The development of one’s own Corporate Identity helps to stay true to oneself. This way, even in times of change, one does not forget who they are, where they come from, and who they want to be in the future. This article illustrates the importance of a company-wide identity and explains who benefits from it and how it differs from brand identity.
How Corporate Identity Gives a Company Its Identity
Corporate Identity (CI) is nothing less than the identity or personality of an organization. It includes all the characteristics that make a corporate entity what it is—or at least what it aspires to be. It reflects its self-image and self-understanding and what makes it unique compared to others. In doing so, clear values are created with which employees and customers can also identify. In contrast, Corporate Image defines the external perception, i.e., the outward image of an organization.
The Importance of Corporate Identity for Companies
Imagine the following scenario: You discover an unknown brand on a supermarket shelf. What initially deters you fades away after a quick look, because a popular umbrella brand stands behind the product. Even though the product brand itself has not been tried yet, this makes a purchase decision more likely. The reason for this is that you might have already heard of the company behind it and know what it stands for. The expected quality, whether it’s sustainably produced or meets certain safety standards—these factors are all part of the Corporate Image. This is formed from the characteristics perceived by the target group about a company. Influencing the image in terms of one’s self-understanding is the task of Corporate Identity. This is not always easy, but it brings decisive advantages for sales, recruiting, and many other areas.
So, as you can see, CI is a complex topic made up of many smaller areas. Partial or product brands can have their own brand identity or directly align with the parent company. Corporate Identity, therefore, is the final instance and can be understood as the overall identity of a company and its employees. Because whether in luxury or budget product manufacturing, it’s still the same employees working with the same values and identity behind it. The end consumer usually doesn’t notice this because they generally don’t come into direct contact with them.
Not only large international corporations, but also small and medium-sized companies benefit from a well-established CI. It helps build long-term loyalty. It’s well known that acquiring new customers and employees costs significantly more than retaining existing ones. Thus, a financial advantage can be generated that organizations of all sizes can benefit from. For smaller companies, it’s even more possible to truly live by their values. For SMEs, these values are more than just a construct developed by the board on another continent and imposed on the company. That’s why these values can be better preserved, as they are less exposed to global changes.
Corporate Identity and Its Core Elements
This superficial definition of CI is good for an introduction but hardly sufficient to clearly illustrate such a multifaceted topic. Therefore, it’s useful to break CI down into at least three key elements that sometimes flow into one another. It consists of Corporate Design, Corporate Culture, and Corporate Communication. These form the pillars or foundation upon which a uniform Corporate Identity is built.
Corporate Design is the Foundation of Corporate Identity
Corporate Design (CD) is seen by many as the most important element, as it enables the audiovisual perception of a company. It dictates which colors should be used and which logo must be applied. This must, like a guide, run through every area of a company. This includes, for example, work clothes, commercials, websites, business cards, and even the office wall color. Certain sound sequences or advertising jingles are also determined by it. Likewise, the music played in the phone hold or the sound a car door makes when closed is specified.
CD is so important because, without a physically perceivable form, there can be no entrepreneurial identity. It thus fulfills the identity-creating foundation of all core elements. How can a CI come to life if there are no recognizable visual or audiovisual features with which one can even identify? Imagine entering a business with only white walls, and all employees wearing their colorful, private clothes. There are also no individual word or image marks in sight. The recognition of a company brand would be practically impossible without noticeable characteristics. So, all the thoughts and values that were painstakingly developed during CI creation would be in vain. Without recognition value, the characteristics of a brand simply cannot be associated with it. Therefore, it can be concluded that Corporate Design is what truly brings a company’s identity to life for its stakeholders.
Corporate Culture is the Soul of an Organization
Especially in the advancing 21st century, the next element, Corporate Culture, is becoming increasingly important. Not only consumers in the buying market but also (potential) employees are paying more attention to the moral direction of a company. Corporate Soul (CS) is also subsumed under this. The culture sets clear guidelines for how a company positions and behaves towards various stakeholders or the public. This includes, among other things, fair compensation, responsible production conditions, or striving to achieve the lowest possible CO2 emissions.
Conveying Own Values with Corporate Communication
The third core element is Corporate Communication (CC), i.e., a company’s communication concept. Whenever something is communicated internally or externally, either in writing or verbally, it follows the clear guidelines of CC. This especially includes press releases and advertising, but also how the closing phrase in an email should be phrased. It is also useful to include two other elements under CC. Corporate Behavior (CB) ranges from setting the dress code for employees to behavior towards different stakeholders and even leadership. The proven concept “The tone sets the music” applies here. Are employees and partners supported or loudly reprimanded for misbehavior? All of this constitutes CB as part of CC.
Finally, Corporate Philosophy (CP) provides information on what values the company’s founders or first employees had in mind when the company was established. Sometimes you find global, highly capitalist corporations with surprisingly good minimum wages or favorable working hours protection regulations worldwide.
Once certain values are clearly defined and specified, they allow for a comparison between the company’s values (especially those of the founders) and real practice, showing how they are lived. For example, deviations from CI can be quickly recognized and sanctioned before significant reputational damage occurs. Modern consumers are increasingly searching for market options that consider specific moral principles and have a clear vision for the future. As a result, CI has long been no longer just an internal issue but is reflected in noticeable revenue increases for certain products. The BIO movement in Germany clearly shows that consumers are willing to pay double or more if their desire for ethical treatment is reflected in the company culture.
As you can see, CI consists of many individual elements that together give a company its identity. This must or even should be constantly reviewed and adjusted, but it must not lose its intellectual roots.
Brand Identity vs. Corporate Identity
It becomes particularly interesting when distinguishing between corporate identity and brand identity (Brand Identity/BI). As their name suggests, these models represent two sides of the same coin and are often mistakenly used as synonyms in practice. It’s a bit like the relationship between fingers and thumbs. Every thumb is a finger, but not every finger is a thumb. Simply put, an organization can have many brands (fingers), and each of these brands can subsequently have its own identity. However, a company can only have one overall organizational identity (thumb), which is significantly influenced by its various brands and their identities.
What exactly constitutes the individual brand identities is essentially based on the same core elements described above. Although here, Corporate Design becomes Brand Design and Corporate Communication becomes Brand Communication, the principle remains the same. Organizations with only a single product brand (single-brand) make no distinction and identify directly with this brand as the entire company. Brand Identity can thus truly be understood as Corporate Identity. This saves time and money in communication and marketing, and the brand also benefits from the (hopefully) good reputation of the “parent.” However, organizations with just one “brand” can also pursue a strict separation of their customer-facing brand and their CI in order to present themselves in a “different light” to investors, applicants, or suppliers.
Building a brand with its own identity and outsourcing it from the company can have various reasons and benefits. A good example of this is the car brand Lexus. It belongs to the Japanese automaker Toyota, but this is most likely not immediately apparent. The reason is that Lexus is a clear luxury product and thus targets a different audience. With Toyota, attributes like “reliable,” “affordable,” and “durable” are generally associated. This is fine, but in the luxury market, there are different preferences. The focus here is more on exclusivity, uniqueness, and customization.
So, the company outsourced its luxury car segment as the new Lexus brand to offer it in the American market. Thanks to this “restart,” Lexus quickly became a popular luxury product. The clear separation of the brand and corporate identity enabled this success, although the same or at least similar technologies are likely used in the cars. The separation of the brand from the company doesn’t always have to be radical. Otherwise, Toyota would surely have come up with a less obvious name than “Luxury Exports to the United States.”
Creating Your Own Corporate Identity in a Few Steps
To develop a strong Corporate Identity, you should first reflect on your origins. Why was the company founded, and what development was planned? What vision is being pursued? These considerations form a good foundation for CI development.
Next, the status quo needs to be analyzed. This means looking at what customers, employees, and other stakeholders currently think about your organization. What values are associated with the company, and why? What first impression does the advertising or information material convey? Direct feedback from all stakeholders is an important factor in gaining awareness of your situation. This allows you to realistically answer the crucial question of what makes your company unique and valuable.
The look inward is followed by the look outward. Even though CI should be developed individually and only for your organization, it doesn’t hurt to take a look at competitors in the market. First insights can quickly be gained about what might work in your company and what might not. Developing everything from scratch is commendable but also very costly. Learning from the competition’s mistakes saves a lot of money. The art here is to be different, but not too different. Taking an innovative and modern approach is a good way to appear unique. However, one shouldn’t stray too far from the established values in the industry. Otherwise, stakeholders may be turned off as they might seek “fresh air” but not experiments.
Finally, the look ahead: the vision for the future. CI development must always also consider the future, as otherwise, it will be outdated at the time of creation. You must think about where the company wants to be in the next two to five years. Is an expansion strategy with new products in global markets planned, or will the company remain a regional specialist in the local environment?
This also determines which employees the organization wants to attract in the future and in what structures they should work. A clearly defined vision is also a good control mechanism to check whether the path being taken is being adhered to or whether it has deviated. This need not necessarily be a bad thing. However, you must be aware of this fact and, if necessary, formulate a new vision for the future. Otherwise, you will quickly confuse stakeholders and fail to convey consistency.
Together to a Successful CI with Branding Agencies
Thus, Corporate Identity is nothing less than the defined soul and culture of every company. It ensures that many colleagues working side by side become one unit. It takes into account the roots, the current reception in the market, and the future vision of an organization. CI development is a lengthy process that is crucial for entrepreneurial success.
To avoid mistakes in thinking and gain an objective view of your organization, it is worth consulting external service providers in the development process. Branding agencies support you in creating a concept that works long-term, without the danger of operational blindness or idealized self-perception. It is pointless to establish a CI if it is not implemented. Culture must always be lived. It starts with every single employee and runs like a red thread through every area of the company. This helps signal continuity, consistency, and security to your stakeholders. Those who manage to unite such attributes under their company name will continue to have a good standing in competition in the future.