As behemoths are built, so do they separate. Corporate spinoffs are often in the news these days. From Bayer, to HP Enterprise, to DowDupont, many major conglomerates are spinning off divisions in hopes that narrowed focuses will result in easier management—and thus, higher profits. Siemens AG is one of the most prolific dismantlers, carving out multiple businesses, including health care and appliances, since 2013. Its most recent announcements: it is weighing its options about carving out its gas and power businesses. However, while investors welcomed the announcement, others worry that in the wake of spinoffs and mergers, “exactly what defines the company remains opaque.”
While the gas and power spinoff seems like a home run for investors, the implications from a brand perspective are less clear. Restructuring of any kind is never easy. In the Siemens case, the creation of a new publicly traded entity is a huge change, one that may generate more questions than answers. This is especially true for employees and clients who will want to immediately understand what this restructuring means for them.
From a corporate perspective, the focus will initially be on who gets to keep what. Assets are broken up in what is too often a chaotic and emotional process. When the dust settles, issues arise that are not so easy to solve. In the past, as part of a larger entity, the new company’s identity largely came from the corporate brand. Now, the new entity must figure out what part of the past to move forward with, how to make up for what is left behind and what should be completely new.
As publicly traded companies, they will face intense scrutiny from the beginning – not only from clients and employees, but from investors and the media as well. That’s a lot to handle all at once. Without a clear and consistently communicated vision and value proposition – in other words, without a brand – it will be hard to rally these stakeholders.
And therein lies the true challenge, and opportunity, of any corporate break-up: same business, same people, different story. The change in business strategy that comes with any major restructuring is really just the first step. When business strategy changes, so too must the brand. Only when the two are aligned can a company realize its true growth potential.
For more about how brand can help ensure the success of a corporate spin-off, contact us.
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