Why did Brinks change its name to Broadview Security? What induced Bell Atlantic to become Verizon? Why did International Harvester morph into Navistar? Why did Florida Power & Light evolve into NextEra Energy? Administaff changed its name to Insperity. Why?
Sometimes the reasons companies change their names are clear-cut and inevitable — discontinuous events such as a merger or a spinoff. There are other times when the reasons for rebranding are much less clear, and the need for evolutionary realignment results in lengthy, strategic deliberation and research into whether a company should change its name.
Spinoffs and Mergers Create a Need for Name Changing
Discontinuous change is created by an abrupt, sometimes unforeseen event that is transformational in its impact on the business. When a company spins off a business unit to form a new, independent business it’s required to find a new company name. For example, AT&T renamed its Bells Labs unit Lucent Technologies. Likewise, Guidant came out of Eli Lilly and Company, Agilent Technologies grew out of Hewlett-Packard, and Cenovus Energy was spun out of Encana Corporation.
Mergers and acquisitions present another occasion for corporate rebranding. There are often high-level corporate politics at play, especially in so-called “mergers of equals.” Neither company wishes to be seen as “taken over,” which is why we get concatenated names, such as ConocoPhillips, ExxonMobil, Newell Rubbermaid, and PriceWaterhouseCoopers.
Finally, there is one reason for name change that every company wants to avoid — “flight” from a negative event. ValuJet changed its name to AirTran after the 1997 Everglades crash. WorldCom changed its name to MCI, a company it had acquired after CEO Bernie Ebbers was jailed for fraud, and Blackwater, the security firm, changed to name to Xe after events in Iraq, and has since changed its name again to Academi by new owners.
Such discontinuous events often leave a company with no option but to change their name. There are other, less dramatic, occasions when the question of changing the corporate name quietly insinuates itself on to the strategic agenda and demands to be addressed.
Evolutionary Realignment Can Require Rebranding
All successful companies evolve. They grow and acquire other companies, expand into new markets, cater to new market segments, and add new products and new categories. They shift their focus according to changing customer needs, competitive pressures, or opportunities created by new technologies. In doing so, they eventually reach a tipping point when the future of the business looks significantly different than the past. This is usually the point at which the appropriateness of the corporate brand and name is examined. If the company name is associated with a declining product category, a low-value customer segment, a limited geographic location or an outdated technology, the name of the company may need to change.
Such was the case with International Harvester. It changed its name to the broader-based Navistar as heavy commercial vehicles — a booming growth market at the time — overtook harvesters as the primary focus of the company. In the wake of deregulation, many of the nation’s energy companies have grown far beyond their regulated utility roots and now compete successfully in competitive energy markets. San Diego Gas & Electric has reinvented itself as Sempra Energy, Florida Power & Light has became NextEra Energy, and PECO — the Philadelphia-based utility — has evolved into energy giant Exelon.
If your company is going through a merger or thinks it may be time to consider rebranding or a new name, give RiechesBaird a call — we’re here to help.
To learn more about the author of this blog post, please visit the Alan Brew page at RiechesBaird.