Good Companies are Storytellers, Great Companies are Storydoers
Discussions about story and storytelling are fashionable in marketing circles. I have ambivalent feelings about this. On the one hand, as a lifelong advocate for the power of story in business, I find this encouraging. For all companies, having a story and knowing that story are crucial steps to achieving success. On the other hand, I’m worried that too many marketers think that telling their story through advertising is enough. It’s not.
In fact, those that think this way do so at their own risk because there is a new kind of company on the rise that uses story in a more powerful way— and they run more efficient and profitable businesses as a result.
In my new book, True Story: How to Combine Story and Action to Transform Your Business, I call these new companies storydoing companies because they advance their narrative through action, not communication. Storydoing companies — Red Bull, TOMS shoes, Warby Parker, and Tory Burch, for example — emphasize the creation of compelling and useful experiences — new products, new services, and new tools that advance their narrative by lighting up the medium of people. What I mean by this is that when people encounter a storydoing company they often want to tell all their friends about it. Storydoing companies create fierce loyalty and evangelism in their customers. Their stories are told primarily via word of mouth and are amplified by social media tools.
So how do you know a storydoing company when you see one? These are the primary characteristics:
- They have a story.
- The story is about a larger ambition to make the world or people’s lives better.
- The story is understood and cared about by senior leadership outside of marketing.
- That story is being used to drive tangible action throughout the company: product development, HR policies, compensation, etc.
- These actions add back up to a cohesive whole.
- Customers and partners are motivated to engage with the story and are actively using it to advance their own stories.
Recently, my partners and I at co:collective initiated a project to determine whether there is hard statistical evidence that storydoing companies are achieving superior results. We also wanted to create a tool that allows CEOs and other senior leaders to apply these criteria to an analysis of their own company.
One of the difficulties we encountered is many of the best examples of storydoing are privately held companies, so the data on their financial performance is not publicly available.
So we chose 42 publicly traded companies. This list spans seven business categories: retail, entertainment, food and beverage, electronic payments, consumer electronics, airlines, and IT services/products. Since storytelling companies outnumber storydoing companies, in each of the seven categories we chose five storytelling companies and one storydoing company based on the criteria we described above. The storydoing companies are Target, Walt Disney, Starbucks, American Express, Apple, Jet Blue, and IBM. More detail on the full methodology can be found here.
The early results we are seeing are quite compelling. As we expected, storydoing companies are generating a substantially greater number of mentions in social media:
Those mentions are also more positive:
This ability to light up the medium of people in a positive way allows storydoing companies to spend substantially less money on paid media per dollar of revenue:
And they wring more value out of that spend in the number of mentions in social media per dollar spent:
As a result, storydoing companies are growing faster than their storytelling counterparts in revenue:
…and share price:
One interesting side note is that it seems like the market hasn’t recognized the structural advantage that storydoing companies have over their storytelling counterparts. Their superior results are not yet reflected in P/E ratios:
This is only a start to our research, and we can only imagine that adding some of the privately owned companies for which we’re missing financial data would yield even better results than those reported here. Whether that turns out to be true or not, time will tell. But based on the evidence we have to date, our conclusion is that storydoing companies are on to something very compelling. CEOs who seek to deliver better financial results to their shareholders would do well to take heed.
In the spirit of collaboration and improvement, we would like to invite anyone to help advance this thinking by challenging our results to date, making suggestions to improve the methodology, or adding to the data set with data of their own. We think that over time the data set itself can become a valuable public source of inspiration and evidence for agents of change to begin to apply the principles of storydoing inside their own companies.
Reprinted by permission of Harvard Business Review Press. Copyright 2013 Ty Montague. All rights reserved.