Before Blackwater Had Xe, PM Had NewCo

After years of bad press over no-bid contracts and massacres of Iraqi civilians, the private military contractor Blackwater Worldwide has changed its name to the cryptic "Xe" (pronounced "Zee"). In an eerily similar move, disgraced sub-prime mortgage lender Countrywide announced that its new name is the smooth-sounding "Bank of America Home Loans." Rounding out the triumvirate of chameleons, Baghdad's Abu Ghraib Prison, made infamous worldwide for the torture and abuses perpetrated inside its walls by both Saddam Hussein and the U.S. government, is changing its name to "Baghdad Central Prison."

As with so many slick public relations tactics, the tobacco industry paved the way. In 2003, tobacco giant Philip Morris (PM) officially changed its name to "Altria Group," a nondescript moniker devoid of negative connotations. PM's name change came after BusinessWeek published a devastating article in November 1999 titled, "Philip Morris: Inside America's Most Reviled Company."

Corporations typically give nebulous reasons for changing their names; the change will help the company "better define" what it does, or "clarify" a shift in services. As a Blackwater / Xe spokesperson claimed, "We've taken the company to a place where it is no longer accurately described as Blackwater."

But, in the corporate world, where your brand is everything, re-naming an established brand is a desperate, last-ditch move. Far from a renewal or rebirth, it's more like a politician who, when embroiled in scandal, quits to spend more time with his family.

What's in a name change? Everything, and more

One particular Philip Morris document provides insight into the name-change strategy, better known in the PR world as "repositioning" or "re-branding."

PM first came up with the idea of changing its name in the early 1990s. An untitled December 1993 PM report describes a high-level meeting held that month at a conference resort in Leesburg, Virginia, to address PM's sagging credibility and an accompanying slump in employee morale. Top PM executives, senior representatives of PM's corporate headquarters and PM's longtime public relations firm Burson-Marsteller all attended, to discuss "the proposed repositioning of Philip Morris Co." According to the meeting report, they felt that PM needed to change the perception of itself as "just" a tobacco company. One proposal for how to do this was to change the company's name. While a drastic step, PM accepted it as their only real option, and proceeded to debate how to kick off a new image for the company soon-to-be-formerly-known-as-Philip-Morris (referred to in the report as "NewCo").

Manipulating employees and the public

Through its name change, PM sought to influence the behavior of its current, past and future employees. They wanted employees to start "engaging in good word-of-mouth about the company, selling us both inside and outside the organization, actively investing in the organization." PM also wanted to increase its appeal to college graduates looking for employment. PM management did not want employees to see themselves as "belonging to a tobacco company." Instead, they wanted employees to see themselves as part of a larger company "whose best days are ahead of it."

With retirees, PM wanted them not only to maintain their investments in the company, but also to suggest the company to others as a solid investment. PM wanted institutional investors to "no longer [see] us as a tobacco company," but "as a company with a bright future and relatively low risk."

PM's other goals included boosting its sagging credibility among policymakers, universities and medical centers, which at the time were reluctant to associate with the tobacco giant. PM was sure that "key universities and medical foundations" could be persuaded "to invest in NewCo." Attendees of the PM strategy meeting predicted that, three to five years after the repositioning, PM would be "able to secure endorsements from organizations who do not endorse us today."

One critical barrier is that, after the repositioning, "NewCo will be instantaneously perceived as 'a tobacco company' -- No gain, Lots of pain!" Other concerns listed include that the repositioning "could make the company look desperate," and that the "repositioning could hurt food [units] as it is formally linked to tobacco under NewCo."

Despite its name change, PM is now more "tobacco" than ever before, having spun off its giant food subsidiary, Kraft, and acquired U.S. cigar maker John Middleton, Inc. in 2007, and smokeless tobacco company U.S. Tobacco in 2009. But to the extent that the name "Altria" doesn't have a connotation to most people, it doesn't have much of a public face, either. In this context, the name change seems to have served PM well.

Reinforcing executive egos

Indicative of the attitudes and egos of Philip Morris executives is a brainstorming session described near the end of the document. Under the heading "Ideas for Launching NewCo," are the following bizarre and at-times grandiose proposals:

• Buy out the Superbowl
• Involve Howard Stern
• Build empty stadium...Fill stadium with Jell-O
• Own the Olympics
• Involve Rush Limbaugh
• Sponsor rave parties

Last but not least, there's the idea of PM "starting an international homeless program."

Don't forget the Web!

As PM drew closer to actually changing its name, the company code-named the effort "Project Capricorn." (We weren't able to find out why they selected that particular name.) One of their first moves was to purchase a long list of Internet domain names that were in some way related to "Altria." A somewhat humorous two-page document titled "Capricorn Domain Names" lists all the addresses that PM scooped up in advance of the name change. They include various misspelled versions of "Altria" and a long list of derogatory domain names critics might try to register, like Altriakills.com, Altriasucks.com, and Altriastinks.com, along with the .net and .org versions of each.

It's all in the perception

These documents make clear that Philip Morris' name change was a risky bid to escape its long-standing negative identification with cigarettes, cancer and death. News coverage of the recent Blackwater, Countrywide and Abu Ghraib re-branding attempts generally acknowledged their desire to escape unsavory pasts, as well.

What's less obvious -- but spelled out in PM's papers -- is that name changes also affect a company's ability to recruit and retain talented employees, boost investor confidence and employee morale, and influence policymakers. PM also clearly sought to stymie "pressure groups" that, after the company's repositioning, would be instructed to "address themselves to our business units -- not NewCo."

Will Blackwater and Countrywide also use their new names to try to avoid accountability and obscure their past deeds? Only if we let them. A good model for rejecting such repositioning is the human rights activists who -- after the notorious U.S. military's School of the Americas training center changed its name to the "Western Hemisphere Institute for Security Cooperation" -- concluded, "new name, same shame." After all, no major institution changes its name when things are going great, if you "Xe" what I mean.