The story of the investment firm Engine No. 1 gaining three ExxonMobil board seats for their carefully selected candidates initially reminded me of the classic children’s book The Little Engine That Could.

If you remember the story, a little engine agrees to try to pull a long train over a high mountain after the train’s original engine breaks down. While the little engine strains as it works, it keeps repeating “I-think-I-can.” The little engine succeeds, thanks to its hard work and optimism.

The back story of the investment firm Engine No. 1 though is much more extensive,  educational and nuanced than the children’s book message. Last December, the two co-founders, Christopher James and Charles Penner, created a firm with the purpose of creating “long-term value by harnessing the power of capitalism.”

The co-founders also devised a sound change strategy to support their purpose. This change strategy also serves as a superb case study, especially for change communication, as you’ll soon read.   

According to the Wall Street Journal, ExxonMobil was Engine No. 1’s first target and a logical choice for several reasons. A number of large ExxonMobil shareholders were annoyed with the company’s high capital spending, low returns and its refusal to engage in discussions. Plus, Exxon was a familiar name to investors of all sizes.

As I read more of the news reports about “David fighting Goliath,” I noted that James in the role of David had identified specific goals. He was focused on altering the big energy company’s governance structure and addressing the high debt levels as well as the decreasing returns while simultaneously preparing for a low-carbon future. Plus he and Penner wanted to shake up ExxonMobil’s insular culture.

To meet these goals, James designed a clear, compelling, customer-centric change communication strategy. The “customers” were primarily Exxon’s three largest shareholders, BlackRock, Vanguard and State Street, which accounted for nearly 20 percent of the voting shares, according to the New York Times. These money managers traditionally support the company’s management, in this case ExxonMobil. However, the Engine No. 1 team through their Reenergize Exxon campaign was able to persuade these large shareholders to act differently.

Even though Reenergize Exxon was designed for a specific company and industry, I noticed five change communication lessons that can be valuable for a range of situations.

1. Use data to form your actions. James and his colleagues analyzed stock performance data, which shaped their strategy in two ways. First, they discovered when companies own up to their problems, they are more likely to outperform their competitors. In other words, being transparent and vulnerable is good for business, which ExxonMobil was not doing about its poor performance. Second, James and his team determined that retailers’ valuations had started to shrink long before the retailers appeared to be in real danger. James theorized that companies in the energy sector could find themselves in a similar position if they continued to ignore the transition to renewable energy, as ExxonMobil was doing.
   

2. Enlist players who are credible. Engine No.1 sought out board candidates who had extensive energy industry experience, which the outside ExxonMobil directors were lacking. What’s more, Engine No. 1 leaders also made sure the board candidates they selected to run for the board seats were independent experts rather than friends and family members. As a result these candidates were extremely credible.

3. Make a clear and concise case for change that appeals to the interests of the investors. In their “Reenergize ExxonMobil campaign,” James and his colleagues framed their arguments around financial results. They pointed out that investors had lost value in their ExxonMobil investments, especially since the company had allocated its capital poorly over a decade. The Engine No. 1 leaders continued to punctuate these points rather than highlight other socio-political messages about climate change. The Engine No. 1 team didn’t hide these climate messages, but they kept the focus on the shareholders’ financial obligations.

4. Be prepared to respond quickly to issues that your stakeholders raise. Several of Exxon’s large shareholders, including a big public pension fund, had voiced their concerns about the lack of energy industry experience on the ExxonMobil board to company leadership but were ignored. That was an extra insult. So while many large shareholders generally make a practice of avoiding activist campaigns, they started to think that the ExxonMobil situation required them to act differently. Engine No. 1 agreed with them, showed them data and explained how voting for their slate of carefully vetted board candidates with energy experience could make a difference.

5. Provide a clear path forward. Engine No. 1 made a simple and compelling ask: vote for the four Engine No. 1 board candidates who have strong energy experience. By voting with Engine No. 1, shareholders could apply their power to change a company.

Shareholders did respond: Three of the four Engine No. 1 board candidates were elected.

And the new, small and nimble investment firm Engine No. 1 has demonstrated its power as the “little engine that could” to make change.

How can you apply these lessons as is or adjuted to your change initiatives?