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Why We Should Be Talking About Organizational Identity and Not Just Company Culture Organizational identity heavily influences business strategy and should directly dictate company culture.

By Jena Booher, Ph.D.

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Opinions expressed by Entrepreneur contributors are their own.

When I ask founders, "When you think about your company, who are you?" I often get answers like, "Oh, we're great. Everyone is super kind, supportive, but also wants to win," or "Our culture is awesome. We play music during All Hands meetings and encourage people to show up with their kids to in-person company events." While these answers may provide a glimpse into a company's culture, they don't really answer the question of organizational identity.

Related: 8 Ways Your Business Can (and Should) Stand for What You Believe In

Organizational identity

Defining organizational identity is about identifying who you are, what you stand for and how you differ from comparable organizations in your industry. Organizational identity primarily answers the questions of "who are we and who are we not?" It captures the company's current and desired future image, purpose, mission and vision. Organizational identity heavily influences business strategy and should directly dictate company culture.

On the other hand, company culture is a visual representation of how members interpret their organizational reality. It can include rituals, stories, language, policies, structures, systems, unwritten rules and conventions that shape behavior within an organization. Company culture can and should stem from organizational identity. It can create a sense of belonging and community among employees, but it doesn't define the company's reason for existence.

For instance, a company culture can be largely shaped by a founder's personal preferences and interests. Let's take an example of a commercial real estate software client of mine whose founders were personally passionate about being outdoors and outdoor sports. Those interests impacted office decor and the hiring of people with overlapping interests. In the early phases, this organic company culture may feel familiar, comfortable and "good." These feelings are great for the founder and early employees who typically share overlapping passions.

However, if organizational identity is not explicitly reinforced through company culture, problems can arise as the company looks to scale. In the case of this client, they had to evolve their culture to be a reflection of their mission and purpose, and it took many years and a lot of hard work to make that transformation happen.

Also, organizational identity can change over time. I once worked with a fitness brand that had an organizational identity associated with high status, exclusivity, and "being bougie." During the pandemic, the company evolved and moved more into functional fitness and physical therapy. Their best customers were folks whose quality of life significantly improved with the use of their product.

Their organizational identity shifted from being exclusive to inclusive. As a result, they had to radically shift their hiring strategy — moving away from hiring folks who were status-focused to mission-driven. This change included parting ways with early employees who helped build the company up to that point. The saving grace for this company was that they quickly recognized their identity had pivoted, and with urgency, they moved their organization accordingly.

Related: How to Develop a Company Vision and Values

How to align organizational identity and company culture

The lesson learned from both experiences is that if company culture and organizational identity are not aligned, confusion can arise for employees and customers. To bring organizational identity and company culture into greater alignment, here are three steps:

  1. Define and clarify the organization's identity. This includes defining the company's mission, purpose and values — and communicating them regularly to employees.

  2. Conduct an audit of the company culture. Identify areas where the culture undermines the organization's identity, and note areas where the culture strongly reinforces the company identity.

  3. Get clear on what needs to change, and make a plan. Commit to getting back on track, and communicate the why, how and by when.

In conclusion, we need to stop talking about company culture as if it's a stand-alone concept and start talking about identity. Start working on who you are first, and then culture should follow.

Jena Booher, Ph.D.

Entrepreneur Leadership Network® Contributor

Startup Advisor

Dr. Booher is a startup to ScaleUp expert, business psychologist, social scientist, and trusted advisor to startups across the country. Her mission is to help high-growth businesses transform their culture, build engaged teams, and chart the path for sustained success.

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