Whats there in a name

Written by New York Times | Updated: Nov 30 2009, 03:50am hrs
Mary Tripsas

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 symbolise 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 todays tumultuous technological and competitive landscape depends greatly on how it defines itself or, in some cases, redefines itself. Questioning a companys identity, whether or not it results in change, is something that every organisation 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, Kimberly says, just as individuals dont consciously think about their identity day to day, managers typically take an organisations 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 prioritise 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 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 commercialisation 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 CEO of Fujifilm Holdings.

Yet despite Fujifilms 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, Komori says, but it is difficult to communicate exactly what we are, and this creates challenges for the organisation. His response has been to emphasise proprietary technology as a common thread in each market. To promote its Astalift cosmetics line in Japan, Fujifilm offered a series of TV 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. In 2001, when Iron Mountain added backup and retrieval of digital records like e-mail to its offerings, its business became information protection and storagewhether 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, Reese says.

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 specialised technology businesses for digital data recovery services, its not clear whether they will gravitate to a company that still has one foot in the analog age.