Why Storytelling Is a Powerful Tool in Business
Colin Iles on Steve Jobs recruiting John Sculley, why purpose-led firms like TOMS and Unilever outperform the S&P 500, and why for-profits struggle to tell stories.
| In one line | Great leaders use storytelling to influence at scale, and purpose-driven companies tell better stories than pure profit-seekers |
| Who should read this | Founders and executives trying to build influence with investors, staff and customers |
| Key number | Purpose-driven firms like TOMS, Unilever, Ikea and Amazon outperformed the S&P 500 by 14 times over 15 years |
| Bottom line | For-profits struggle to tell inspiring stories because their goal is the story's villain; purpose gives staff a role as heroes |
| Read time | 4 min |
What do all great leaders have in common?
Number one on my list is they have all achieved mastery in using storytelling to influence at scale.
How one novel helped end slavery in America
The book Uncle Tom's Cabin is widely recognized as having contributed to the end of slavery in the United States. The novel humanized slaves, portraying them as complex characters with emotions, families, and dignity, rather than just as property.
It was a powerful story which polarized opinion and catalyzed support for the abolitionist movement that eventually saw the ending of slavery in 1865.
Powerful stuff, but we shouldn't be surprised.
Because stories are what have driven human behaviors since the beginning of time. In fact, stories have shaped our history in every regard, whether that relates to religion, politics or the underlying fabric of different cultures around the world.
It should therefore be no surprise that effective storytelling is a powerful tool in business.
By telling stories that emotionally resonate, we can influence others to do incredible things.
And business is all about influence.
Influencing investors to stay the course.
Staff to be more productive and innovative.
Customers to become advocates.
Why Steve Jobs asked John Sculley if he wanted to sell fizzy water
And I'm not the only one who believes in storytelling's power.
Steve Denning, a former executive of the World Bank, said: "When it comes to inspiring people to embrace a vision or a change in behavior, storytelling isn't just better than the other tools, it's the only thing that works."
Steve Jobs was perhaps one of the greatest proponents of the power of storytelling in business. As he once said, "The most powerful person in the world is the storyteller. The storyteller sets the vision, values and agenda of an entire generation that is to come."
One of the best examples of how he inspired people with fantasy, not fact, came when he successfully asked American businessman John Sculley to leave PepsiCo and join Apple.
"Do you want to sell fizzy water for the rest of your life or come and help me change the world?" Sculley later said that question landed like a punch in the gut.
Why purpose-driven companies outperform the S&P 500
If stories are such powerful business tools, why don't more businesses use them?
Well, purposeful organizations do, and it is central to their success.
A purpose-driven company typically sets social or environmental goals as the primary purpose or mission.
For-profits, on the other hand, follow American economist Milton Friedman's doctrine that an entity's greatest responsibility is to satisfy its shareholders. Interestingly, researchers are consistently showing that purposeful organizations are typically outperforming their profit-driven peers.
For example, the book Firms of Endearment showcases how purpose-driven companies like TOMS, Unilever, Ikea and Amazon have, on average, outperformed the S&P 500 by 14 times over 15 years from 1998 to 2013.
And if you are looking for more anecdotal evidence, just write down your 10 favorite successful companies. I'd expect the majority to be purpose-led.
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The most recent case study is, of course, OpenAI.
Their flagship product ChatGPT gained 100 million users within two months, making it the fastest growing consumer application in history.
But their purpose wasn't to make a profit. Instead, they focused on "creating safe artificial intelligence that benefits all of humanity".
Despite their best efforts they are now worth billions.
Why For-Profits Struggle to Tell a Good Story
Ok, so back to the why. Why are purposeful organizations such better storytellers and, therefore, influencers?
Well, for starters, for-profits have no inspiring stories to tell.
When your goal is to make money for the sake of making money, and your dream only extends to making more money, what role can you play in a story other than that of the villain?
On the other hand, purpose-driven organizations offer ample storytelling opportunities because their purpose is the story, and their staff are the heroes who all want to be part of a movement that benefits society.
And that's the type of environment that fosters trust, collaboration and innovation.
Purpose allows for storytelling. Storytelling lets you influence. Influence is key to success.
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