Return on Identity

Every successful company is established on the basis of a strong idea. That idea serves as the core of the company’s identity and the foundation for its initial success. Success reinforces and sharpens identity, which in turn is the precondition for further success.

But sooner or later, most companies reach a point at which the power of the original idea wanes and growth subsides. The factors that made for success in the past become progressively less relevant to the future. At such moments, an organization’s corporate identity can no longer be taken for granted. Unless the existing identity is reexamined and, if necessary, redefined, the company will stagnate and even lurch into crisis. Too many companies have ended up on the scrap heap because they waited too long to question their corporate identity—until problems had already made themselves apparent in the bottom line.

However, senior executives can systematically reexamine their company’s identity and use it as an important lever for reorienting strategy and identifying new sources of shareholder value. Think of it as a new kind of ROI: return on identity. The recent transformation of the German company Bayer provides an illustrative case.