How ‘Story Building’ Can Help Boost Your Business Performance

Seasoned hikers wouldn’t dream of heading off into the wilderness without a map and a compass. But organizations do it every day.

Two years after the breakthrough book In Search of Excellence reported on 43 of the “best run” companies in America, 14 of the 43 firms were in financial trouble. The reason, according to a Businessweek study: their failure to deal effectively with change.

In other words, they lost their bearings.

Every organization is perfectly aligned to get the results it’s getting. Unsatisfied with results? Check your map and compass.

Strategic alignment is every bit as critical for organizations as it is for hikers. Call it pathfinding. Call it navigating to true north. Call it mission and vision. Call it taking responsibility for shaping events. Call it good leadership. Call it smart business. It’s not a destination, it’s a journey. Take charge.

Bottomline? Culture is a key performance component in every organization—your business, your team, your family.

It may seem like an oversimplification, but “culture” is in large part a product of the stories people create about their environment. Note that word “create.” Culture is not just about storytelling (although that plays a role). It’s about story building.

An excellent resource on this phenomenon is The Secret of Culture Change: How to Build Authentic Stories That Transform Your Organization, authored by Jay B. Barney, Manoel Amorim, and Carlos Júlio. These men certainly have the credentials to write such a book. Barney, one of the world’s most cited strategic management scholars, focuses his consulting work on implementing strategy through culture change. He received his Ph.D. at Yale and teaches entrepreneurship at the University of Utah. Amorim has been CEO of four large corporations and has served as a board director in six countries. Júlio is founder of HSM, the largest management training company in Latin America.

Multiple studies show that most strategic efforts to change a company’s culture fail. In exploring this phenomenon, Barney, Amorim, and Júlio compiled and analyzed more than 150 stories from business leaders who successfully navigated change. They identified attributes that are common to every successful change story.

The authors point out that organizations where culture and strategy align outperform those where culture and strategy do not align. So, what does alignment look like compared to misalignment?

“Strategy and cultural misalignment can take many forms,” Barney says. “For example, a firm’s strategy may focus on building and selling innovative products, but its culture may focus on assigning blame and firing people who take innovative risks. A firm’s strategy may focus on delighting customers, but its culture may focus on keeping manufacturing costs low or developing technically sophisticated products that customers can’t afford. A firm’s strategy may focus on decentralized decision-making, but its culture may value centralized decision-making and control.”

In all these and many other cases, Barney says, the misalignment between strategy and culture will make it difficult to implement a firm’s strategy.

The authors differentiate between story building and storytelling, and say the former is more crucial to culture change than the latter. Why?

“Storytelling is used to inspire certain behaviors in organizations, and some stories have true motivational power,” Amorim says. “However, nothing is more impactful than seeing a leader behaving in ways that reflect the principles and values of the new culture.

Amorim offers this illustration: Shortly after Procter & Gamble acquired Gillette, Alberto Carvalho was named vice-president for the developing countries. India had enormous potential, but poor performance. “After a few weeks, Alberto found that the technology-driven culture of the acquired company shed little light on the needs of consumers,” Amorim says. “Product Development claimed the product tested well among consumers. The problem was the test was done among Indians living in Boston—not representative of the Indian population.

Carvalho then announced he was going to India. He knew from experience he would find something valuable during that trip. His team believed the trip was a waste of time, but ended up joining him.

“Over the next week, they woke up at 5:00 AM to go to poor neighborhoods to observe men shaving,” Amorim says. “They discovered that many families shared a bathroom outside of their houses and that men cleaned their razors by shaking them in a small cup of water, as running water was a luxury few could afford. No wonder Gillette’s product is clogged with hair so easily! Those and other insights helped them develop a better performing and lower priced product for India, which sold to 100 million men while the subsidiary’s market share jumped to 18% in two years. By creating a radically different ‘story,’ Alberto started the shift to a more successful customer-centric culture.”

Barney says that to be effective, culture-changing stories must have six attributes:

• They must be authentic, consistent with the values and actions of the leader who’s building them. This doesn’t mean that the leader never makes a mistake. But when a mistake is made, the leader must acknowledge it, then use the error to build a story that exemplifies the new culture that’s being built.
• Culture-changing stories must “star” the business leader. Barney and his colleagues have never seen a successful culture change in an organization that was not—at least in part—“top-down” in nature. Unless employees see business leaders doing things that exemplify a new culture, they won’t believe their commitment to culture change, he says. “This doesn’t mean that a business leader gets to ‘dictate’ what the new culture will be,” he says. “Instead, the job of the business leader is to set the direction of culture change, but the actual change is co-created between the leader and employees throughout the firm.”
• The actions that business leaders take to build a story must break with the past and provide a clear path to the future. They break with the past by clearly rebuffing the values and norms that dominate an older culture. They provide a path to the future by exemplifying the kind of culture a business leader thinks will be needed to implement a new strategy.
• Culture-changing stories must appeal to employees’ heads and hearts, Barney says. “By heads, we mean there must be a compelling business reason to change the culture—usually because it is not aligned with a firm’s strategies. If there is no business case for culture change, then culture change is a manifestation of a business leader’s ego.” Barney says changing culture is about changing the values, norms, and practices around which an organization’s culture is built. “It thus requires employees to change what they value and do, perhaps even how they identify with and are committed to an organization. This kind of personal change often requires people to reconsider their deep seeded beliefs and commitments. In this way, culture change is about more than just ‘making more money.’”
• Culture-changing stories are often theatrical. Barney says this makes them memorable. It also sends a signal that a business leader is deeply committed to culture change.
• Finally, business leaders need to encourage other employees in the organization to build their own culture-changing stories. Barney says they do this by building multiple culture-changing stories themselves, by recognizing when others have built stories, and even by asking a few critical managers to build culture-changing stories.

How can leaders encourage rank-and-file workers to develop their own culture-changing stories?

Amorim says the process of replacing old stories of the old culture with new stories with new values and norms succeeds when many people create stories consistent with the new culture.

“Leaders can invite others to ‘come along’ to co-create stories with them,” he says. “When the Gillette team came back from India, the story was no longer Alberto’s, but his team’s.”

Amorim says leaders can observe those in the organization who act in ways that reflect the desired new culture and then publicly recognize them and their stories in meetings, in corporate newsletters, and other means so the rest of the organization to learn the story. “The recognition will encourage others to embark on new behaviors that become new stories,” he says. “And leaders can invite the entire organization to create stories that reflect a new culture through corporate programs and contests.”

A logical question here is that if leaders must star in their own stories, how does that square with the idea of humility and sharing credit?

“Mark Twain said that ‘actions speak louder than words, but not nearly so often,’” Barney notes. “It’s quite easy to announce the need for a new culture. But such announcements are examples of ‘cheap talk.’ When culture change gets difficult—as it almost always does—it’s easy for business leaders to put this kind of change on the ‘back burner’ as a firm focuses its efforts on shorter-term financial or regulatory or other challenges.” However, he says, it’s harder to “walk back” actions that build culture-changing stories. So, starring in these stories increases a business leader’s perceived commitment to culture change, and that helps encourage employee commitment to the change.

What’s the key to building stories that appeal to both the head and the heart?

Barney says that on the “head” side,” business leaders need to build stories that clearly exemplify what a firm’s new strategy needs to be, and the culture that needs to be created to implement that strategy. On the “heart” side, “these stories also need to invite employees to join with a business leader to build a better and more effective company that accomplishes great things.”