In a new book, Identity Economics, released in February, Nobel Prize economist George Akerlof and Rachel Kranton describe how identity helps explain why people, facing the same economic circumstances, make different choices. In their view, an organization works well when people personally identify with it. Jim Heskett dedicates his March HBS Working Knowledge column to the topic, wondering to what degree identity affects economic performance and whether US corporations are not going through an “identity crisis”. A recent research survey led by the Identity Circle measures the impact of organizational identity strength and the awareness thereof on employee engagement and performance, and establishes identity as a key performance driver over any other engagement boosting activity. Paradoxically, the study suggests, most employees are hardly aware of their company’s identity strength. This leaves quite a lot of room for improvement.
Identity has long been a central element of branding and its definition, the specialty of branding agencies, in particular B2B. Because of the frequent disconnect of marcom with strategy and HR in decision making or resource allocation, traditional branding approaches, although capturing a whole wealth of collective knowledge and insight on identity and potential, have concentrated their focus on serving the external dimension of the Brand -the formulation and communication of the promise to the outside audience- but overlooked how this insight could be leveraged towards internal dimensions -such as strategy and people engagement. In worst case scenarios, strategy, brand and HR are developed independently along three separate processes that hinge on different premises and therefore generate mixed priorities and messages, widening the gaps between strategy and execution, perception and reality, promise and delivery, effective marketing and positive outcomes.
Identity is the substance of what characterizes an organization, the set of unique capabilities and characteristics that brought it where it is and that enables it to create value and formulate a promise. It contains the seeds of what will take an organization to the next level. Larry Ackerman from Identity Circles provides a good definition here.
It constitutes a good platform from which Strategy, Brand and HR can be developed in concert.
In two other posts I elaborate on why Strategy formulation should start with identity and why the Brand has a role to play in aligning strategy and execution.