Being authentic limits who your organization can attract as partners.
Not every organization wants to do business with an organization that’s authentic, because authentic organizations can be demanding partners. Authentic organizations need partners who will support the organization’s dedication to authenticity, who will appreciate why the organization dedicates its resources to sustaining authenticity, and who will give the organization honest feedback. Because an organization is often influenced by the company it keeps, authentic organizations have to resist the “bad influence” of organizations that are content to be inconsistent, inauthentic, or hypocritical. And, because an organization is judged by the company it keeps, authentic organizations need to partner with organizations who also strive for authenticity. Where authentic potential partners are scarce, an authentic organization might find it difficult to attract the right partners to support it.
Being authentic makes it easier for your organization’s competitors to take advantage of you.
By demanding that an organization be consistent in its choices and actions, authenticity can make an organization more predictable. Authenticity demands narrow an organization’s strategic choice set and rule out certain kinds of (inauthentic) actions. Competitors might recognize that an authentic organization will pass up certain opportunities and will decline to act in certain ways, because an authentic organization is not going to compete by temporarily changing its tactics or by doing things that conflict with how it sees itself or presents itself. For example, an organization defines itself with customer service may be able to adjust when their competitors lower their prices, if reducing costs depends on reducing customer service. Thus, competitors may find it rather easy to take advantage of an authentic organization.
Being authentic can make your organization financially inefficient.
Being authentic takes time, energy and creative resources. Being authentic might require more time, energy, creative resources and even capital investment than inauthentic organizations in the same business. And, because it is hard to monetize or put a financial value on the benefits of authenticity, authentic organizations may seem less efficient and less successful on financial dimensions. Potential investors, market analysts, business media, suppliers and potential customers may undervalue what the authentic organization has to offer.
Being authentic can make your organization too distinctive.
Authenticity is a relatively rare quality, and for this reason alone authentic organizations are distinctive. Yet in addition, authentic organizations are often more distinctive because they are more committed to what they are. Authenticity reinforces what is unique about an organization. Each element of the authentic organization reinforces the others, concentrating and anchoring the organization’s qualities. The more distinctive and the more unique the organization is, the less they can blend in with everybody else. They can’t look like, act like or be mistaken for another organization, even if that might sometimes be desirable.
Being authentic can make your organization look deviant.
Because authenticity is a relatively rare quality, and because authenticity reinforces what is unique about an organization, authentic organizations usually differ from similar companies in a similar business. When these differences set the organization apart in manner that is clearly positive, they can create a competitive advantage. But often differences are interpreted in a negative way, as a deviance from the norm. Where difference is seen as deviant, organizations look less legitimate than organizations that look like everyone else. While it can be helpful to be different, it’s dangerous to be deviant.
I am an organizational consultant, change advocate, and organizational identity/reputation scholar with a PhD in leadership & organizations. I research, write about, and consult with organizations on the relationships between organizational identity, actions, and purpose. I teach Technology Management, part-time, at Stevens Institute of Technology.
My current research focuses on how social technologies in the workplace can drive organizational change, generate meaning, and catalyze purpose. See the 
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Okay, you’ve sold me…so why should an organization try to be authentic if it only creates problems? Is there anything good that comes from being authentic that helps balance these negatives?
But I get it, that you’re using the tactic of treating positive features as though they were negative, to make us think about it. The idea is that authenticity takes work, but in the end is worth the effort.