The Corporate Identity: When Do You Change It?

BrandBank • MARCH 2010 issue

StrategiCom's Journal of Brand Strategy

The Corporate Identity: When Do You Change It?

By Lesley Tian, Research Analyst, StrategiCom


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1 As obtained from: http://brandfailures.blogspot.com/2006/12/brand-extension-failures-xerox-data.html2 As obtained from: http://www.mobiletracker.net/archives/2006/07/13/sony-ericsson-q2-2006 in March 2010.3 Ries and Trout, “Positioning: The Battle for Your Mind”, 1981, New York.4 G. B. Northcraft and G. Wolf, “Dollars, Sense and Sunk Costs:A Life-Cycle Model of Resource-Allocation Decisions,” Academy of Management Review 9, no. 2 (1984): Pp 225-2345 D. Leonard-Barton, “Core Capabilities and Core Rigidities; A Paradox in Managing New Product Development,” Strategic Management Journal 13 (summer 1992): Pp 111-1266 M.T. Hannan and J. Freeman, “Structural Inertia and Organizational Change.” American Sociological Review 49, no. 2 (1984): Pp 149-164

The CorporaTe IdenTITy – an InTroduCTIon

The Corporate Identity: When Do You Change It? By Lesley Tian, Research Analyst, StrategiCom March 2010

In today’s business environment, firms are constantly seeking ways to stay relevant with market trends while coping with latest developments. While staying current with the business trends within their industries might give a company a competitive advantage over others, the adoption process could be painful. Every now and then, management has to take the organisation through radical changes such as developing a new business model, entering into new business territory or merging with another company, just to prepare for their desired future and the opportunities which may follow.

History reveals that while some revolutions have succeeded, others have failed. For example, Xerox, despite the huge amount of investment in technology acquisitions and their globally renowned Palo Alto Research Center (PARC), is still highly associated with copiers1 rather than other digital products. In contrast, Sony Ericsson created a new category through the effective integration of

the mobile phone and a music player. In 2006, the company enjoyed a net profit of €143 millions, a 91% increase from the previous year. The Walkman branded line of mobile phones contributed to a quarter of the shipment2. This difference is because different companies have different adoptive capacities.

Whether a firm can completely implement a particular technology or promptly tap upon a certain market trend depends on many factors. Past studies have identified factors such as brand/line extension3, organisational sunk costs4, corporate core competence5, and structural inertia6, among many others that contribute to a company’s adoptive capacity. While literature explanations are fair, one of the lesser mentioned factors is a firm’s corporate identity (“CI”). A firm’s CI, when managed properly, can be a fundamental contributor of a firm’s current and future adoptive capacity.


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7 Hamid Couchikhi and John R. Kimberly, “Escaping The Identity Trap”, MIT Slogan Management Review, Spring, 2003, Pp20-26.8 J.E. Dutton, J.M. Dukerich and C.V. Harquail. “Organizational mages and Member Identification.” Administrative cience Ouarterly 39 (June 1994): Pp 239-263.9 B.E. Ashforth and F Mael, “Social Identity Theory and the Organization,” Academy of Management Review 14 (January 1989): Pp 20-39.10 J.L.Porras, and J.C.Collins, “Built To Last: Successful Habits of Visionary Companies”, New York, HarperCollins, 1994.11 “The Soul of the Corporation: Managing Your Company’s Identity”, December 06, 2007 in [email protected] Hamid Couchikhi and John R. Kimberly, “Escaping The Identity Trap”, MIT Slogan Management Review, Spring, 2003, Pp20-26.

BenefITs of The CorporaTe IdenTITy: The GrowTh & expansIon ImpaCT

The relevanCe of The CI To CorporaTe sTraTeGy: askInG The rIGhT QuesTIons

The firm’s CI is a powerful concept7. Research has shown that it shapes the the views of members in an organisation on corporate issues8, and even their personal identity9. For example, a man from a welding company is likely to develop his sense of self as a welder. When the welding company develops an identity anchored in safety, he tends to pay more attention to the use of new welding technology, proper personal protective wear and best-in-class safety practices rather than energy sources or weld-ability in different environments.

One of the most important benefits of a CI is probably the ability to serve as a business acceptability indicator for a company i.e. to gauge how far a company can stretch its operations to take on the demands in terms of customers’ needs and changes, while still being perceived as relevant and competitive. As Porras and Collins argued, “organisations cannot endure without developing a

solid core from which they can confront a changing and often hostile environment”10.

As a case in point, Ace Dynamics Ltd (a publicly listed company in Singapore) was known as a diversified company involved in the supply of welding equipment and consumables, safety equipment and property development for almost 30 years in Singapore and the region. In 2006, its Chief Executive Officer, Steven Tham, realised that with the rapid growth in the offshore & marine construction and engineering sector, a greater focus in their welding, safety and welding gas business was needed. Since Ace Dynamics was also known for its involvement in the property sector, Tham sought the support of his board to change the CI of Ace Dynamics (since the name formed a large visual part of the company’s CI). In this case, it was clear to Tham that the CI was a hindrance to the board’s strategy in growing the business of welding, gas and safety in a focused way.

Here are some salient questions that a management of a company and its board should ask when evaluating the relevance of corporate identities. A good guide is to work from the bottom up:-

- What is the CI of my organisation?

- Is the CI of my organisation well-recognised and if so, what is it recognised for?

- Is the CI relevant to my stakeholders in the context of the strategic intent of the company?

- If not, what steps should be taken?

- What is the impact in terms of change management?

For business leaders who are sensitive about their organisations’ CI, a good tool which can help to better understand and measure a CI is known as a CI audit11. For companies, especially the ones that failed to realise performance improvements despite their continuous efforts to solve operational or strategic issues, a periodic CI audit may prove to be useful in assessing the company’s core problem(s)12. In the case of Ace Dynamics, a CI audit was commissioned by the CEO who took a personal involvement in the audit; something rarely seen in most CEOs.


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know The CI & do more wITh IT

Similar to a financial audit, which is to add credibility to the implied assertion by an organisation’s management that its financial statements fairly represent the position and performance to the firm’s stakeholders13; a company should not be convinced that its current CI is a reasonable representation of its desired position without a logical and systematic audit. While conducting it on an annual basis may not be necessary,

a periodic CI audit is essential since a company’s product and service range may be changed to suit the needs of the market from time to time. Conventional wisdom should be the trigger as to when a CI audit is necessary. But when it is commissioned, a structured process is needed. This paper provides the salient steps any management should consider when commissioning or administering a CI audit.

CI, as a modern management concept, has made three main developments in the past three decades. In the seventies, CIs were synonymous with organisational visual identifications. Great importance was assigned to the graphical aspects by practitioners then14. One of the more notable of scholars was Olins, whose renowned work was found in the classification of CIs namely: monolithic, endorsed and branded15. In the late 1980’s, both graphic designers and marketers realised the difficulty in projecting a cohesive image as modern organisations had to contend with different stakeholder groups. Bernstein, among others, argued the necessity of ensuring visual consistency in a firm’s marketing communication efforts16. In the 1990’s, scholars like Balmer argued that the CI is rooted in the behaviors of the members of the firm17, and this forms the unique characteristics of the organisation. Gradually, the definition of the CI has expanded to include different components.

Today, there is no consensus on the definite definition of a CI18, however it is commonly understood that an organisation’s identity is revealed through members’ behaviours and communications, as well as through

symbolism to internal and external audiences. In the case of Ace Dynamics, all three of the following interconnected components were included in its CI audit exercise.

1) Symbolism: to reveal some of the basic traits of an organisation’s identity by interpreting organisational symbolism19 such as logotypes, corporate signatures, typestyles, formats and colours. Here, the Ace Dynamics mark was found not to symbolise any pertinent association to its various diverse business. Put simply, stakeholders knew that it was a public listed company but few could associate the company to its various natures of businesses.

2) Integrated marketing and communication: to ascertain an organisation’s external marketing and communication efforts20 through a heuristic analysis. This examines the organisations’ historical roots and its current areas of internal conflicts21. Ace Dynamics’ marketing efforts in the last 10 years (before its CI change) were diverse since the business as a whole was diversified. There was an obvious conflict between what was communicated historically vis-à-vis the company’s new strategic intent.

Step 1: Know the Current Situation of the CI

13 Obtained from http://en.wikipedia.org/wiki/Financial_audit, as at March 2010.14 Cees B.M. van Riel, John M.T. Balmer, “Corporate Identity: the Concept, its Measurement and Management”, European Journal of Marketing (2007), 31, 5/6: Pp340-355 15 Olins, 1978, “The Corporate Personality: An Inquiry Into The Nature Of Corporate Identity”, Thames and Hudson, London.16 Bernstein, 1986, “Company Image and Reality: A Critique of Corporate Communication”, Holt, Rinehart and Winston, Eastbourne, UK.17 Balmer, 1995, “Corporate Identity: the Power and the Paradox”, Design Management Journal, Winter, pp.39-4418 International Corporate Identity Group (ICIG) decided not to give a definition of corporate identity but rather a statement which articulates the multidisciplinary nature of the area and its difference from brand management. “Strathclyde Statement”, Feb 1995. 19 Napoles, V. (1998), Corporate Identity Design, Van Nostrand Reinhold Company, New York, NY. 20 Gray, E.R. and Smeltzer, L.R. (1985), “Corporate Image – An Internal Part of Strategy”, Sloan Management Review, Summer, Pp73-77.21 Cees B.M. van Riel, John M.T. Balmer, “Corporate Identity: the Concept, its Measurement and Management”, European Journal of Marketing (2007), 31, 5/6: Pp340-355


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22 As referred in: Cees B.M. van Riel, John M.T. Balmer, “Corporate Identity: the Concept, its Measurement and Management”, European Journal of Marketing (2007), 31, 5/6: Pp340-35523 Balmar, J.M.T, (1996), “The Nature of Corporate Identity: An Explanatory Study Undertaken Within BBC Scotland”, PhD thesis, University of Strathclyde, Glasgow, UK.

3) Members behaviour: to assess members’ behaviors within an organisation. Here, qualitative methods were often adopted. Van Rekom proposed the laddering technique22 which relies on means-end interviews to reveal the dominant values of employees. Balmer proposed the “Balmer’s Affinity Audit (BAA)”23 which relies on collecting data through various qualitative methods such as semi-structured interviews, observation and

examinations of documentaries (figure 4.1). The laddering approach was adopted for Ace Dynamics and it revealed that most staff only knew what their division was doing as opposed to what the company was involved in as a whole. This presented challenging issues since the strategy was to consolidate the welding, gas and safety business; and a discontinuance of non-core businesses,

Figure 4.1.: Conceptual Model Based on Balmer’s Affinity Audit (BAA)


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24 Rossiter, J.R. and Percy L. (1997), “Avertising & Promotion Management”, McGraw-Hill, New York.

An organisation is constantly subjected to changes especially in its products and services and hence, it is advisable to periodically assess the degree of fit between the company’s identity and its strategy going forward. For Ace Dynamics, the company decided to change its corporate name to

Leeden and with it, its CI. CEO Tham realised that its new CI would fail without a well-spelt out corporate strategy. In other words, the vision of Leeden as “The Integration Specialist for Welding, Gas & Safety” was aligned to its CI (Figure 4.2).

To ensure that a CI is aligned to the firm’s corporate strategy, a variety of methods can be used:

1) The IDU method: Introduced by Rossiter and Percy24, it aims to discover three important pieces of information- the benefits that are perceived by key external stakeholders as important (“I”), the ones that are delivered

by the organisations (“D”) and finally those that are perceived as unique, or better (“U”) when compared to other organisations in the same category (Figure 4.3).

Step 2: Determine the Desired Corporate Identity

Figure 4.2: Leeden’s Logo and Tagline


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Figure 4.3: The IDU Method Example based on Rossiter and Percy, 1982.

Figure 4.4: Bernstein’s Spiderweb Method Example

2) Bernstein’s Spiderweb25: Generally, an external consultant leads this process. It begins with a focus group conducted with the firm’s top management. Key attributes are extracted and verified within stimulating

conversations with key participants represented at every level and department. This approach aims to generate in a representation the salient attributes of the corporate identity. (Figure 4.4)

25 Bernstein, 1986, “Company Image and Reality: A Critique of Corporate Communication”, Holt, Rinehart and Winston, Eastbourne, UK.


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26 Hamid Bouchikhi, John Kimberly, (2007), “The Soul of the Corporation – How to Manage the Identity of Your Company”, Wharton School Publishing.

Within StrategiCom’s methodology, there are two things which the firm’s consultants look out for when determining the desired

corporate identity, namely “relevance” and “desirability” of the corporate identity:

1) Relevance: The characteristics of the desired corporate identity must be relevant. In Leeden’s case, the lead consultant tested the new trademark with key players within Leeden’s key customer markets. “Integration” of Leeden’s three business units of welding, gas and safety was an important characteristic for the communication of the business through the newly designed mark. Feedback and comments served to evolve the mark to its final accepted stage.

2) Desirability: Within the iterative process of crafting Leeden’s trademark, key customers’ markets were studied to ensure that appropriate colours and symbols were used. However, the search for desirable attributes has to be highly related to the organisation’s current situation and again, comments were derived from the marketplace.

A clearly defined CI will only become a source of competitive advantage when there is convergence both internally and externally26. This convergence acts as a force for bringing people together around a central mission. Therefore, a convergence study is necessary.

The following are some of the key questions organisations should ask during a convergence study:

- “Is there internal congruence on the perception of our CI?”

- “Are we satisfied with the amount of convergence around our identity?”

- “Are the internal and external perceptions of our CI aligned?”

- “Are there internal or external signals that reflect our CI as blinding us to market changes?”

- “Which stakeholder group would be anxious or threatened by a CI change?”

- “Which stakeholder group would be better served by a change in our CI?”

Step 3: Convergence Study


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27 Hamid Couchikhi and John R. Kimberly, “Escaping The Identity Trap”, MIT Slogan Management Review, Spring, 2003, Pp20-26.28 As obtained from http://www.medibix.com/company.jsp?company_id=9992466 in May 2010.

A comprehensive CI audit will indicate if change is necessary. Generally, there are two situations when organisations do not need a CI change. First, when the CI is strong and relevant. Secondly, when the CI is not desired by the firm, but perceived to be strong according to other stakeholders. With such audit results, relevance rather than change is what needs to be brought to the current CI.

However, once the audit shows that the current CI is weak and undesirable, change

is essential. Companies who need to revamp their current CIs have two options: evolutionary change and revolutionary change27.

Evolutionary change refers to a process during which the CI change is a by-product of successive strategic and operational changes over a long period of time. Shell (Figure 4.5) alters the shape, color, and typography of its symbol to keep it up to date. But the basic elements have been around for almost one century.

By contrast, a revolutionary change usually begins with a swift transformation of the company’s identity and then proceeds with realignment of strategy and operations. The creation of a global giant GlaxoSmithKine

took place in the year of 2000. Today, the world’s second largest pharmaceutical company (by employees)28 boasts a wider portfolio of pharmaceutical products than ever.

so you now know…so whaT?

Figure 4.5: Evolutionary Changes of Shell Logo

Figure 4.6: Revolutionary Changes of GlaxoSmithKine (GSK)


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29 “Ignoring Your Corporate Identity Can Sabotage Strategic Change”, May 21, 2003 in Knowledge@Wharton.

ConClusIon: ChanGInG The CI means ChanGe manaGemenT

Whichever way an organisation chooses to carry out its identity change, the process is normally painful. Inevitably, resistance will be felt and change management needs to be implemented. It takes more than mere political skills for corporate leaders to preempt and overcome resistance.

One of the most powerful women in business, Carly Fiorina, probably underestimated how deeply rooted Hewlett Packard’s (“HP”) identity was in the core values, and hence did not anticipate the hostile reaction of influential members of the HP families when it came to the merger with Compaq. Her leaving after the fight with HP’s board in 2005 indicates that the personal

qualities of CEOs form only part of the story29. In order to facilitate the transformation of an organisation’s identity, management must be willing to accept changes, including changes to the management itself. By so doing, they can help internal and external stakeholders cope with the identity crisis as an expected event in a well-prepared environment.

Hence, before any business owner or corporate leader ever decides to undertake a CI change; there should be serious consideration followed by the will to take bold initiatives to assess congruency between the CI and the firm’s business strategy before these two critical components drift too far apart.

Lesley Tian’s keen interest in organisation and community cultural patterns is reflected in her firm understanding of geographical and cultural differences of various countries, and her research interest lies in the branding of companies in the context of different cultures and languages. Her skills were utilized in a research study on green energy with Professor Gerhard Apfelthaler during her stay in Austria. Lesley interned with StrategiCom in 2007 and 2008 and joined the firm full-time in 2009 where she worked on clients such as Swee Hong Construction Engineering, Marshal Technology and Hu Lee Impex.les ley. t [email protected]

aBouT sTraTeGIComStrategiCom is a global B2B brand strategy consulting firm headquartered in Singapore with 11 offices and 110 consultants & researchers around the world. The industries it serves include Information Technology, Oil & Gas, Petrochemicals, Commodities Trading, Business Services, Pharmaceutical, Medical & Healthcare, Transport & Logistics, Construction & Real Estate, Precision Engineering and Electronics Manufacturing. StrategiCom’s consultants, researchers and proprietary methodologies provide the catalyst for companies to transform from traditional businesses into differentiated brands.

ConTaCT usStrategiCom Pte Ltd 371 Beach Road #19-08 , The KeyPoint , Singapore 199597Tel: (+65) 6220-2216 Fax: (+65) 6220-2116 Email: [email protected]

© Dec 2009 StrategiCom Pte Ltd. All rights reserved. Published by StrategiCom Pte Ltd.An imprint of StrategiCom Pte Ltd: 371 Beach Road, #19-08, The KeyPoint, Singapore 199597.No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the priorpermission of the copyright owner. Request for permission should be addressed to the Publisher, StrategiCom Pte Ltd, 371 Beach Road, #19-08, The KeyPoint, Singapore 199597.Tel: (65) 6220 2216 Fax: (65) 6220 2116 E-mail: [email protected] Website: www.strategicom.com

The Corporate Identity: When Do You Change It?

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