A logo serves the same purpose for a company that a flag does for a nation or other jurisdiction. It's a shorthand reminder of identity. The North American Vexillological Association states that a good flag is one that a child should be able to draw from memory. Too many design elements, or too many intricate ones, make for a forgettable or indistinctive flag. The same goes for logos. One logo change that's universally regarded as an across-the-board improvement is that of FedEx.
The old one was a product of its time (1973) and not particularly easy to read. In addition, by incorporating two distinctively English words, it seemed counter to the purpose of a company the scope of which is truly worldwide. Federal Express didn't just streamline the logo; it also cropped the extraneous syllables from its name. The result was a simple name that translates to almost any language. Fortuitously, the negative space of the new logo happens to delineate a forward-moving arrow, too.
As for the new logo's immediate impact on the bottom line, it was negligible. The stock stagnated throughout 1994 but grew steadily over the next dozen years as FedEx began buying up smaller companies and extending its global reach. The company now operates multiple subsidiaries.
Sometimes, the brilliance of a name change doesn't become evident until years later. For decades, Arthur Andersen was one of the largest concerns in accounting. After a series of mergers throughout the industry in the 1980s, Arthur Andersen stood as one of accountancy's big five firms. It was a huge oligopolistic player with tens of billions in annual revenue and a reputation for fairness and honesty.
SEE: How Companies Create A Brand
The firm's consulting business branched off under the obvious, if uninspired, name Andersen Consulting. The two entities sued each other in the late '90s, eventually reaching a settlement by which Andersen Consulting had to change its name. Futuristic-sounding words of faint Indo-European origin were in vogue at the time. On the first day of 2001, Andersen Consulting unveiled a doozy for itself: Accenture. Initially mocked and derided throughout the Anglophone world, the new name ended up saving the company.
The company's former parent was the auditor for one of the most infamous companies in American history: Enron. Arthur Andersen shredded documents on behalf of its criminal clientele. In the summer of 2002, the firm surrendered its license to practice before the Securities and Exchange Commission. The big five became the big four, and today Arthur Andersen is synonymous with crooked accounting.
SEE: The Enron Collapse: A Look Back
Meanwhile, Accenture is riding higher than high. The stock has quadrupled in value since the new company's inception, and critics have begun to appreciate that an awkward name beats a toxic one any day.
The Bottom Line
Whether it's change for change's sake or change out of necessity, transforming a logo or a brand is never neutral. It's a shrewd company that can entice new business without alienating its existing customer base.