Corporate reputation: Name and Shame.

Sometimes a name change is the only way to shed a negative reputation. Still, you shouldn’t be fooled into thinking that a new name is a panacea. At first blush, it seems an easy fix, a way to obliterate a rotten reputation and start fresh. But don’t be too hasty – a new name should be your last resort.

A company sometimes changes name with too little planning and too many grand expectations, and sometimes even ends up reverting back to its old name – but only after considerable confusion and expense.

Indeed, don’t underestimate the financial expense of a name change. It can cost many millions of dollars to make a new name stick.

Changing a name isn’t like creating a new advertising campaign. The corporate name is incredibly powerful, conjuring up a wealth of images drawn from personal experiences with the company’s products or services, advertising campaigns through the years, news media coverage and a myriad of other influences. While some of those images may well be negative, what about the high awareness of the old name and recollections of what the company was like in better days?

Talk about fortuitous timing. Accenture couldn’t have planned it better had it known what fate had in store for its former parent company. But back in 2000, the consulting arm of Andersen Worldwide wasn’t exactly thrilled at the prospect of changing its name. After an acrimonious fight with the Arthur Andersen accounting side of the house, Andersen Consulting was granted the divorce it had requested.

But as part of the breakup, an arbitrator ordered Andersen Consulting to come up with a new name in 147 days. Not only was the firm giving up what was then a highly respected name, dating back to 1913, but it also faced the stress of making the change fast.

Little did the consulting firm realise that the Andersen name would be worse than worthless just two years later.

‘At the time, I felt that this is really tough to have to sit here and shoot our baby after ten years in business as Andersen Consulting,’ recalls Jim Murphy, global managing director for marketing and communications. ‘But thank God we had to do it when we did.’ By the time Enron and Arthur Andersen collapsed, Accenture had succeeded in establishing both a high awareness of its name and a positive reputation with existing and potential clients.

Accenture, of course, is a one-in-a-million case. More often than not, companies don’t enjoy such perfect timing in changing their names. One of the biggest risks is making the switch prematurely. A company should wait until a reputation problem has been resolved and the negative publicity has subsided. Otherwise, the stigma will attach to the new corporate name.

WorldCom changed its battered corporate name to MCI, its long-distance telephone service provider, much too early. It understandably wanted to make a fresh start. But the company’s financial and legal troubles continued to reverberate long after the name change, sullying the MCI moniker as well.

Enron has wisely taken its time in adopting a new name. After its bankruptcy filing, the company realised it was probably the most hated name in America. So it began to research possible names in the event that it survived in some form after selling off parts of the business. ‘We wanted to wait until we saw what, if anything, emerged after the auction process,’ says Enron spokesman Mark Palmer. ‘We don’t want to poison the well by changing the name too early. But it will definitely not be called Enron.’ By mid-2003, Enron had announced new names for two surviving parts of the company: CrossCountry Energy Corporation and Prisma Energy International.

On the other hand, some companies with long-lasting reputation damage may be overly cautious or stubborn and cling too long and too tightly to their names. The Firestone unit of Bridgestone Corporation is certainly a prime name-change candidate. It has been severely hurt by the serious automobile accidents, injuries, and deaths related to the failure of its tyres. But so far, the company has kept the Firestone name alive rather than replacing it with Bridgestone. Only time will tell whether that was a wise strategy, but at this point, the Firestone name still conjures up images of suffering and death and remains far from ideal.

A merger is often the ideal time for scrapping a tainted name. A company is undergoing a major transformation, and a new name seems especially appropriate. After the merger with Mobil, Exxon probably would have been better off dropping its name to become simply Mobil. It was the perfect chance to distance itself from the catastrophic 1989 Exxon Valdez accident.

Instead of adopting just the Mobil name, it became Exxon Mobil Corporation and still suffers from people’s animosity over the environmental damage caused by the Exxon Valdez. The company decided that Exxon was a powerful name even if some gasoline buyers still boycott it because of the spill.

Call in the experts if you are sure a new name is the answer to your reputation problem. You will need identity consultants and advertising and PR agencies, plus attorneys with expertise in trademark law. Name changes often lead to legal tangles with companies that have claimed the same or a similar trademark. Companies are all too ready to sue over the slightest similarity. Finally, don’t forget the linguists. It is essential to assess whether a name conveys the intended meaning in other languages and cultures.

Occasionally, a new name is created within a company and not by the corporate identity specialists. That’s what happened at Andersen Consulting, which sponsored a ‘brandstorming’ competition. A senior manager in Norway coined Accenture, a blending of ‘accent’ and ‘future,’ and won a week’s vacation to Accenture’s golf tournament in Australia. But Andersen also enlisted Landor Associates to develop other potential names and help ensure that its new name didn’t face any trademark conflicts or linguistic complications in other countries. Of the more than 5,000 names suggested by Accenture’s own consultants and Landor’s staff, only a handful survived the screening.

Lawsuits and consultants are costly, but one of the greatest expenses will come after the name is actually changed. Communicating the new identity alone can run well over $100m.

Partly because of the speed of its name change, Accenture spent $175m advertising its new name. Its elaborate communications plan involved 178 offices and client sites in 47 countries and included everything from running Super Bowl commercials to painting the Accenture name on taxis in London.

Beyond advertising, companies must budget in the expense and labour to change everything from stationery to T-shirts. Accenture’s effort included seven million business cards, 440 internal servers, 75,000 computer desktops and applications, and 1.2 billion pieces of promotional material. Accenture was forced to destroy millions of items bearing the Andersen Consulting logo, but it did find thankful recipients at homeless shelters for $2m worth of T-shirts and hats.

A corporate name is the essence of a company. It isn’t like naming your children, when personal preferences matter far more than what others think. With corporate names, it’s critical that the name meets the approval of employees, investors, and the general public, not just the CEO and the board of directors.

The unfortunate reality is that it’s slim pickings in the name game. That’s why you rarely find a new corporate name in an English dictionary. Most of the appealing names have been taken. Thus we end up with such meaningless hybrids as Dynegy and Verizon.

For reputation enhancement, it certainly helps if the name is descriptive of the company or at least has a positive connotation. If nothing else, make it easy to pronounce. And avoid initial names, which aren’t likely to improve your reputation or even create a clear image of who you are. It’s hard to gain the familiarity of an IBM or AT&T. Waste Management realised that soon after it changed its name in 1993 to WMX Technologies, which some people said sounded like a radio station. A recognisable name is better than a meaningless one. So in 1997, Waste Management was revived.

A bad name is the fastest road to oblivion, but misguided name changes aren’t as rare as you might think. Companies frequently wind up with downright awful names that become fodder for comedians. People were both bemused and aghast when the post office changed its name to Consignia in 2001 to reflect a more modern, service-oriented culture. Just sixteen months later, the name Royal Mail was restored.

The notorious Enron name was actually never meant to be. It was a last-ditch substitute for the original name that had been developed for the merged Houston Natural Gas Corporation and InterNorth. The plan was to call the new company Enteron Corporation, but just before it became final, the company learned that the dictionary definition of ‘enteron’ is the human digestive tract.

Corporate scandals produced a wave of new names from accounting firms, as they made plans to spin off their management consulting arms to prevent any conflicts of interest. There was the transformation of KPMG Consulting to BearingPoint, which doesn’t exactly trip off the tongue. Most jarring of all, however, was the choice of Monday by PwC Consulting. The company explained that Monday is a real word that’s easy to remember and it represents ‘a fresh start, a positive attitude, a part of everyone’s life.’ But Monday isn’t exactly the most positive thing in everyone’s life.

In the end, IBM snapped up Monday, ditched the too-cute name, and absorbed the Monday business into IBM Business Consulting Services. Wise move!

This is an edited extract from The 18 Immutable Laws of Corporate Reputation by Ronald J Alsop, published by Kogan Page, ISBN 0-7494-4255-7, price £17.99.

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