To stay competitive in a changing environment, many companies attempt radical transformation by adopting a brand-new business model, entering a different industry, merging with another firm or deploying a new global strategy. Often, these efforts fail. The management literature offers many explanations, focusing on issues such as sunk costs, cognitive inertia, organizational routines, resource bases, core competences and organizational politics, among others.1 While none of those explanations is wrong, per se, none recognizes that an organization’s fundamental identity can be the primary constraint on its adaptive capacity.
Just as individuals develop, often unconsciously, a narrative of who they are,2 so do organizations, reflecting the context of their founding and the identities, motivations and values of their founders.3 Just as individuals with ambiguous identities have trouble maintaining internal balance and healthy relationships with people around them, so organizations with ambiguous identities have trouble maintaining internal balance and building lasting and productive relationships with vital stakeholders. And, just as the identity of individuals may come to be anchored in some combination of gender, nationality, profession, social group, life style, educational achievements or skills, so an organization’s may be anchored in some combination of geographical place, nationality, strategy, core business, technology, knowledge base, organization design, operating philosophy or governance structure.
For each organization, its particular combination of identity anchors imbues it with a set of distinctive attributes that key stakeholders (employees, owners, suppliers, customers, bankers and shareholders) view as core, enduring and distinctive.4 The respective weighting of these anchors may vary considerably from one organization to another. For example, Polaroid’s identity has been intimately tied to its core competence in instant film; by contrast, Hershey Foods’ identity is closely linked to its geographic location; and the identity of the Public Broadcasting Service (PBS) is anchored in its commitment to commercial-free, quality programming for mature audiences.
A company may explicitly articulate its identity or it may remain, as is... To read the complete article, login or sign-up using the form below.
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