and results.

Everyone is accountable.

Rules

Maverick is challenging the mind-set. People believe this person is getting away with things. Or this person dies trying.

Employees are operating within the company norms and trying to get sustainability done where they can.

More permission given to make change, encouraged to do so in role. Testing of rules begins.

Rule breaking occurs. Employee engagement starts to spike. Leaders give permission to fail so that innovation and new ways of doing things can be adapted faster.

Sustainability and innovation are the new rule.

The goal of Figure 7.4 is to demonstrate the different types of change that occur, who predominantly leads the change, the unique characteristics, and the financial drivers of each phase as they differ as the company matures with its sustainability efforts. As you can see, at first the costs and environmental and social impacts increase as you grow, and then once sustainability becomes more embedded in everything you do, the environmental and social positives increase and lead to greater value creation and growth, and the negative impacts subside.

Main Points of the Matrix

Next I want to highlight some key points about the matrix, especially about the skills and competencies required to implement change successfully.

Understanding the Table

  • The company moves through phases in a cluster, not in lock step—there will always be folks ahead of, and folks behind, the main curve. The practitioner has to be able to recognize where folks are at any time and keep the masses moving in the right direction.
  • Each phase has things you must learn in order to be successful in the short term and long term. Each phase has paybacks and merit. You can deliver measurable value to the organization in each phase.
  • You don’t check a box and move from one phase to another; it will be more of a cultural and operational shift that everyone will recognize.
  • Although the lines are smooth, expect small dips in productivity between each phase reflecting the necessary learning, realignment of processes, inevitable confusion, and just natural variation of people repositioning themselves for change.
  • When you get to that trade-off conversation in Phase 3 and tensions mount because people are starting to become backed into a corner, that’s when innovation and rule breaking occurs because they might need permission to knock down a wall.
  • Start working with NGOs and industry partnerships early because you’ll need these relationships later, especially in Phases 4 and 5.
  • Be warned that the dominant behaviors of the leader that are needed for success in one phase can be derailers in the next. As the leader, be self-aware and recognize it if you’re the barrier to next-phase success.

Skills and Competencies

  • There is a set of individual skills and competencies that go along with this process. A company builds them over time, the same way an athlete builds muscle. You might not need every skill in every phase, but you’ll want to build that muscle for later phases, where you’ll need it. If you don’t build it earlier, it will stop you or slow you down when you need it.
  • Moreover, the skills, people, and competencies that were necessary for one phase might be different from what you’ll need at another phase. This will be difficult especially if you were successful in the preceding phase. Getting people to change or think differently will be tougher in the next phase. Ask, “What needs to be changed to get to the next phase?”

People

  • As Kevin Hagen says, “The job of the leader is to know how much to invest in skills and competencies in each phase. You can’t spend all the resources in Phase 1!”8
  • “Executive sponsors need to adapt, learn, and move with the organization as well. They have to move to deemphasize what worked in that first ‘hero phase’ and move to a new stage.”9
  • Everyone likes to be recognized, so remember a famous quote that is often attributed to Harry Truman: “It’s amazing how much you can get done when you let other people have the credit.”
  • From that point, realize that it might take time for a CEO or manager to understand what is needed in a phase, so plant a seed in their head well ahead of time, and then ask questions about it. You’ll be more successful if they think it is their idea when the time comes.
  • The characteristics of the people who helped you get started in the hero stage will be essential early on, but as you move into later phases, you’ll want to rely less on individual heroism and more on process and systems. For example, creative employees might do great in one phase but struggle in the next phase when operationalizing the idea requires a different skill set.

Arguments Worth Having

  • Although there is always a cost to getting started and beginning implementation, it’s also important to ask and calculate the cost of not moving to the next phase. Be sure to ask, “What cost savings and efficiencies are we leaving on the table? What opportunities are we not capitalizing on?” Too often the conventional wisdom focuses on what things will cost to “do”; be prepared to show the cost of not moving!
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