What's It Called?
In all that is going on around the world today you may not have noticed that the great Sony company has changed its name. For more than 60 years it was known as Sony Corporation. From May of this year it will be known as Sony Group. Big deal? Well, it is to Sony. They reckon that the word “Corporation” had the wrong connotation. A bit stuffy perhaps. Maybe it implied it was too big and cumbersome. They (and their advisers) believe that the word “Group” will help them “take advantage of the diversity of our portfolio and to promote the evolution of its businesses.” (Their words not mine).
Before we get too cynical about the cost of this name change and the effect it could have, let’s step back a minute and think about the way a name frames an organisation. Just as a name says something about us as human beings, it also says something about a company. It is the start of the brand that defines what it is and what it stands for. A company’s name is arguably an important framework for its success. Let’s think about how names work in generating that accomplishment.
Every company has a name. Sometimes you wonder if the only reason for the company’s existence is its name. Hairdressers love puns. We’ve all seen such as “A Cut Above The Rest”, “Shear Magic”, “Hair Apparent” and the like. In some ways these names are not too different from Volkswagen (“People’s car”) or Lego (from the Danish, leg godt, which translates to "play well"). It is difficult for hairdressers to grow into large and international companies because theirs is such a local service. However, for other businesses, a name that is short, snappy and easy to understand can be a huge bonus. Names that are succinct and easy to pronounce in different languages, are a great advantage. A name that begins with a K can be an asset. Kodak in its time helped the company grow its business in film. When you say “Kodak” it has the onomatopoeic sound of the click you hear when you press the button of the camera. The name Kellogg’s may not mean much but it is easy to say and remember. Apparently 13% of companies in the world's top 100 brands start or end with a K or have the K sound in the middle of the name. Certain letters give a name an advantage and K does just that.
Academics have examined the records of thousands of companies over the last 30 years and determined that short company names are more effective. They found that by reducing the name length by one word can achieve a 2.5% rise in the value of the company. It is interesting to note that if you don’t do this, customers will. A company that was originally known as Sky-Peer-to-Peer was reduced to Skype and eventually became its official moniker.
Psychologists reckon that companies with the names of their founders have an advantage. You can think of many. We’ve already mentioned Kellogg’s and there are plenty more – Barclays Bank, Ben and Jerry’s ice cream, Nestlé’s chocolate, and, of course, the Trump organisation. Some companies develop their name from an anagram such as Ikea (from the first letters of the founder, Ingvar Kamprad, and the village where he grew up, Elmtaryd Agunnaryd), or Adidas from the German founder’s name, Adi Dassler.
A study of over 1 million European businesses by Duke University found that the return on assets for companies named after their founders is 3% higher than the rest. It seems that a company which features the owner’s name (or a contrivance of that name) over the door is less likely to let you down. They do not want to be for ever associated with the failure of their business and will do anything to keep you happy and keep the company alive.
So, what’s in a name? Sony is a great name; “Corporation” less so. We may get so used to names that they trip off the tongue with no apparent meaning. Don’t be kidded. Lurking behind every name is a critical framework that could be seriously affecting your business.