The Soul of the Corporation: How to manage the identity of your company

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9780131857261: The Soul of the Corporation: How to manage the identity of your company

“As Emerson said that an institution is the ‘extended shadow’ of a person, Bouchikhi and Kimberly fluidly blend the personal and enterprise-wide perspectives of professional identity to yield both powerful insights and priceless practical tools. Most management books look at the decision maker or at the decision making context. This important book embraces both while eschewing the clichés of corporate culture guidebooks. Anchored in decades of research, compelling current business sagas, and familiar everyday challenges, The Soul of the Corporation uniquely conveys the inextricably intertwined nature of the symbolic and substantive roles of leadership.”

Jeffrey Sonnenfeld, Senior Associate Dean, Lester Crown Professor of Management, Yale School of Management, and coauthor of Firing Back: How Great Leaders Rebound from Career Disasters

 

“In a world of continuous flux and accelerating change, one’s sense of identity becomes more crucial than ever for companies, no less than individuals. In The Soul of the Corporation, Bouchikhi and Kimberly take us on a journey into the psychological world of corporate identity and explore the importance of companies knowing who they are, both in relation to their inner-workings and the outside world. This trailblazing book will prove invaluable to management in their quest to define the essence of their corporate identity.”

Jeremy Rifkin, President of the Foundation on Economic Trends in Washington, author of The End of Work, The Age of Access, and The Hydrogen Economy

 

“Identity is one of the most fundamental yet least understood determinants of organizational outcomes. Bouchikhi and Kimberly’s book provides a fresh and provocative point of view of the determinants of organizational identity as well as research-based insights on how to shift identity over time. This book will be important to both scholars of organizational evolution as well as managers involved in leading change.”

Michael Tushman, Paul R. Lawrence Class of 1942 Professor of Business at the Harvard Business School

 

“A strong Identity is a major asset for a firm, as this book so convincingly illustrates. To manage the Identity (the I*Dimension) is perhaps the most critical top leadership function today. The authors show us how to do this–a must read!”

Dr. Peter Lorange, IMD President, The Nestlé Professor

 

Understand, Control, and Leverage Your Company’s #1 Asset: Its Unique Identity

 

We live in a new Age of Identity, in which your employees, customers, investors, and
other stakeholders care about who you really are. More than ever, your company’s identity will shape the results it can achieve. The Soul of the Corporation will help you clearly understand your company’s identity, and then take control of it and leverage
it for long-term adaptation and success.

 

Drawing on real-life stories from the world’s most prominent companies, the authors show how identity can be an extraordinarily valuable asset–and how, if not properly managed, it can become a huge liability. Discover how your firm’s identity is related to–and different from–its organizational culture, brand positioning, and reputation. Learn how to diagnose and manage the often unconscious shared beliefs that constitute your company’s soul...how to face the enormous identity challenges that arise in mergers, alliances, spin-offs, and the creation of new brands...and above all, how to lead and inspire in this new Age of Identity.

 

· Master your company’s “I*Dimension”

New tools for leveraging identity for competitive advantage

 

· Manage the tensions that shape your company’s identity

Convergent vs. divergent, internal vs. external, designed vs. emergent, sameness vs. uniqueness

 

· Overcome the dark, dysfunctional side of identity

Minimize narcissism, conflict, drift, and fragmentation

 

· Protect what’s precious, change what needs to change

Managing identity through M&As, spin-offs, alliances, and unrelenting change

 

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About the Author:

Dr. Hamid Bouchikhi is a professor of management and entrepreneurship at ESSEC, a leading European business school based in France. He is interested primarily in the human side of organizations and draws heavily on the social sciences. A native of Morocco who has crossed many geographical and mental borders and collaborated with firms from many parts of the world, Dr. Bouchikhi has developed a sharp awareness of identity and its influence on the conduct of business.

Dr. Bouchikhi’s current research topics are in organization theory, corporate entrepreneurship, and managerial innovation, where he has authored and coauthored several books and articles in French and English. His English works have appeared in the MIT Sloan Management Review, Harvard Business Review, Organization Science, Organization Studies, Organization, and the European Business Forum.

Dr. Bouchikhi has been involved with several international public and private-sector organizations through consulting assignments, management development programs, and research projects. He is the founder and academic director of ESSEC Ventures–a center providing training, coaching, logistical support, and seed financing to nascent entrepreneurs in the ESSEC Business School community.

Dr. Bouchikhi has been a visiting professor at Keio University (Tokyo), at the Wharton School (Philadelphia), and at the University of Putra Malaysia (Kuala Lumpur, Malaysia).

 

Dr. John R. Kimberly is the Henry Bower Professor and Professor of Management, Health Care Systems, and Sociology at the Wharton School of the University of Pennsylvania and Visiting Professor at INSEAD in Fontainebleau, France. He is also Executive Director of Wharton’s Global Alliance with INSEAD.

Dr. Kimberly has served as organizational consultant in several organizations in the public and private sectors: the Directorate for Science, Technology, and Industry, and the Directorate for Scientific Affairs of the Organization for Economic Cooperation and Development in Paris, France; the Office of Technology Assessment of the U.S. Congress; the Association of American Medical Colleges, the Robert Wood Johnson Foundation; and the Institute of Medicine of the National Academy of Science. His recent professional leadership activities include membership on the editorial boards of the Academy of Management Review, the British Journal of Management, and M@n@gement. He is the codirector, with Dr. A. Thomas McLellan, of the Center for the Organization and Management of Addiction Treatment, a joint venture between the Treatment Research Institute and the Wharton School that focuses on the business of addiction treatment.

Dr. Kimberly’s research areas include organizational design, organizational change, institutional creation, health policy, and managerial innovation. His current projects deal with the content and consequences of firm identity, competition and collaboration among health-care organizations in local markets, the structure and mobility of managerial elites, and competition and change in business education. His most recent book, edited with Hubert Gatignon, was The INSEAD-Wharton Alliance on Globalizing: Strategies for Building Successful Global Businesses, published in 2004 by the Cambridge University Press.

He holds a Ph.D. from Cornell University and a BA from Yale University. His previous appointments were at Cornell University, the University of Illinois, and Yale University. He has held visiting appointments at Ecole Polytechnique, France; University of Paris-Dauphine; and Ecole Superieure en Sciences Economiques et Commerciales (ESSEC), Paris. From 1998 to 2002 he was also the Novartis Professor of Healthcare Management, INSEAD, and was responsible for designing and launching INSEAD’s Healthcare Management Initiative. He is currently completing a book on the global diffusion of managerial innovation with Professors Gerard de Pouvourville at ESSEC and Tom D’Aunno at INSEAD.

 

Excerpt. © Reprinted by permission. All rights reserved.:

Introduction: Leadership Challenges in the Age of Identity

Introduction: Leadership Challenges in the Age of Identity

Welcome to the Age of Identity. The central premise of this book is that we are in the midst of a transition on a global scale from an era in which the vast majority1 of individuals and human groups lived with a sense of clarity, continuity, and consistency about their identity—their notion of who they are and how others view them—to an era in which identity is increasingly problematic across all levels of human organization, from the individual person2 to entire nations or civilizations.3

This shift has profound implications for leaders in all walks of life, and particularly in business. To some extent, identity issues and crises in religious, educational, or human service organizations, although potentially highly consequential, are not particularly surprising. These are, after all, organizations that have a strong sense of mission, and as traditional underpinnings shift, you might expect them to be particularly vulnerable to this increasing volatility. You might think that business organizations, with their strong economic orientation and their focus on the bottom line, would be more or less immune to identity questions. Not only is this not the case, but our thesis is that in the Age of Identity, businesses of all kinds are facing identity issues that they do not fully understand and are often ill-equipped to deal with.

The goal of this book is to sensitize you to the central importance of identity in your business and to give you some tools that will enhance your ability to lead in this new context. To set the stage, we highlight ten trends that have characterized the close of the twentieth century and that, together, have created an environment in which organizations of all sorts—businesses, churches, universities, and hospitals—have to cope with essential questions about who they are, who they want to be, and who they can be. Will you be effective as a leader in the Age of Identity? Do you understand the identity issues your business faces? Let's begin with the challenge of globalization.

Globalization

The transition from an environment in which the majority of businesses—especially small and medium-size—were confined to, and often protected in, domestic markets to an environment in which goods, services, and capital flow across borders simultaneously creates new opportunities and poses new challenges. Globalization enables firms to move freely into new markets and geographic areas, but it also brings to the surface questions about who they actually are.

The expansion of McDonald's outside the United States is a particularly good example of the business opportunities and identity challenges that accompany globalization. McDonald's operates the biggest restaurant chain in France and is led by a French management team. The restaurants are owned by French franchisees. Almost all supplies are sourced in France, and the workforce is obviously French. McDonald's France thus has all the attributes of a French organization and is certainly more French than many companies whose products or services are sourced outside of France. And yet McDonald's is widely perceived by French people, and treated by the French media, as an American company spreading "mal bouffe" (the French phrase for junk food) and threatening the French way of life.

In response to a European ban on imports of U.S. hormone-treated beef in 1999, the U.S. government heightened import tariffs on a variety of European products, including Roquefort and foie gras.4 Because McDonald's is identified so intimately with the United States, it was subsequently a natural target for the hostility and anger of the French Farmers Confederation, led by the colorful José Bové.

To change the French public perception of the company, the management of McDonald's France launched a massive advertising campaign to stress that it sources 80 percent of its purchasing in France and Europe and that its purchasing power contributes to the welfare of thousands of French farmers.5 Despite these efforts, the company is still identified with the United States, and the management of McDonald's France has yet to square a difficult circle: persuading the French public that McDonald's France, the organization, is French, although McDonald's, the brand, is American.

The challenges faced by McDonald's as it has expanded globally are hardly unique. The political and psychological resistance encountered by Chinese companies as they enter or make acquisitions in Western markets is the most recent, large-scale illustration of how identity can be a liability. Lenovo, the company that acquired the PC business from IBM, negotiated the right to continue to make and sell PCs under the IBM name for five years6 after the transaction. However, a firestorm of controversy was created when Lenovo won a contract to supply computers to the U.S. government, with critics raising the specter of threats to data security posed by use of Chinese equipment. In another case, to overcome the liability of "Chineseness," TCL, the second-largest manufacturer of TVs in the world, chose to market consumer electronics gear outside China through well-known Western brands under its full or partial ownership such as RCA, Thomson, and Alcatel.

Although its efforts to acquire the U.S. energy group Uncoal made a splash in the global media village, the China National Off Shore Oil Company (CNOOC) was hindered by its identification with the Chinese government. In an interview with the Financial Times7 a few days after Chevron won the fight for the control of Uncoal, Fu Chengyu, CNOOC's Chairman and Chief Executive, acknowledged that his company failed to change the perception that it was operating on behalf of the Chinese government.

Mergers and Acquisitions

The spectacular growth of corporate mergers and acquisitions in the last quarter of the twentieth century reflects a relatively recent view of firms as commodities that can, and must, be bought, sold, and combined whenever such actions serve the interests of their shareholders. However, the consistently high rates of poor performance of mergers and acquisitions, as documented by dozens of empirical studies, have raised questions about the firm-as-commodity theory.

Although cultural differences are widely cited as a principal factor, little attention has been paid to the more important role of identity. Culture and identity are not synonymous. To illustrate, let's say that two firms with seemingly compatible cultures are merged. Management and employees in both firms value customer orientation, technological innovation, entrepreneurship, value creation for shareholders, and internal cooperation. From a cultural perspective, therefore, post-merger integration should be smooth. At a deeper level, however, we also find that the firms are viewed by their respective members as unique. This sense of uniqueness means that, comparatively, the firms are actually seen as quite different from one another. This view may have been reinforced by several years of intense rivalry between them. Throughout their histories, each of the firms defined its identity, in part, in opposition to the other. The identity of each firm is, to a significant extent, anchored in not being the other. Therefore, despite the fact that their cultures are expressed through similar values, merging them will be a daunting task.

Cultural alignment may mask deeper differences in identity, and for a merger to be successful, managers must find a way to make "one" identity out of "many." Identity integration is achieved when insiders and outsiders "forget" about the identities of the original firms and come to see the result of their combination as a single reality. The challenge of achieving identity integration is dealt with in detail in Chapter 5.

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