All change

Choosing a new name is the perfect way of altering the public’s perception
of your business. As well as clarifying which goods or services are on offer,
it can also give the impression you are keeping up with the times. By Jane
Lewis

There is little doubt that 1999 will be remembered as a year of great flux
and change on the UK corporate scene. In tandem with the new wave of
entrepreneurial dot.com companies appearing, there has been a marked rise in
the number of established organisations looking to re-invent themselves to
tackle 21st century markets. Indeed, in some sectors – particularly those
saddled with the tag "traditional" – it is no exaggeration to say
that the process has become almost compulsory if organisations are to maintain
any sort of market credibility. It is no longer enough to claim you are moving
with the times, you have to be seen to be doing so – and the ultimate way of
ramming home the point is to gamble on a completely new identity.

The reasons underlying this trend for rebirth are as varied and complex as
some of the new names emerging. Much of the momentum has certainly come from an
exponential growth of mergers and acquisitions. Nowhere is this more apparent
than in the distillery and hospitality sector, where players have been
broadening their portfolios to encompass wider leisure interests before
merging. Thus at least two newly named giants have appeared on the scene –
Diageo, comprising the former Grand Met and Guinness, and First Quench Retail,
formed from the merger of Victoria Wine and Thresher.

"There is one primary outcome from a rebranding exercise and that is
clarity," says Ted d’Cruz-Young of the Wolff Olins branding consultancy,
an operation which has been kept pretty busy this year. "From an external
point of view, it creates a greater degree of desire for your offering.
Internally it creates a greater degree of drive around the corporate purpose.
If you combine those two outcomes, the fundamental result is a higher level of
profitability." Or so the theory goes.

"Much of this activity has been prompted by the movement towards
globalisation," adds Simon Knox, professor of brand marketing at Cranfield
School of Management. "It can be seen as an attempt to develop a common
culture and set of values – changing names is a signal or an artefact of that
change." For many UK players, especially those trading under names with
local connotations, the move to tackle foreign markets means a new, more
international, identity can appear crucial.

A case in point is HR systems supplier Peterborough Software, which in April
1999 changed its name to Rebus, ostensibly to conform with the prevailing
nomenclature of the rest of its sister software companies comprising the Rebus
group. "We wanted to be part of the wider corporate identity," says
business future manager Dave Johnson.

Moreover, the group had recently come under new ownership. "But more
significantly, with offices in Australia, South East Asia and soon in the US,
we wanted to present ourselves as a global player. Peterborough smacks of North
Cambridgeshire."

As well as global forces, both d’ Cruz-Young and Knox believe that a second
major impetus for change has come from what can only be termed the rise of the
customer-led business model. "Greater competition is giving all customers
– whether business-to-business or direct consumers – new criteria on which to
assess companies," d’Cruz-Young claims.

"They are looking at the emotional content, forcing companies to get
their story right. Consumers have been bombarded with marketing ploys for 40
years and they are getting very savvy. Often staff and consumers are
shareholders too, so segmentation by audience is breaking down. You cannot send
out a different message to all these groups."

According to Philip Blackwell, head of customer relationship management
(CRM) at systems integrator Cap Gemini, the move to becoming more
customer-centric is having a profound effect on how organisations structure and
identify themselves. "CRM means starting with the customer and then working
back, building the whole company around how the customer works and then meeting
those needs."

Any organisation embarking on this route needs a quick way to highlight its
transformation, and a change of name is often the best way to achieve it. For example,
would the cross-sector giant Centrica command the same degree of market respect
and recognition if it had continued to trade under a name associated with its
origins in the gas industry?

Indeed, as d’Cruz-Young points out, notions of fashion can often make a
major contribution to any decision to embrace a new brand identity. But what is
really driving the current momentum is a combination of all these factors.
"It is like pincer movement. There are macro pressures such as
globalisation, which have been fermenting for some time, and a host of micro
factors."

Possibly the most pressing of these "micro" factors is the urge to
dissociate an operation from past failure. A leading example of this, from the
printing industry, is the former Wace Group, now disbanded into several
operations, all of which took the opportunity to change their identity as
quickly as possible.

Brian Dudley, managing director of one of these new operations, Bezier,
claims the name change and new identity was "an important part of the
whole process of rebirth" – just as well given the expense involved in the
operation. "The cost of redefining the company, was almost as great as the
cost of buying it."

The main part of the Wace Group, meanwhile, also renamed itself in 1998 to
reflect its planned shift from a traditional printing company to a
"graphics and digital imaging business". The new name, Seven,
provoked some mirth – it was an unfortunate coincidence that the blockbuster
Hollywood movie about serial killers should have been doing the rounds at the
same time. But, as Seven’s worldwide HR coordinator for the UK, Deborah
Blackie, points out, the company’s new brand identity has had a major impact on
its 470-strong UK workforce, and she believes this has been almost entirely
positive. "We do feel like a new company. Wace was a classic old lumbering
printer, Seven is much more upbeat, much more sexy. It has given us a new lease
of life. We haven’t done any employee surveys or a huge amount of change
management but there is no doubt that people are committed to the new brand. It
is much more visible than Wace."

This feeling was enhanced last year when Seven was bought by Applied
Graphics Technology, thus securing its position as part of a global operation.

But experts warn that a change of name and mission statement can pose hidden
dangers for organisations. As Knox points out, senior management can find
itself so hopelessly distracted by the romance and subtlety of the chosen new
name and image that it omits to drive through the type of change management
needed to back up the new identity.

"As a result, identity changes are often badly executed. Typically they
suffer from poor internal communications, the actual enactment of the vision
and values are often poorly carried out. Senior people often aren’t that clear
on how to go about doing this in their organisations. The temptation is to fall
back on a mission statement."

And d’Cruz-Young has no doubt about the potential damage that merely paying
lip service to a change of identity can cause, in terms of customer loyalty and
staff morale. If the rebranding process has no substance to underpin it, the
exercise can backfire badly.

He believes many of the old water companies have fallen into this trap.
"They have essentially kept the same business with a new brand attached to
it, and it hasn’t worked. That is why they are universally regarded so
negatively. Branding is evolving – it has gone from being the wrapping around
the organisation to becoming the organisation. If you construct an organisation
from the brand out, it will invariably be successful."

With this in mind, d’Cruz-Young considers that the role of HR in driving
forward and cementing a new identity in organisations is crucial, although
there is a finite time span in which the function’s input can be made to tell
on the success or otherwise of the operation. "HR is the reference point
in an organisation for reframing the employees’ view and defined new purpose.

"It is there to facilitate the translation process between the new brand
and its values and the desired behaviour necessary to achieve these. It also
has a role in defining those areas of the company which the new brand is most
likely to impact, and it has to monitor the impact on key areas such as
recruitment, compensation and leadership," he says.

But he gives any HR department only six to 10 months’ grace to implement
these measures before the advantage of employee momentum is lost. "A
successful brand is the sum of the people in the organisation, the
responsibility for delivering that therefore has to reside in the realm of
HR." So when it comes to recruitment, it is important to define very
tightly the kind of people needed. "You may need to find an innovative
balance between the kind of skills you need and the behavioural set."

Similar skills need to be brought to bear on defining new forms of
compensation to reflect and boost the new brand identity, d’Cruz-Young
believes. "Historically, motivation has been of the push variety – ‘this
is what you get if you do this’ – it has been seen as easier to manage."
But he recommends balancing this with a "pull" approach to attract
and maintain staff – that is, assessing how they feel about performing a
certain function.

"Actually, how people feel as an outcome of what they have done equates
to what they get."

Although the jury is still out on the success or otherwise of many of the
corporate rebranding exercises that have taken place in recent months,
d’Cruz-Young is in no doubt that there will be failures. "More often than
not, these organisations do not return to their original identity – they retain
the new brand but they fall back on the original operation. If you can’t rise
to meet a new challenge, you fall back on what you know best. It seems like
safe territory." But appearances, he concludes, can be deceptive. "A
name change alone is a temporary reprieve."

Fly in face of fashion

Although BA stopped short of undertaking a complete change of identity, its
decision three years ago to embark on a major rebranding exercise backfired
spectacularly. The most tangible aspect of the rebrand – designed to push the
idea of BA as the world’s favourite airline – was the set of "ethnic"
designs replacing the traditional Union Jack on the airliners’ tail fins. These
immediately provoked huge controversy.

Traditionalists, epitomised by Baroness Thatcher who had enjoyed a close
political friendship with former BA chairman Lord King, were appalled at this
abandonment of the national standard. She famously draped a handkerchief over a
model of the offending item in front of television cameras.

The move also drew criticism from style gurus who claimed the move went
against the prevailing mood of Cool Britannia. At a time when the Spice Girls
were flying the flag, and Liam and Patsy were pictured lounging on it on the
front cover of Vanity Fair, why on earth was BA chucking it out as
old-fashioned? No one was surprised when rival Richard Branson took advantage
of the debacle by announcing Virgin’s continuing commitment to the red, white
and blue.

BA succumbed to public pressure and took steps the scrap the new ID. But branding
experts now believe this was a mistake – the airline should have had the
courage of its convictions and weathered the storm. "Some would argue it
was justifiable that Thatcher killed that one," says Simon Knox of
Cranfield Management School, "But most new brands survive. People get used
to them."

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