There is a long-standing debate in creative writing circles about whether storytelling is an art or a craft. I think it is both. While there are some aspects of storytelling that cannot be taught, there are many components that are not only teachable but that can be improved with practice. In this chapter I look at the ingredients that go into a good story and examine how these ingredients need to be modified for a business story. I follow through by looking at types of stories, laying the foundation for the connection between narrative and numbers in later chapters, and at how narrators can use language and structure to evoke stronger reactions from listeners.
Story Structure
Most well-crafted stories follow a structure. In this section, I first look at the structuring of stories in general and then look at the same issue from the perspective of business storytelling. As you read this section, I should be honest and tell you that I was oblivious about much of the history of story structuring, which goes back millennia, until I started reviewing the literature. Recognizing that most of this story structure setup is constructed to help dramatists, novelists, and writers tell more gripping stories, my intent was simpler: to see whether I could extract lessons from the past that I could use in business storytelling.
It was Aristotle, in Poetics, who provided the first formal description of what a story requires.1 In his telling, which he based on his observations of Greek theater, every story needs a beginning, a middle, and an end, and what keeps a story going is that the incidents within the story are linked together by cause and effect. For the story to have an effect, the protagonist should see a change in fortune over the course of the story. It is amazing how well that structure has held up through time.
In the nineteenth century, Gustav Freytag, a German novelist and playwright, fleshed out this story structure more and came up with his version, with five key ingredients:2
1. Exposition or the inciting moment: This is an event that gets the story started and introduces the main problem it will be addressing.
2. Complication or rising action: This is the phase in which the tension builds up in the story through additional events. In a tragedy, this is often the phase in which things are going well for the protagonist(s), and in a story with a happy ending, it is the interval of trying events.
3. Climax or turning point: This is the event that turns the tide, from good to bad in a tragedy and from bad to good in a happy ending story.
4. Reversal or falling action: In this phase, events occur that bring out the effects of the change initiated in the previous step.
5. Denouement: The story ends in catastrophe, if it is a tragedy, or in a resolution of some sort that shows the protagonist either winning or losing.
Freytag’s structure is often depicted as a triangle, as shown in figure 3.1.
Figure 3.1
Freytag’s pyramid of storytelling structure.
The Freytag storytelling structure is one in which the narrator controls the environment, acting as stage master who determines when surprises happen, to whom, and with what consequences. Thus, its direct use in business storytelling is limited, since so much of what happens is out of your control, your best-planned story can be rendered to waste by a real-world surprise, and the ending is not yours to script.
In the middle of the last century, Joseph Campbell, the famed researcher on mythology, looked at myths through the ages and concluded that they all shared a common structure: a journey a hero makes from humble beginnings to a triumphant ending.3 In figure 3.2, you can see a simplified version of the hero’s story.4
Figure 3.2
The hero’s journey simplified.
If you are a Star Wars fan, you will probably find this picture familiar, partly because George Lucas was influenced by it when writing the script for the movie. As with the Freytag structure, this one is clearly far too controlled for a business enviroment, but I think that it does provide an explanation for why some business stories get remembered far more than others. Again, think of Steve Jobs and his passage to mythic stature in business. Like the hero in Campbell’s structure, Steve’s call to adventure was in a garage in Silicon Valley where he and Steve Wosniak built the first Apple computer, and his challenges and temptations as he went on to make Apple a succesful company are well chronicled. It was, however, his ouster from Apple and his subsequent return (his death and rebirth) that set the stage for one of the greatest second acts in corporate history.
I am sure there are other structures that can be used for storytelling, but looking across time, the path from Aristotle’s three-step structure to Joseph Campbell’s hero’s journey seems to be a short one. In effect, stories share more in common than we think and often just require updating to reflect modern sensibilities.
I would be lying if I said that I was thinking of the lessons of Aristotle, Freytag, and Campbell when I constructed the stories that animinate my valuations of Uber, Ferrari, and Amazon. In fact, I was not aware of much of their thinking until recently, but I have learned something from each of these structures that I can use in business storytelling. From Aristotle I learned the importance of keeping the story simple, with a beginning, middle, and end, and not getting distracted. Freytag made me understand the need to bring in both successes and reversals in a business story, since narratives without these are flat and boring. Campbell’s structure highlighted the importance of characters in the story and how audiences relate to the key narrator’s troubles and triumphs, a lesson that, in young companies at least, the story is as much about the founder or the person running the business as it is about the business. Finally, this version of the story brought home the realization that stories connect with audiences because they feed into all-too-human impulses.
The big difference between a fictional story, told primarily for entertainment, and a business story is that there are few limits on creativity in the former but far more in the latter. If you are writing a movie script or a story, you can create your own worlds, bizarre and unreal though they might be, and if you are skilled enough, you can take readers into those worlds. If you are telling a business story, you have to be more grounded in reality, since you will be measured not just on creativity but also on credibility and being able to deliver what you promise in the story. That said, there is no reason why you cannot adapt general storytelling structure to business storytelling.
Story Types
As with story structure, almost all stories we read or hear are recreations of old story lines. Much of the work on identifying types of stories has been with general storytelling, but there are parallels to the business world here as well.
General Types
In his book on storytelling, Christopher Booker contends that there are only seven basic plots for stories that have been mined for hundreds of years, and he lists them as follows:5 In the first one, overcoming the monster, you have the underdog, usually smaller and perceived to be weaker, beating out an evil adversary. A rebirth is a story of renewal, in which a person is reborn to live a better life. In a quest, the protagonist goes on a mission to find an item or thing that will save him or her and perhaps the world. It is what makes myths like Lord of the Rings and Star Wars so appealing to audiences. A rags-to-riches story is about transformation, with someone or something who is poor and weak rising to become wealthy and powerful. In a voyage and return, the characters embark either intentionally or accidentally on a journey of discovery that ends with them returning, usually wiser, happier, or richer, to their point of origin. In comedy the intent is to make you laugh with the players or at them as they stumble through life’s challenges, and in a tragedy you get the flip side: the objective here is to make you cry. Booker makes the compelling case that everything from high literature to pulp novels, opera to soap opera, and Shakespearean drama to James Bond movies draw from these seven themes.
Product Stories
Advertisers have drawn on general story types for decades in creating advertising narratives for products. Apple’s 1984 advertisement for the Macintosh, with the personal computer business (IBM and Microsoft, in particular) playing the role of the heavy, can be viewed as a simple extension of the overcoming the monster story type. The Apple 1984 advertisement premiered on Super Bowl Sunday, and there is no better forum to observe this reliance on stories than on that day each year, when advertisers pay fortunes to get their chance to appeal to immense television audiences for very short time periods. In what has become a ritual for television watchers, both experts and audiences are polled to see which advertisements leave the biggest imprint on audience memories. While there is no one company or advertising agency that consistently comes out ahead, the one consistent finding is that ads that tell compelling stories, quite a feat to pull off within 30 or 60 seconds, are the ones most likely to be remembered.
Founder Stories
With young start-ups in particular, and even with some established businesses, the story of the business can be tightly tied to the story of the founder, and it is the founder’s story that draws investors to the business. In particular, founder-based stories can be one of five types:
1. The Horatio Alger story: This is a classic, especially in the United States, and it is a variant of the rags-to-riches story. Investors are attracted to this story by the tenacity of the founder in making something of himself or herself in the face of immense odds.
2. The charisma story: In this narrative the founder’s story is built around an epiphany, a moment when he or she gets a vision of business opportunity and then proceeds to fulfill that vision. Elon Musk has founded or cofounded many businesses, including SpaceX, Tesla, and SolarCity, but with each of these businesses, investors are as much drawn to him, as a charismatic founder, as they are to the companies themselves.
3. The connections story: In some businesses, it is who you know that gives you the advantage, and founders who have the right connections, either because of family background or due to their past roles as politicians or regulators, are given special deference.
4. The celebrity story: Investors are sometimes drawn to the celebrity status of a founder, in the belief this status will allow them to attract business and generate value. Jack Nicklaus, Magic Johnson, and Oprah Winfrey have all used their celebrity status to build successful businesses, with many investors being drawn to the celebrities’ names as much as to the businesses themselves.
5. The experience story: It is the track record of some founders that draws investors to their businesses. The assumption, when investing in these businesses, is that if they have been successful in the past in building businesses, they will be successful in their new ventures.
There are two dangers of crossing the line and making a business story all about the founder or founders. First, a business that is too closely tied to its founder may not be able to survive personal failures on his or her part. When Martha Stewart was convicted of insider trading in 2003, the publicly traded company that shared her name suffered mightily in the aftermath, dropping almost 15 percent on her indictment. Second, while listeners are always attracted by the personal aspect of founder stories, these personal elements still have to be connected to business success. That perhaps explains why so many celebrities start off on the road to entrepreneurship and so few make it through successfully.
CASE STUDY 3.1: NARRATOR-BASED STORIES—UNDER ARMOUR AND KEVIN PLANK
Under Armour has been a success story in the apparel business, coming from small beginnings to mount a challenge to giants like Nike with its clothing and footwear offerings. The story of Under Armour is as much a story about the business as it is the story of its founder, Kevin Plank. Kevin, the youngest of five children, grew up in Maryland and walked on to the University of Maryland football team as a special teams player. He became captain of the team but noticed that he and his teammates were wearing heavy, sweat-soaked shirts after practice and came up with the idea of lightweight, sweat-wicking shirts using fabrics from women’s undergarments.
After graduating in 1996, Plank started his business from the basement of his grandmother’s house and built it up over the next decade into a worthy competitor to Nike, with revenues of $4 billion in 2015. He has been a very visible part of Under Armour’s story, going so far as to put some of his teammates from the University of Maryland football team in early commercials for the company. He has also preserved his voting control of the company by issuing shares with different voting rights.
Business Stories
Business stories can range across the spectrum, and the one you use will depend on where the business is in the corporate life cycle and what the competition it is facing looks like. Again, at the risk of both overgeneralizing and not spanning the spectrum of possible stories, a few classic business stories are presented in table 3.1.
Table 3.1
Types of Business Stories
| Business story |
Type of business |
Investment pitch |
| The bully |
Company with a large market share, a superior brand name, access to lots of capital, and a reputation for ruthlessness |
They will steamroll competition to deliver ever-increasing revenues and profits. |
| The underdog |
Company that is a distant second (or lower) in market share in a business, with claims to a better or cheaper product than the dominant company |
They will work harder than the dominant player at pleasing customers, perhaps with a kinder, gentler corporate image. |
| The eureka moment |
Company that claims to have found an unmet need in the market, usually in a serendipitous way, and then has come up with a way of meeting that need |
They will succeed as a business by filling the unmet need. |
| The better mousetrap |
Company that contends it has a better way of delivering an existing product or service that will be more desirable and better suited to the need |
They will eat into the market share of the existing players in the market. |
| The disruptor |
Company that changes the way a business is run, altering fundamental ways in which the product or service is delivered |
The status quo is ineffective and inefficient, and disruption will change the business (while making money). |
| The low-cost player |
Company that has found a way to reduce the cost of doing business and is willing to cut prices on the expectation that it can sell a lot more |
Increased sales will more than make up for lower margins. |
| The missionary |
Company that presents itself as having a larger, more noble mission than just making money |
They will make money while doing good (for society). |
This list is not a comprehensive one, but it does cover a large proportion of the businesses both in public and private capital markets, and there are two additional points worth making. The first is that it is possible for a company to have dual narratives, as is the case with Uber in September 2015, a company that is telling both a disruption story (it is changing the car service business) and a dominance story (it is presenting itself as unstoppable in the ride-sharing market). The second is that as a company moves through the life cycle, its narrative will change. Thus, when Google entered the search engine market in 1998, it was the scrappy underdog to the established players, but by 2015 it had made the transition to being the dominant player in the market, perhaps even a bully, with a reputation to match.
Steps for Storytellers
Through much of this chapter, I have looked at storytelling primarily from the perspective of listeners, investors gauging sales pitches by founders or using them to classify companies as investments, but what if you were starting a business and were the storyteller? Using the lessons from story structure and story types, here are the steps you can adopt to tell a better story.
1. Understand your business and know yourself: As a storyteller, it is difficult to tell a story about a business if you don’t understand the business yourself. If your vision for the business in terms of what it does and where you see it going in the future is fuzzy or unformed, your story about it will reflect that confusion. This is true whether you are the CEO of a well-established business with a long history talking to equity research analysts or the founder of a start-up seeking venture capital money. In fact, as the founder of a start-up is so integral to the business, you are as much a part of the story as the business you have founded, and some introspection (on the role you hope to play in this venture) may be needed.
2. Understand your audience: Your business story may not be the same when you are talking to different stakeholders (employees, customers, or potential investors), because each has a different interest in the story. While employees may share your enthusiasm for the success of the business, they are just as interested or perhaps more so in how you plan to share that success with them and the personal risks they face from failure. Customers are more interested in your products than in your profits and want to hear the part of your story in which you explain how your product or service will meet their needs and what they will have to pay in return. Investors want to know about these same products and services, but generally from the perspective of how you plan to convert potential into revenues and value. Even among investors there can be big differences in time horizon (short term versus long term) and how they expect to generate their returns (cash return versus growth in value), and your story may succeed with one while failing with the other.
3. Marshal the facts: Nothing will undercut your story more than mangling the facts. Thus, it will behoove you to do your homework on your company, its competitions, and the market you are trying to capture. To check your story before delivering it, you should consider adapting the five Ws of journalism to business:
• Who are your customers, your competitors, your employees?
• What does your business look like now and what is your vision for what it will look like in the future?
• When or over what time period do you see your business evolving to match your vision?
• Where (in terms of markets and geographies) do you see yourself operating?
• Why do you see yourself as the winner in this market?
In a later chapter we will return to these questions and see how working with numbers can help you on each of these questions.
4. Talk in specifics: While your business story may be built around market opportunities or macroeconomic trends, you will need to be specific about how you plan to take advantage of these trends. Assume, for instance, that you are building a social media company. It is not enough, for instance, to argue that people are increasingly turning to social media to interact, to get their news, and even for entertainment. You need to specify what you are offering as a company that will draw these people to your products or services.
5. Show, don’t tell: Steve Jobs’s keynote speeches for Apple resonated because he was willing and eager to share Apple’s new products on the stage, even at the risk of having some of them malfunction. In the same vein, being able to show how your products and services work can make your business story not only more memorable but also more effective.
6. Have a good ending: Taking Aristotle’s advice to heart, you should craft an ending for your story that not only leaves your audience excited and eager to act but also encapsulates the message you were trying to deliver.
I have never pitched a business venture to investors, employees, or customers, and you should be skeptical about any advice I dish out on this question. I do teach, however, and I have always believed that good teaching requires every one of these six steps.
The Ingredients in a Good Story
So what is it that makes some stories more gripping than others? After all, stories come in many forms, are told by different characters, and have different twists, but good stories do share some commonalities. At the risk of missing some characteristics that you think belong on the list and adding some that you do not, my list of what makes for a good business story are the following:
1. The story is simple. Good business stories have a core message they deliver without distractions and eliminate complexities and complications that get in the way of that message.
2. The story is credible. A good story, in business, has to be actionable and deliverable, and consequently needs to meet the reality test. That may mean being open about your limitations as a business, while presenting the strengths that you bring to the game.
3. The story is authentic. Authentic is a much used word, with nebulous meaning, but it is undeniable that your stories resonate more when they reflect who you are as a person and what your business is truly about.
4. The story is emotional. I don’t mean emotional in the sense that the storyteller cries on the stage, but emotional in the sense that it comes from the heart. If you are not passionate about your story, why would you expect anyone else to be?
Rather than go through the usual litany of business dos and don’ts, I decided to turn to Pixar, one of my favorite storytellers, for lessons. I remember watching Toy Story with my children and marveling at how well the storytelling kept both adults and children engrossed, and my admiration for the studio’s storytelling capabilities have only increased over time. I was happy to discover that Emma Coats, who used to work at the studio, had put together a simple manual for storytelling based upon her experiences, titled the 22 Rules to Phenomenal Storytelling. While not all of the rules she lists carry over directly into business stories, many can be adapted to the business setting. Bringing the Pixar rules to business storytelling, you would be well served to tailor your story to the interests of your audience, to simplify and focus that story, to find the most economical way to tell that story, and to keep working and reworking the story, rather than go for perfection. I found the last piece of advice the most important, because there is no better way to learn what works in your story and what does not than to tell it to different audiences. Practice does make for a better story.
On a personal note, I am a fan of Shark Tank, the television show featuring entrepreneurs who present their business ideas to and seek funding from successful venture capitalists and businesspeople (the sharks). One of my favorite activities when watching the show is to listen to the business stories told during the course of the show and think about why some stories connect and others do not and how that connection sometimes, but not always, translates into a willingness to invest.
Conclusion
A good story is magical in its capacity to create connections and evoke action. In this chapter I tried to look at the craft behind the magic. The way you structure stories has changed surprisingly little in the last two millennia and stories have been built around the same structures for centuries, whether it be Aristotle’s theater-based structure or Joseph Campbell’s discovery that a hero’s quest lies at the heart of every enduring myth. In the same vein, there are only a handful of base story types that you return to over and over again, whether it be in fiction or in business.
Toward the end of the chapter, I probed the steps involved in constructing and telling good business stories. Good business storytellers, while learning from story structure and types, have to understand their businesses, their audiences, and themselves, and must craft simple stories that reflect reality, not fantasy. Those who listen to these stories should do so with open minds, always checking them against the facts and being willing to accept that, unlike fictional stories, business stories don’t always have the desired endings.
