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Does your company have a distinctive personality?

Oct 19, 2009 Business Daily, Strategy

“When I talk of corporate personality, I mean just that: the company, not the individual. The law created the concept of corporate personality over a century ago, distinguishing the company from the individuals who run it, own its shares, or work for it. I think corporate personality is a useful idea, as a commercial as well as legal feature of successful companies. The modern tendency to equate the actions of the firm with the ideas of the chief executive leads us to miss the important features of what makes these companies successful.”

JOHN KAY, The Hare and the Tortoise (2006)

John Kay is one of my favourite strategy teachers, whose work I have followed for nearly two decades now. The Hare and the Tortoise is a very readable collection of articles on the subject of strategy.

One of Professor Kay’s central themes has always been the distinction between corporate and individual success. He warns against equating a company’s success with the ideas of any leader, no matter how charismatic. We all fall prey to this delusion: when a company looks successful, we look for the person to whom to attribute the success.

John Kay is telling us something different: look to the personality of the company, not just of the person in charge. It is in corporate personality that the roots of success are likely to lie. But can a company really have a personality? Of course it can, and most successful ones do. Outstanding companies present a consistent set of values, behaviours and attributes to the world.

Consider Shell. This is one of the most dominant companies around, for as long as any one of us can remember; indeed, it maintained a similar degree of dominance in every decade of the 20th century. But can you name any standout CEO? Toyota turned the tables on the world’s carmakers to become the leading auto company. Look around you here in Kenya: nearly half the cars you see on the roads are Toyotas. So, can you name the leaders who have made this happen?

Coca-Cola is the world’s most consistently profitable company, for a century or more. It makes simple fizzy drinks, but has held its dominance in the face of all competition. Do a string of famous-name CEOs spring to mind? No, because it is the company’s personality that makes all the difference, not that of whoever happens to be in charge.

What makes these companies, and other like Wal-Mart, Unilever, P&G, or Goldman Sachs so enduringly successful is not their leaders – it is the set of capabilities they hold that are distinctive. Corporate personality is all about which of these capabilities is dominant. It could be the maintenance of brand power, or an architecture of unique relationships – with employees, customers, suppliers, distributors – maintained over time. It could be an internal environment that systematically throws up innovative products. Each successful company has its own capabilities that drive its success – and define its personality.

Of course, there are visionary leaders and outstanding individuals. But they rarely create long-term success. Lee Iacocca and Chrysler, anyone? Walt Disney was an entertainment genius, but his company went into a long period of stagnation after his death, and only found its ‘mojo’ again when it rediscovered the sources of its distinction. Apple has enjoyed ten years of blinding success with Steve Jobs – but must learn to live without him very soon by focusing on its corporate personality.

What about Jack Welch, the award-winning CEO of GE? Kay reminds us that Welch’s two predecessors were also the most admired leaders of their time. As he puts it: “These were remarkable men. But when a company is always run by remarkable men, what is truly remarkable is the company itself.”

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