Using Story as Strategy to Grow your Good Idea Faster
If a company doesn’t have a story. It doesn’t have a strategy. Storytelling is the most underrated business skill today.Ben Horowitz, Silicon Valley based entrepreneur turned investor – ($7.1bn under management)
Ben Horowitz clearly knows a thing or two about growing good ideas faster; having co-founded and served as CEO of enterprise software company Opsware, which Hewlett-Packard acquired in 2007 for $1.65 billion in cash; and as co-founder of a private American venture capital firm Andreessen Horowitz, which has invested in Skype, Facebook, Groupon, Twitter, Airbnb and Stripe. It’s not just Horowitz who thinks this. Many of the world’s most successful business, (such as Microsoft, Nike, 3M, Berkshire Hathaway, FedEx, and Proctor & Gamble); and high profile business schools (such as Notre Dame and De-Paul University); use storytelling as a key leadership tool.
There are two important things to note about Horowitz’s quote:
- Firstly, creating and telling your story is not just the job of marketing – story is strategy.
- Secondly, storytelling is an important business skill – that means that it can be learnt, practised and improved.
In this blog you will learn:
- Why story is a single tonic for many strategic ailments faced by entrepreneurs
- Whose job it is to tell the story of your business
1. Why story is a single tonic for many strategic ailments
The most important function of stories in our social evolution is making us feel in control of our interactions with other people. Our hyper-social brains try to read and understand the minds of others. Whether you’re communicating with a customer, funder, investor, journalist, potential collaborator, possible hire or current employee; they’re subconsciously asking themselves – Who is this person? Can I trust them? Do their ideas fit with my values? Why should I go on this journey with them?
Product features, facts, or objectives don’t answer the core question of Why. Only the well-told story of a company addresses this. Why should I buy from this company? Why should I fund or invest in this company? Why do my readers need to know about this company? Why should I join this company? Why should I be excited to work here? Why is the world better off as a result of this company’s existence?
A powerful company story can unlock the support of the different audiences you need to grow faster.
This is especially true for early-stage companies. As Scott Kupor, Managing Partner of Andreesen Horowitz, notes:
True storytelling is a remarkable talent in a start-up where you have so little proof of success in the early years on which people can base their decision.
Stronger storytelling also has other benefits. According to psychologist Jerome Bruner, facts are 20 times more likely to be remembered if they are part of a story. So if you want your audience to remember key information – make it part of your story.
Stories for Customers
When a person is deciding whether to buy from a company; they’ll have an instant intuitive hunch based on whether what they’re hearing agrees with the stories they believe in. Our brains are extremely protective of the stories we already believe; quickly finding evidence to support them and dismissing evidence that challenges them. It does this because the stories we believe make us feel in control.
To bring people with you on a journey of change, you have to tell them a story that works with the stories they already believe, to help them feel in control.
Brands have long understood the power storytelling can have on decisions about what to buy from whom. From ancient brickmakers’ symbols, medieval trade guild marks and sixteenth-century whiskey producers names burned on barrels; to modern brands like Microsoft, Nike and Ørsted; brands do much more than tell us who made a product or service. They sell us a story about what our lives will be like if we choose to pay (and often pay more) for these products and services.
When people think about brands, they tend to picture logos, packaging and design features like colour schemes or a product’s appearance – but these are just markers of the brand. Without a brand story behind them, customers wouldn’t associate these markers with higher quality or a better future for themselves.
As Stephen King, famous for his work on measuring the effectiveness of advertising at WPP Group, said:
A product is something that is made in a factory; a brand is something that is bought by a customer. A product can be copied by a competitor; a brand is unique. A product can be quickly outdated; a successful brand is timeless.
A strong brand story not only helps you sell but can protect you from competitors. As Regis McKenna, an advisor to Silicon Valley firms points out; a position based on specification alone (such as being the fastest, lightest, or cheapest), can be short-lived due to innovation by competitors. Intangible factors such as perceived quality, commitment to customer service and technological leadership, are more effective associations to develop than specific attributes.
Building up a strong awareness of your brand story makes it much harder for competitors to move in on your turf. If your brand story cements you in customers’ minds as the leader in service, quality or innovation; it’s harder for a competitor to convince them that it surpasses you in that area. These brand associations take time to build-up in customers’ minds, so it’s worth making them part of your story as early as possible.
Ultimately a strong brand story is what separates the companies customers love, from the companies customers merely tolerate.
Stories for Funders and Investors
As Christian Inglis, Senior Innovation Lead – Clean Growth & Infrastructure at Innovate UK writes:
“During my 10 years working at Innovate UK, I’ve noticed that one of the common gaps in companies’ innovation stories has been a failure to adequately address the question of:
Where is the customer need?/Who will buy your innovation?
This is something so essential to us, investors and customers that it is always a surprise when I encounter conversations that require a lot of digging to understand.”
Scaling up: the investor perspective by Innovate UK highlights that businesses underestimate the importance of communication, adaptability and resilience, and chemistry to investors – all things that can only be shown by your company’s story and not by your products and services.
So your story can affect your ability to secure funding and investment.
Storytelling can also help you stand out to investors. Andrew Wordsworth, Managing Partner of Sustainable Ventures, the UK’s leading developer of sustainable start-ups, says his team see over 1,200 businesses a year to make just 10 investments. They have invested in E-Car Club, Powervault and Airex.
As Andrew told us at an event we organized:
“Pitches are about entertainment not just facts; I need to be engaged.”
Further proof of the power of storytelling to help raise investment came from speaking to Josh Tetrick, the founder and CEO of Just Inc. on the Clean + Cool Mission 2017. Tetrick told us that his story about a ‘broken food system’ had been key to raising $500,000 in seed funding for his clean growth company (as well as a $1.5 million Series A and a $23 million Series B).
One reason why brand story might be so important to investors is that as an intangible asset it can add real monetary value to a company.
Brand Finance is the world’s leading independent brand valuation and strategy consultancy specialises in measuring this. According to its research, the Amazon brand is now worth over $200 billion, followed by Google at $159,722m and Apple at $153,634m. WeChat, a messaging, social media and mobile payment app saw its brand value grow from $3,092m in 2014 to $50,707m by 2019.
This high valuation of intangible brands isn’t just true in B2C markets. In 2013 Gardner Denver, a pump, compressors and fuel system manufacturer sold for $3.74 billion. Its reputation as the ‘Mercedes of fuel pumps’, meant that 43 per cent of its value (around $1.6 billion) was calculated to be down to its intangible brand value. In fact, B2B brand stories often add more value than their B2C counterparts. A McKinsey study of over 700 executives, found that business buyers’ purchasing decisions often use the vendor’s brand reputation as a short cut that reduces risk and simplifies the evaluation process. It found that decision-makers say that the brand is almost as important as the efforts of sales teams in encouraging them to make out a purchase order.
Stories for Journalists
Because of our social evolution, our hyper-social brains are hardwired to try to make sense of the world of people. We seek to understand what made people take dramatic action and try to learn through the experience of others.
This is why news about companies (even when it talks about financials) is told through human stories – we hear from CEOs, investors, employees, and customers.
As Jon Card, a freelance business journalist who writes for titles including The Guardian, Daily Telegraph and The Times, explains:
“Entrepreneurs need to explain what you do, tell me why your work is important and me how it’s going to change the world.”
His readers need to know who you are to be interested in reading about your business. Once people have a good idea of who you are, and why you do the job you do – it’s much easier for them to care about your company.
Stories for potential collaborators
Rosabeth Moss Kanter is the Arbuckle Professor at Harvard Business School, former chief editor of Harvard Business Review, and author of the new book Think Outside the Building: How Advanced Leaders Can Change the World One Smart Innovation at a Time.
She found that collaborators often talk about ‘love at first sight’, ‘the company of our dreams’ or ‘consummating an alliance’; because business pairings aren’t entirely cold-blooded. Successful business alliances nearly always depend on “the creation and maintenance of a comfortable personal relationship between the senior executives”.
When considering whether to collaborate with your business, our hyper-social brains mean potential partners are constantly seeking to understand who you are and whether they should trust you. Your technical achievements might be attractive to them, but only your story can answer these ‘human’ questions.
Stories for Recruitment and Employees
Management consultant Peter Drucker famously said: “Culture eats strategy for breakfast.” But the truth as Ben Horowitz points out in his book What you do is who you are is that culture and strategy do not compete:
“Neither eats the other. Indeed to be effective they must cohere.”
Successfully executing a strategy and having an effective company culture both rely on how people act when no one is looking.
If as Horowitz asserts, ‘how we act is who we are’, then your company’s story is key to attracting talent and motivating the right types of employee behaviour
You might think at this point that we’re talking about a company’s values, but value statements are ineffective if they’re just words on a page. People need to understand the values in action. Stories are the most powerful way you can project and reinforce values because stories show values in action. They’ve always been used in this way by celebrating actions that benefit the group and vilifying those that don’t.
It’s through the story of a company that potential recruits can understand how a company acts. It’s the celebrated actions of employees that guide colleagues when hard decisions have to be made. Many tiny decisions, made on a daily basis, determine a company’s performance – from quality to design, from fiscal discipline to customer care. Like it or not, the delivery of your strategy is culturally driven.
As Horowitz writes:
“Culture is to a company as nutrition and training are to an aspiring professional athlete. If the athlete is talented enough, he’ll succeed despite relatively poor nutrition and a below-average training regime. If he lacks talent, perfect nutrition and relentless training will not qualify him for the Olympics. But great nutrition and relentless training make every athlete better.”
2. Storytelling, whose job is it anyway?
Story is both your business strategy and your company culture.
It is the CEO’s job to clearly articulate the companies story and be the keeper of this story.
Your story is key to winning the support of customers, funders, investors, journalists, potential collaborators, possible hires and current employees – and only the CEO interacts with all these different audiences.
Consistency in your story is vital. If you’re living your story with your employees, but not your customers, you will soon get found out. If your story to the media doesn’t match how you treat collaborators, those relationships will be vulnerable.
If you expect employees to live your story, but fail to live up to it yourself, they will follow your example.
To bring your innovation to the world, your number one job is to tell a story that changes customer buying behaviour. If the CEO doesn’t publicly show belief in that story, how can you expect customers to believe in it?
Only the CEO can drive story through a company – but remember storytelling is a skill that can be learnt, practised and improved.