The Power of Defining What Your Company Isn’t

Original Article

Investors and employees alike want to know what a company stands for and how it’s going to make money. Purpose statements such as BMW’s “We are number one — we inspire people on the move” give employees a sense of direction, just as an understanding of a company’s business model gives investors essential information about the company’s prospects and trajectory.

That said, there are times when having the opposite — an anti-identity or an anti-strategy — can be equally useful for communicating with customers, employees, and investors. It can be helpful in times of stress or crisis: for example, during the financial meltdown, when distrust of banks was at an all-time high, credit unions and financial cooperatives could use “we’re not a bank” to signal their trustworthiness and solidity. It can also be useful if strategy or identity are still being developed or if they need to change.  Uber’s leaders took a while to settle on a strong business model — but in the meantime, “we’re not a taxicab company” provided its own kind of definition.

We started to think about this approach while conducting an in-depth, qualitative study of a German company we’ll call Musterman. (We’ve disguised the business, but retained direct quotes from interviews.) Originally a start-up founded by two students operating out of their parents’ living room in 1985, Musterman is now a $400-million revenue business that is among the top telecommunications and electronics distributors in Germany and a leading player in the European market. As it’s grown, the company has made several pivots: The founders started by selling answering machines and designer telephones from home. After the German telecommunications industry was deregulated, they shifted to producing licensed products. As competition increased and technology improved, that business became unprofitable, and they shifted to distributing telecommunications equipment and then to distributing non-telecommunications products.

Each of those pivots required a new business model, new competencies, new customer bases, and new success metrics. But the leadership did not change: the co-founders continued to run the company through all of these changes. It’s unusual to find continuity of leadership over generations of business-model revision, so it offered a rich case to study. (A paper was published in Strategic Organization.)

In interviews with both the founders and employees about how the business had evolved, we were struck by how often the company was defined by what it wasn’t. Primarily, it wasn’t a traditional corporation.

“Right from the beginning, we knew…that we did not want to have investors. We did not want to become a conglomerate.”

This quote from one of the founders was echoed by multiple employees:

“I like that we are …not like the other big corporations” and “Peter (co-founder) does not want to turn this into a highly bureaucratic company.”

That anti-identity is also captured in the employee handbook:

“There are no financial jugglers or investors behind our company but two entrepreneurs.”

One aspect of not being a corporation, in company lore, was that customers were always treated with respect.

“Our customers are not numbers; we know their names,” said a co-founder in an interview.

Various employees echoed that point of view:

“We go the extra mile” and “we’re not looking to get the maximum out of clients…for us, it is the relationship that counts.”

Another anti-identity theme we encountered concerned the company’s relationship to technology. According to one of the co-founders:

“It was clear to us that we were not the most technologically advanced company.”

And this too was echoed by employees:

“We used technologies that already existed…we were no engineers…no technology leaders” and “we don’t have any patents.”

In Musterman’s case, the existence of an anti-identity offered two significant benefits: First, executives had more wiggle room when designing their next strategic moves. Instead of being restricted to a specific identity and strategy, the company was able to evolve from sales to production to specialised distribution and finally to general distribution.  What potentially seems absurd to us, as bystanders, was perfectly logical to Musterman executives, workers, and sectoral analysts, who could relate to the company’s evolving logic of “not wanting to be an engineer” in the first transformation and “not wanting to be an anonymous conglomerate offering only ordinary things” in the second transformation. The origin of their strategic direction thus stems not from a clear, predefined objective and mission, but from the refusal to become something that they did not want to become.

Second, this approach served as an anchor for executives, managers, and employees in the wake of drastic changes. In the course of our in-depth interviews with Musterman employees, it became clear to us that the anti-identity approach allowed them to connect to change initiatives and remain loyal to and emotionally engaged with the company:

 ”They told us that we are selling antifreeze and coffee machines now. […] It is very hard to imagine when you are coming from the telecommunications direction. However, then I started to think that this is a logical step because we are not a plain corporate distributor only looking to get the maximum out of a client. For us, it is the relationship and the maximisation of value creation that counts.”

Because the anti-identity was at the core of the organisation, employees never felt that they were losing something essential.

In other contexts, an anti-identity might be used to signal core aspects of identity to potential customers, as was the case for financial cooperatives (“we’re not a bank”) or to start-up investors, as was the case for Uber (“we’re not a taxi company”). In cases where industry boundaries are shifting, this approach may help to suppress the resistance to change that so many incumbent companies encounter and that Musterman was able to avoid. The dominant players in the locomotive industry offer one of many counterexamples: they were unable to grasp the importance of light-weight diesel engines, a technology emerging from a different field, and fought its adoption because it didn’t fit with their sense of who they were.

Musterman was fortunate to have founders who were articulate and consistent about what they did not want to be; their anti-identity was as meaningful as their positive identity.  That’s not all that unusual: many organisations already define themselves in negative terms. (The New Yorker magazine’s founder, Harold Ross, used to claim that the magazine would never be edited for “the old lady in Dubuque” – which is just a more memorable way of saying that it would be edited for sophisticates in big cities.) But we suspect that other companies could experiment with developing an anti-identity approach by analysing who they are, and what that implies about who they are not. We’d just caution against doing this if it feels forced: employees, investors, and customers are very good at sensing inauthenticity. But if you need to change – or you don’t yet know what you’re going to become – it may be a good tool to experiment with.