The Identity Effect: Ignore It At Your Peril

by Larry Ackerman, Feb 23, 2010, 5:00 AM

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Ever wonder what's really behind this thing we call "identity?"

It's one of those words that attracts a variety of meanings, ranging from a company's name and logo, to its business definition (Fuji: We're a digital imaging company), to its image in the marketplace, to its values.

Sometimes, executives manage to go a level deeper and talk about identity -- their company's and even their own, as the unique characteristics that define how they create value in the world. From this vantage point, identity provides the seeds of differentiation. Ahhhhh, I think these guys may be on to something.

It doesn't matter what business you're in; if you're going to successfully re-shape your brand, you need to start by knowing who you are. This imperative isn't just a nice-to-have; it's a must-have, which we discovered recently through a research study -- the Identity Impact Survey -- that quantitatively demonstrates the impact of "identity strength" -- organizational and individual -- on employee engagement and business performance. The key findings of the survey, which included nearly 2,000 participants across five diverse companies and industries, were dramatic.

• Increases in identity strength translate into predictable increases in revenue and other economic benefits.

• Organizational identity strength is more influential than individual identity strength in driving employee engagement and business performance. Their combined effect, however, is greater than either one alone.

• Although organizational identity emerges as a prime performance driver, employees don't typically think that their organization actually has a strong identity.

The last finding made me shudder: Organizational identity strength has a major impact on performance, but most people don't believe their company has a strong identity. Now, there's a gap to be reckoned with! The implications get worse. What we found was that for all the innovative workplace activities companies use to boost engagement -- better relations with one's boss, more recognition, more work-life balance -- none of them can make up for low identity strength. What's a smart executive to do?

That question brings me back to brand. If there's one management portal companies have for building identity strength, it's their brand. Not brand as a measure of consumer attitudes, but brand as the vessel that links the company's identity to how it goes to market, starting with how employees contribute to building brand success. Call it branding from the inside-out, rather than outside-in.

Our research offered many insights into the power of identity as a performance lever that executives can actually control. One of the most useful analyses in this regard was determining where identity strength comes from. What we learned is that it comes from eight building blocks, which constitute the primary "muscles" that account for identity strength and resultant business performance.

These building blocks of identity include: autonomy, differentiation, change, stewardship, purpose, alignment, brand and sustainability. While brand is ultimately only one of eight factors, it is still the best place to start when seeking to build identity strength. That's because brand reflects, and affects, all parts of the business, simultaneously. (Just ask Starbucks, Toyota, IBM or Disney.)

One of our aims in conducting the survey was to develop a yardstick to measure identity strength, and its performance ramifications, in one number. Thus, was born "IdentityIQ." Derived from the dynamics of human IQ testing, this simple yardstick gives executives a quick, clear read on performance that can be linked to strength or weakness on several key leadership measures including:

• Current financial performance

• Strategy deployment

• Innovation

• Brand

• Culture

• Investment value

What we've learned about identity strength through our research can reshape how companies approach their branding challenges. And it can give business leaders a new way to address employee engagement and business performance.

Someone once asked me who my heroes are, professionally speaking. After a bit of thought and naming my usual suspects -- Peter Drucker, Abraham Maslow, Jim Collins -- I came up with one more; maybe the oldest brand consultant in history, Socrates, who famously said, "Know thyself." He was right. That's where success begins.

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