You Name It
Nike used to be known as
Blue Ribbon Sports. What's now Sara Lee used to be Consolidated Foods. And
Exxon was once Standard Oil Company of New Jersey. These were name changes that
worked. But for all the ones that do, there are 10 or 20 that don't. Each year,
hundreds of U.S. corporations change their names. In a corporate culture driven
by the mystique of brands, and in a country obsessed by the possibility of
self-invention, that comes as no surprise. What does surprise is just how
irrational are the hopes and how feeble the performance of corporations that
decide a new name is all that stands between them and fiscal nirvana.
Most
corporate name changes are the result of mergers and acquisitions. But these
tend to be unimaginative. Corporations have tended either to smoosh names
together--thus Lockheed and Martin Marietta became Lockheed Martin, McDonnell
and Douglas Aircraft became McDonnell Douglas, Northrop and Grumman became ...
well, you get the idea. The result is straightforward, if not always
felicitous, monikers. Or the smaller company simply adopts the bigger company's
name. For instance, all indications are that the Boeing-McDonnell Douglas
merger will produce a new company called Boeing.
One notable exception was the 1986 merger of Sperry and
Burroughs, which created a new company called Unisys. At the time, the name was
much mocked, violating as it did the precept that you don't choose words ending
in the sound "iss " because people associate it with disease. But
although the company has gone to the dogs, its name now looks stylish in a
retro way. At least that's what I imagine Unisys' executives saying to
themselves when they seek comfort in the face of the company's falling profit
margins.
The real
debacles in the field of corporate name changes have been utterly self-imposed,
not forced by a merger or other change of circumstance. They are the corporate
equivalents of middle-aged men buying Corvettes. Almost without exception, when
corporations have tried to reinvent themselves as more sophisticated and
complex entities, they have chosen names distinguished only by their
obliqueness and lack of intuitive appeal. The desire for reinvention seems to
arise most often when companies hear the siren call of synergy and start to
expand beyond their core businesses. And they seem to be guided by one
fundamental rule: What you call yourself should have nothing to do with any
product you make.
The most unforgettable example of this rule was United
Airlines' baffling adoption of the name Allegis in 1987, just after CEO Richard
Ferris had spent $2.3 billion acquiring Hertz and Hilton. Ferris wanted Allegis
to become a world travel powerhouse, but within a year he was gone--cushioned,
to be sure, by a $3 million golden parachute--and United became United again.
It's tempting to say that only in retrospect does Allegis seem like such a
stupid name, but the truth is that it seemed like a stupid choice even then.
Hell, to begin with, it violated the "iss " rule. When a Chicago
Tribune reporter randomly surveyed shoppers at a mall soon after the name
was chosen, one said, "Isn't that a new disease?" while another insisted, "I'm
sure I've seen that name on my medicine." More strikingly, a 1988 study of
consumers showed that Allegis ranked in the bottom 5 percent of corporate
"identities" both in terms of name recognition and in terms of the esteem
accorded to the name by people who recognized it. United Airlines, on the other
hand--the old name the company threw in the trash--was in the top 15 percent in
awareness and the top 10 percent in esteem. It isn't easy to be that wrong, but
Ferris managed it.
And he did it with fanfare. What's most amusing about
corporate name changes is the dubious reasoning and overwrought rhetoric that
inevitably accompany them. The United--excuse me, Allegis--spokesman explained
at the time, "We are a travel company, not just a transportation company. The
name change clearly identifies us as the only corporation that can offer
travelers door-to-door service." Of course. Allegis = door-to-door travel
service. How could we have been so blind? Even better was the explanation
offered by Lippincott and Margulies, the "identity-management firm" that came
up with the name. It said that Allegis "conveys the central corporate mission
of service and guardianship ... through its relation to the word allegiant,
meaning loyal or faithful, and aegis, meaning protection and sponsorship." That
might be more convincing had the word "allegiant" ever, in the history of the
English language, been used in a sentence.
Maybe even
funnier is when executives celebrate the empty-signifier status of their
companies' new names. Sounding like a student of Ferdinand Saussure, the French
semiotician, retired chairman David Lennox said of Navistar, the name chosen
for the former International Harvester, "One of the pluses of Navistar is you
can make it mean whatever your imagination wants it to mean." When Waste
Management Inc. changed its name to WMX Technologies, CEO Dean Buntrock
insisted that adopting the non-descriptive name meant the company was "growing
up [and] raising our profile." One can only speculate how executives of a
company called Combined Insurance explained to themselves their decision to
adopt the name Aon.
Coming up with a name like Navistar is
certainly creative, and trashing a valuable label like International Harvester
is certainly destructive, but the process hardly adds up to Joseph Schumpeter's
famous definition of capitalism as a process of "creative destruction." And
it's not cheap. United spent more than $8 million in the move to Allegis and
back. When Swift and Co. became Esmark in 1974--the company finally decided to
get out from under the cloud of bad publicity created by Upton Sinclair's
exposé The Jungle , published in 1906--it cost more than $2 million.
Changing Esso (Jersey Standard) to Exxon cost an incredible $100 million.
Nissan spent $30 million on its three-year campaign to ditch Datsun.
The fact that bad names do
seem to hurt companies is, to be sure, evidence of a sort that names matter. A
rose by the name of Allegis would almost certainly not smell as sweet.
But it's clear that corporations are as faddish in their choice of names as
parents are. Just as waves of Ashleys and Brittanys are succeeded by hordes of
Maxes and Sadies, so the postmodern bricolage names of the '70s and '80s have
been replaced by the retro labels of the '90s. WMX Technologies is Waste
Management Inc. again. IC Industries, which makes Whitman's Chocolates, is now
called Whitman's. United Brands now bears the name of its best product,
Chiquita. And Microsoft, I hear, is changing its name to Slate Inc.
