Expert View: A cigarette firm by any other name ...

A little more than a week ago the tobacco giant Philip Morris changed its name to Altria, supposedly to emphasise that its operations encompassed more than tobacco. Name changing is not a new thing in either business or government circles. Andersen Consulting, for example, changed its name to Accenture, GEC became Marconi, and Texas Utilities is now called TXU. Nor do government agencies shy away from name changes. Maff has been broken into two parts: the Food Standards Agency and Defra. The Department of Education is now the Department for Education and Skills. I could go on.

So why do companies and governments do it? There are several reasons, all associated with a desire to create a stronger brand or to improve a reputation. A corporation may want to demonstrate its wider international business interests (TXU, Aviva and Diageo); or focus on the value inherent in a single powerful brand identity (Visa); or move away from a name with negative associations (the Post Office to Consignia and back again). This last motive was probably behind Philip Morris's attempt to portray itself as something other than a tobacco company.

And in extreme cases, a name can completely disappear (as did Pan Am after the Lockerbie disaster; Townsend Thoresen after the sinking of the Herald of Free Enterprise; and Monsanto after its disastrous attempts to sell GM food in Europe). Indeed, the commercial implications of a company's reputation have never been greater, as Judy Larkin explains in her book Strategic Reputation Risk Management.

Reputation influences who we buy from, work for, invest in and supply to. It plays to both our rational and emotional instincts. Underpinning all of this is the extent to which we do or don't trust the organisation attached to the name. Reputation and brand equity are, therefore, valuable assets that must be actively managed in the boardroom.

Rebranding in order to regain public trust can be a successful strategy. Maff, for example, had lost the trust of the public after its bungling of the crisis caused by mad cow disease. Morale was low and the ministry became a laughing stock in media circles. But today the UK Food Standards Agency is highly trusted and heralded as a model for food regulatory agencies in Europe.

So when should an organisation rebrand and when should it leave well alone? The answer comes down to trust. A high level of trust must be earned by being competent, honest and, when necessary, humble. Among those companies that have had to regain trust is the drugs giant Johnson & Johnson, which restored its reputation in the US after cyanide was deliberately introduced into batches of its flu remedy Tylenol, with fatal effects. Likewise, the Swedish Nuclear Inspectorate and Sydkraft (now part of E.ON group) moved swiftly to reassure the public after an incident at the Barseback nuclear plant in which the cooling system's filters became blocked. These companies do not need to rebrand.

Where companies and agencies are distrusted, rebranding may be seen as the easy way out. But the public will quickly see through the facade and distrust will remain or even increase. The nuclear reprocessing plant at Sellafield is viewed with as much public displeasure as when it was called Windscale, and this will probably be the fate of the rebranded Altria, formerly Philip Morris. In most cases, organisations concerned about their negative reputation should spend more of their hard-earned funds on proactive risk communication strategies, thereby building public trust, than on yet another rebranding consultant.

Professor Ragnar Lofstedt is director of the King's Centre for Risk Management, King's College, London