In a survey of 720 executives by Strategy&, companies that were seen as having a stronger identity outperformed those that didn’t by 25%. So what constitutes a compelling identity? And how do you go about building one?

Zurich is the largest city in Switzerland. As well as being a leading financial hub, it also has some of the world’s highest standards of living.  But twenty years ago, Zurich had a major problem. The onslaught of illegal drugs was seriously blighting the city’s image.

Hundreds of addicts were living without shelter in an area dubbed “Needle Park”. Thousands more flooded the vicinity daily to get their fix. The police were doing all they could, but the dealers were starting to fight back. Combatting the problem by treating users as criminals wasn’t working. Something had to be done.

In a radical move, the city decided to medicalise the use of heroin. Instead of trying to cull its use, they actually prescribed it. But it wasn’t handed out freely. Users were forced to get their high in an incredibly rigid environment, and drugs were never allowed to leave the premises. Getting a fix became more about routine, than reckless abandonment.

Gradually, crime associated with the drug began to fall. The attractiveness for young people faded. The glamour and rebellion was replaced by illness and controlled medication.  People started to call heroin the “loser drug”.

Within ten years, Zurich saw an 82% drop in new users.

Zurich wanted to clean up its parks, but in doing so unintentionally changed the perception of heroin. People who took it were labelled losers. And nobody wants to be loser; the association is what drove down adoption.

Have you ever consciously considered what being associated with your organisation means? Or what buying your products signifies to others?

Designer dog leads

When Angela Ahrendts became Burberry’s CEO in 2006, she faced an immediate challenge. The 156 year-old luxury brand, famous for its gabardine trench coats and its trademark check pattern was in a spot of bother.

Licensing deals had been a lucrative money spinner, but they were doing little to solidify the label’s luxury image. Burberry had 23 licensees around the world, each of whom was doing something entirely different. The company’s camel-coloured check had become ubiquitous and was found on everything from purses and umbrellas, to dog leads and kilts.

Burberry was no longer exclusive, it was accessible. It had become associated with thugs and football hooligans. Nightclubs were turning away customers who sported Burberry baseball caps. Even the high-end department store Selfridges was refusing to stock it.

Through accessibility and association, Burberry had gone from being an elite luxury brand, to the uniform of the “chav”.

“Companies rarely fail simply because they don’t understand the market, but many struggle because they don’t understand and leverage what is great about themselves.” – Paul Leinwand, partner, Strategy&.

Ahrendts recognised the importance of re-establishing who Burberry was, and who Burberry was for. She embarked on a dramatic overhaul, spending millions buying back all the licenses, appointing Christopher Bailey as Global Design Director, and getting ruthless at vendors who sold knock-off Burberry goods at discount prices.

In 2011, just five years after Ahrendts took the helm, Burberry was named the fastest growing luxury brand on the interbrand index. A year later, the company reached $3bn in sales. And by 2013, its share price had risen by 461%.

Give the gift of identity

The accessibility of Burberry made the brand popular with an audience that wasn’t symbolic of who Burberry was. Those who wanted to express an image of violence and hooliganism donned the checked baseball cap. The cap became a cue to help the wearer signify who they were to others. It strengthened their own identity.

Identity cues such as this can often shape others’ evaluation of a person, sometimes even before they begin a conversation. For example, the make of car they drive, the handbag they carry, or the phone they use. Category-leaders have long understood that the identity a product provides, is a far greater motivator than its functional benefit alone.

For example, Nike gives users the identity of an athlete. Harley Davidson gives users the identity of a rebel. Moleskine gives users the identity of an artist. Does your identity just tell customers what you do, or does it help them communicate who they are?

Identity as a strategic asset

What’s the first word that comes to mind when you think of Volvo?

The Swedish car maker spent decades refusing to imbue its cars with curvy lines and sleek looks, and instead stayed firmly rooted to what it believed in; protecting passengers from the hazards of the road. Did you know that Volvo actually invented the three-point seatbelt that we clunk-click on every trip?

Volvo didn’t manufacture an identity to sell a product. Its identity was the inspiration for its products. Each new product simply reinforced it. The product became an expression of the organisation, and an expression of the person that bought it.

Sadly, after Ford acquired the company in 2000 things started to go awry. Safety was put on the back-burner, and replaced by design and efficiency. Overtime, the identity that made Volvo so unique became diluted beyond recognition. Ford failed to protect and capitalise on what made Volvo special. Sales plummeted, and Volvo’s marketshare collapsed. Ford was forced to sell the brand in 2010, at an eye-watering 72% loss.

The good news is that it appears Volvo’s new owner, Chinese carmaker Geely has recognised the strategic importance of Volvo’s identity.

It’s set-aside an $11 billion war-chest for new vehicles, and is working on innovations such as active cruise control that accelerates and brakes automatically in traffic. Even more impressively, its announced a goal of a zero-death safety record in new Volvo cars by 2020.

Strengthening your identity

Do you have a clear understanding of who your organisation is? The answer could mean the difference between growing marketshare, or losing it.

What all of these stories reveal, is a set of traits for turning identity into a competitive advantage. How many are you already using today? Which ones do you need to develop?

  • You must clearly know who you are, who you’re for, and what you represent
  • Identity isn’t an isolated tactic to sell products, it’s used to define them
  • You must stand for something authentic, unique and consistent over time
  • Your identity should be a philosophy that informs your overall business strategy

We’re living in a world that’s making people dizzy with choice. The huge variety in every category is overwhelming. Today’s consumer has neither the time, nor the patience to weigh up the myriad of functional benefits between one brand and another.

The product that will cut through the noise, is the one that says the most about who someone is. In today’s world, identity is a shortcut.