A limited period Exclusive 40% Off on the expert-led webinars. Code EXPERT40 REGISTER NOW

Narrative and Numbers: The Value of Stories in Business

Tell Me A Story

This chapter helps the readers to understand why 'Stories' are important. It also cautions them about the hazards when stories are not concurrent with the real world and run into fantasy land.

 

Here the author explains why one story is remembered more than the other is because of subjects making inferences and noticing the connections in the story. What he means here is that stories work best if they not only involve listeners but also require them to think on their own and make interpretations.

 

In the business world, stories have been used for many purposes. In the early stage (startup phase), storytelling is designed to encourage investors to attract high value to business and invest capital. With employee’s storytelling helps to get them excited working for the company. With customers, it helps companies to spur sales even at premium prices. 

 

In investing, storytelling is useful for both investment philosophies and recommendations. As we know, there are many investors who snub numbers and concentrate on the big picture, i.e., the story behind the company. In sell-side equity research stories play a major role in the overall analysis. This is because it interacts better with the readers than numbers.

 

Professor Damodaran explains a very classic instance on how stories influence us. We all remember the story of Warren Buffet investing in American Express. He invested in the company, when the company was tarred by a scandal wherein a commodity trader deceived the bank by forged the collateral salad oil with contaminated oil. The value of American Express collapsed and hence gave the opportunity for Buffet to invest. The investment story, however, printed probably in every investment book or article glamouring Buffet’s acumen, has actually made very little money for him. The stock gave the partnership a profit of just $33mn which is a paltry sum when compared with his other wins.

 

This brings us to the dangers of storytelling. As we noted in an earlier section, stories are powerful because they connect with people’s emotions, get remembered, and elicit action from listeners. It is for each of these reasons that stories can be extremely dangerous, not just for listeners but also for storytellers.

 

Master storytellers want us drunk on emotion so we will lose track of rational considerations and yield to their agenda.”

 

To the extent that business stories are often built around the experiences of the storytellers, it is easy to cross the line between real and imagined experiences. Founders who invent improbable rises from poverty, portfolio managers who claim to have had the foresight to get out just ahead of market collapses, and CEOs who invent struggles with nonexistent business challenges may, with repeated retelling of their stories, start believing them. This is not to suggest that stories are always made up or full of falsehoods but to show that even well-meaning storytellers can sometimes reinvent their memories and that those listening to those stories might not be remembering the stories the way they were actually told.

 

Stories allow businesses to connect to investors, customers and employees at a level that pure numbers can’t. But storytelling left unchecked can easily lose focus and can be dangerous for everyone involved. In this book the reader will get a checklist to ensure that he doesn’t let hope become expectations.

Did you like this unit?

Units 3/17