Within a twelve-month stretch spanning parts of 2024 and 2025, five iconic American companies replaced their CEOs: Nike, Starbucks, Boeing, Intel, and Target. The business press noticed something beyond the usual turnaround narratives. Headlines spoke of companies that had “lost their magic,” “lost their sparkle,” or “lost their way.”
Those headlines caught the attention of Jon Iwata, former IBM Senior Vice President and now Executive Fellow at Yale School of Management. In a new research paper, “When Companies Forget Who They Are: The Work of Refounding,” Iwata argues that something more profound than strategic missteps explains these struggles. These companies, he proposes, have experienced “an erosion of distinctive character.” As a result of that decay, they have forgotten who they are. His research suggests such companies don’t need transformation. Instead, what they need is to remember who they are.
Drawing on nearly 200 in-depth CEO interviews conducted since 2020 by Yale’s Program on Stakeholder Innovation and Management, Iwata makes a compelling case that the conventional turnaround playbook (restructuring, portfolio reshaping, process redesign) is inadequate when a company has lost connection to its core identity. What’s needed in such cases is what he calls “refounding.”
Iwata has offered us a thought-provoking framework. It’s also one that raises important questions worth considering alongside its insights.
The Insidious Nature of Drift
The paper introduces a concept that should concern every board member and executive: institutional drift. This is the accumulation of individually rational decisions that collectively pull an organization away from its foundational identity. Ironically, success often accelerates drift. This is so, for example, because expansion introduces competing priorities and acquisitions inject new cultural DNA. Or leaders remain focused on measurable financial outcomes while missing the degradation of intangibles such as customer experience and brand authenticity.
Boeing’s trajectory illustrates this pattern starkly. Its 1997 merger with McDonnell Douglas brought executives who prioritized financial optimization over the company’s historic commitment to technical rigor. Starbucks drifted as growth and pandemic adaptations overshadowed its founding vision of creating a “third place” between home and work. Automated machines replaced manual brewing methods that once enabled barista-customer interaction, and store designs began prioritizing mobile pickup over comfortable gathering spaces. Each decision by itself made operational sense. Together, they eroded what made Starbucks distinctive.
Refounding Is Not Nostalgia
Iwata is careful to distinguish refounding from waxing nostalgic. CEOs rightly resist looking backward, since companies often falter precisely because they cling too long to past successes. The relationship with the past that refounding requires is fundamentally different. It’s about distinguishing what should endure from what must evolve. This is interpretive, almost archaeological work. Leaders must excavate foundational principles buried beneath layers of accumulated practices. When they conduct this forensic examination well, Iwata observes, they typically identify two elements: an enduring need the organization was created to address, and a distinctive capability to create value that competitors struggle to replicate.
Steve Jobs remains the most instructive example. When he returned to a near-bankrupt Apple in 1997, he didn’t simply impose a new strategy. He rediscovered the ethos he and Steve Wozniak had originally embedded (empowering human creativity through intuitive, beautifully designed technology) and reinterpreted it for a new era. Within a year, the iMac arrived, embodying both the enduring need (democratizing computing for creative people) and the distinctive capability (design that made technology inviting rather than merely functional).
Current CEO statements suggest several leaders understand this challenge. Starbucks’ Brian Niccol has announced a “Back to Starbucks” plan refocusing on “what has always set Starbucks apart, a welcoming coffeehouse where people gather.” Nike’s Elliott Hill bluntly diagnosed his company’s drift: “We lost our obsession with sport.” Target’s Michael Fiddelke has identified the company’s “unique lane in retail” as one that leads with style and design.
Questions Worth Asking
The refounding framework is meritorious, but we should approach it with clear eyes about its limitations. First, there’s a survivorship bias problem. We see the refounding stories that worked: Apple, and potentially Starbucks and Nike if current efforts succeed. We don’t hear as much about companies that tried to return to their roots and failed because the world had genuinely moved on. Kodak attempted to reclaim its imaging heritage. Sears tried various returns to its catalog-era identity as the “everything store.” It is also complicated because sometimes what looks like drift is healthy adaptation and what looks like refounding is nostalgia dressed in strategic clothing.
Second, his work assumes there’s a recoverable “true” identity buried beneath accumulated sediment, but organizations are contested spaces. Boeing’s engineers believed technical rigor was foundational; the McDonnell Douglas executives who joined through the merger believed shareholder value creation was equally legitimate. Both could claim to represent the “real” Boeing. Refounding isn’t just archaeological. It’s inherently political. The leader doing the excavating inevitably finds what serves their vision.
Third, new CEOs have strong incentives to frame their work as “refounding” rather than ordinary turnaround. It sounds more profound, more connected to organizational destiny. Boards and investors should ask whether they’re witnessing genuine identity recovery or standard strategic repositioning dressed in founding mythology.
From Articulation to Embedding
These cautions noted, Iwata’s research offers insight into what separates rhetoric from results. Purpose statements alone are insufficient; character must be embedded into operational systems.
Mars, Inc. offers an instructive model. The family-owned company has transmitted its character informally for generations. But recognizing that future family members wouldn’t necessarily work in the business, leadership undertook a multi-year effort culminating in the Mars Compass, a framework translating foundational principles into specific objectives, three-year plans, and compensation structures tied to both financial and non-financial outcomes. Similarly, after Rio Tinto’s destruction of sacred Aboriginal sites revealed the consequences of drift, the new CEO Jakob Stausholm didn’t just apologize. He established new governance processes, compensation frameworks tied to non-financial metrics, and co-management agreements, making traditional owners integral partners in operational decisions.
The Leadership Development Gap
Perhaps the most crucial implication of the Yale report goes unstated. We train leaders almost exclusively to look forward: scenario planning, strategic foresight, innovation methods, and change management. The interpretive skills refounding requires (patience with history, comfort with ambiguity about what’s essential versus contingent, the humility to value what came before) appear nowhere in most business school curricula.
If Iwata is correct that refounding moments are increasing as disruption accelerates and stakeholder expectations evolve, we may be systematically underpreparing leaders for the challenge. The typical MBA or executive program offers abundant training in transformation. It offers almost nothing on institutional stewardship, the careful work of understanding what an organization genuinely is before deciding what it should become.
When a business is struggling to find a way forward, this gap deserves attention. Because if companies keep forgetting who they are, we should start teaching leaders how to help them remember.
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