If you’ve been following our series on building a strategic messaging foundation (“brand narrative” is the third essential element of this foundation, by the way), you should have plenty of inspiration on how to structure your story. As a quick recap, however, consider the following when crafting your narrative.
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In this chapter I look at how storytelling has been central to learning, why stories continue to have so much power over us, and why the need for storytelling has actually increased in the information age. If the first part of this chapter is about the good side of storytelling, the last part is about the dangers of runaway storytelling and how the emotional appeal of stories can lead to bad decisions. While %url% I will frame the book around investing and valuation, the connection between stories and numbers is just as important, if not more so, for those on the other side of the process—the founders and managers of businesses. Understanding why stories matter more at some stages of a business and numbers speak more loudly at others is critical not only for attracting investors but for managing these businesses.
Throughout the book there are examples of how he converts narrative to valuation numbers for Uber, Ferrari, Alibaba, and Amazon. Damordaran argues that we need to combine storytelling with number crunching if we are to properly value companies. I’m not a financial analyst or economist, so I had to read some sections more than once, but it’s mostly very clearly written. That Aswath Damodaran is a teacher is abundantly clear on every page of this book.
We should consider the use of what-if analysis, scenario analysis, decision trees and/or simulations to understand how the valuation and story might change under different circumstances. While numbers can be an antidote to the big market delusion and the glowing narratives of a company and its founders, they also present a variety of dangers that are not always talked about.
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There is a great deal we can learn by looking at the allure of stories and how they are sometimes used to further both good causes and bad ones. It is amazing that, given the diversity of storytelling, you find patterns in stories; great stories share commonalities, structures that get used over and over. It is also true that while some people are better storytellers than others, the craft of storytelling can be taught and learned.
Narrative And Numbers: The Value Of Stories In Business
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Taking a step back, Narrative and Numbers is also a personal journey for Damodaran as he over time has developed from a pure number cruncher to taking Narrative and Value of Stories in Business a more holistic approach. I find that when a reader is invited to share an author’s personal development the result is often very likable.
As a result, readers are likely more inclined to view Cook and his company favorably, and to recall the salient points from the interview. All things being equal, people with powerfulpersonal brands have a leg upon getting jobs and being promoted to leadership within them. Andpersonal brands are builton,among other things,telling and sharing great stories. The businesses that can tell one will have increasing advantage. This is largely because social media has gotten us comfortable having conversations with companies.
The first printed stories, which tell the story of a Sumerian king, Gilgamesh, are from 700 B.C.E. and were recorded on stone pillars, but there is also evidence that the Egyptians wrote stories almost 3,500 years ago on papyrus. There is evidence of storytelling in every ancient civilization. It is easy to understand the draw of big data when companies like Amazon, Netflix, and Google use the information they accumulate about their customers not only to fine-tune their marketing but to alter their product offerings. In a world of uncertainty, numbers offer us a sense of precision and objectivity and provide a counterweight to storytelling. That precision is often illusory, and there are uncountable ways in which bias can find its way into numbers.
Check the narrative against history, economic first principles, and common sense. Take the narrative apart and look at how you will bring it into valuation inputs starting with potential market size down to cash flows and risk. I first heard about Uber when I read a Wall Street Journal article in 2014 that said venture capitalists had priced Uber at US$17 billion.
Dove’s campaign hit a cord with every-day people, who don’t look like the supermodels that often grace television advertisements. These crafty techniques allow brands to associate with social causes or other brands, helping grow their audience and business. Visual storytelling is a great technique to use in presentations and marketing efforts. By weaving imagery together, you can create a story that speaks volumes about your core message.
- The author who describes himself as a “teacher first” gives us short but thorough accounts of the two components before merging them into a greater whole.
- Also, Narrative and Numbers is about those on “the other side”, the founders and managers of companies, and how they use numbers and stories in different ways and with different purposes.
- Damodaran tells you that he will combine narratives and numbers, he describes the basics of one of those, then he describes the basics of the other one, he merges them and finally discusses the consequences.
- In other words, the books is about connecting the two endpoints of valuation;the qualitative and the quantitativefactors and how to combine them in order to end up with a good business valuation.
- All the way through the book we get to follow the described process through the case studies and there are further several illuminating pictures giving good oversights of the reasoning.
“When are founded, a kind of DNA is created that persists for the life of the company,” Bonchek wrote in Harvard Business Review. “A strategic narrative must align with this brand DNA or it will be perceived as inauthentic.” But customers are more than https://forexbox.info/ their pains – they have morals and have values. They have common cultural experiences that help them feel like they belong to the world at large. Brand narratives enable you to find that common ground with customers by telling them the right stories.
It might be a good way to describe their brand to fellow professionals at a networking event, but it’s not quite enough to make a deep connection with a potential customer. You might say, “We are a software company that creates a mobile accounting app for businesses. Our goal is to help startups and entrepreneurs simplify their finances and save time.” A business may genuinely have a better product or service than a competitor, but at Narrative and Value of Stories in Business the end of the day, decision-making is much more emotional than it is logical. The ability to tell a good story is essential and can make or break how well a business differentiates itself in the market as well as makes a profit. People would rather invest in a human than a company, and in fact, some of the most admired and financially successful companies are known for delivering financial returns and building people and society.
This book provides a great framework for avoiding “garbage-in, garbage-out” when approaching the valuation of a business. Professor Damodaran hits on the key points, but does leave the reader with some work to do in terms of implementation.
One of the best, and most unique, examples of a brand that profits from the growth of social media is Humans of New York. The photo-journalistic blog started by Brandon Stanton in 2010 has become a massive center of fascinating, individual stories that feed the narrative of the human experience. His photojournalism stories are what drives consumer engagement on sites such as Facebook and Instagram. HONY’s Facebook page as of 2018 has more than 18 million likes while its Instagram has 8.5 million followers. In addition, personal care company Dove’s viral video promoting its “real beauty” campaign to called-out the difference between how women look and how they feel they should look.
There are lots of possible narratives, not all of them are plausible, and only a few of them are probable. How can a company that has never turned a profit have a multi-billion dollar valuation?
To be a successful business, not only do you have to build a better mousetrap, but you have to tell a compelling story about why that mousetrap will conquer the business world to investors , to customers , and to employees . The third is that storytelling in business Narrative and Value of Stories in Business comes with more constraints than storytelling in novels, since you are measured not just on creativity but on being able to deliver on your promises. The real world is very much a part of your story, and much as you would like to control it, you cannot.
I want to hear what you know about the company that justifies a $60 billion revenue. Every number in your valuation has to be backed up by a story.
Your job in writing this narrative is to connect the dots for customers and make it relevant to them. Show them how they are connected with your brand and/or company, and by extension, connected with the larger moral or lesson of your chosen metanarrative. You can take a similar approach with your own brand narrative by finding a small handful of stories that bring the metanarrative to life.
It could be for a single division within a large enterprise corporation. Narrative and Value of Stories in Business Or it could be for a specific product or service that you offer.
Actually, it’s pretty easy to create a heart-warming story for a presentation. The real challenge is turning data into a narrative that packs an emotional punch. When incorporating storytelling, the right stories can make your message more meaningful and—most importantly—digestible.
