When Names Change to Protect the Future
APPLE dropped the word “computer” from its name in January 2007, soon after it introduced the iPhone. Likewise, Fuji Photo Film shortened its name to Fujifilm in 2006, when sales of its photography products slipped to less than one-third of total revenue.
These moves symbolize fundamental shifts in how these companies see themselves and how others perceive them. In short, they signify a change in identity.
How a company responds to today’s tumultuous technological and competitive landscape depends greatly on how it defines itself or, in some cases, redefines itself.
Questioning a company’s identity, whether or not it results in change, is something that every organization should do.
“As the core essence of a company, identity plays a central role in guiding managerial decision-making,” says John R. Kimberly, a professor at the Wharton School at the University of Pennsylvania, who was co-author, with Hamid Bouchikhi, of “The Soul of the Corporation” in 2008. Yet, Professor Kimberly says, just as individuals don’t consciously think about their identity day to day, managers typically take an organization’s identity for granted.
Unfortunately, he says, “identity may be at the root of a problem that is misdiagnosed as an operational or strategic issue.”
Ideally, a strong identity provides continuity and consistency, allowing a business to prioritize opportunities efficiently. For instance, when laser vision-correction surgery emerged as a possible substitute for eyeglasses, the Luxxotica Group, the maker of luxury and sports eyewear brands like Chanel, Prada and Ray-Ban, chose not to participate.
“We are an eyewear company and, simply put, our best opportunities for growth going forward continue to be in our core business,” says Kerry M. Bradley, president of Luxxotica Retail North America. “From this perspective, we passed on laser vision correction.”
In contrast, laser techniques fit well with the identity of Bausch & Lomb, a contact lens maker that defines itself as an eye health company. It developed its own laser eye treatment, called Zyoptix.
So each company responded to the opportunities of laser surgery in a way that was consistent with its identity.
But identity has another side, one that can result in what Mr. Kimberly calls an “identity trap.” Polaroid had a strong identity as an instant-photography company, and despite developing technical expertise in digital photography, was never able to overcome its prior mind-set about what business model and commercialization strategy to use. The company filed for Chapter 11 bankruptcy protection in 2001.
In some cases, having a broad identity lets a company avoid such a trap. Fujifilm had much greater success than Polaroid in the digital transition, and was the early digital camera market leader in Japan. “We thought of ourselves as an imaging company, whether film or digital,” says Shigetaka Komori, president and C.E.O. of Fujifilm Holdings.
Yet despite Fujifilm’s early success in digital imaging, the company has diversified to grow further, broadening its identity beyond photography and imaging. Building on its expertise in specialty chemicals, stemming from years of work with film, Fujifilm has entered new markets including those for materials used in flat-panel displays, pharmaceuticals and cosmetics.
But changing identity can create ambiguity. "We are no longer just an ‘information and imaging’ company,” Mr. Komori says, “but it is difficult to communicate exactly what we are, and this creates challenges for the organization.”
His response has been to emphasize proprietary technology as a common thread in each market. To promote its Astalift cosmetics line in Japan, for instance, Fujifilm offered a series of television commercials in 2008 explaining how nanotechnology originally developed for photography helped skin cream to better penetrate the skin.
The key to a successful transition can be creating a sense of continuity, despite a change in identity. C. Richard Reese, executive chairman of Iron Mountain, says it was a “vital records storage company” when he took the helm in 1981. Clients’ valuables were stored in underground facilities, including a deserted iron ore mine, and were rarely accessed.
Mr. Reese added above-ground storage of computer backup tapes that were accessed more often, and logistics became a crucial part of Iron Mountain’s identity. “I used to tell employees: ‘We’re not a storage company. We’re an R.& D. company — retrieval and delivery,’ ” he says. At the same time, however, he emphasized the core values of customer service and building trust.
In 2001, when Iron Mountain added backup and retrieval of digital records like e-mail to its offerings, its business became what Mr. Reese calls “information protection and storage — whether physical or digital.”
The decision to enter the digital realm was not without controversy. Competitors stuck to the physical business, and “many shareholders would have preferred that strategy,” Mr. Reese says. “But I believe you have to go where customers want to go, and that’s digital.”
To ease this transition, the company again used the importance of service and trust as a bridge. Digital services revenue almost doubled between 2005 and 2008. But because many companies hire specialized technology businesses for digital data recovery services, it’s not clear whether they will gravitate to a company that still has one foot in the analog age.
Changing identity can be risky, particularly when it challenges convention by transcending traditional industry boundaries. But if done well — consider the juggernaut that is Apple — identity transformation can create a strong foundation for shaping an organization’s future.
