The Untapped Potential of Corporate Narratives, where he explains the importance of narratives, and why they can make the difference between institutions that either crumble or grow stronger. If you replaced the context of the institution by the startup, the same concept applies, and even more forcefully. First, let’s review the difference. For background, you might be familiar with story-telling, but there are fundamental differences, as John Hagel explains it:

Stories are self-contained – they have a beginning, a middle and an end. Narratives on the other hand are open-ended – the outcome is unresolved, yet to be determined.  Second, stories are about me, the story-teller, or other people; they are not about you.  In contrast, the resolution of narratives depends on the choice you make and the actions you take – you will determine the outcome.

A dumbed down interpretation of the power of the narrative, is to substitute it by another familiar expression: capturing our imagination. When a startup or company begins to capture our imagination, we start to complete our own narrative, taking action choices of our own, therefore using the product more, being more engaged and more loyal to it. We become emotionally attached to it, and that bond is very strong. And it “drives us to do amazing things.” According to Hagel, the specific benefits of a strong narrative are very real because it’s about “connecting with and mobilizing others beyond the boundaries of the institution.” (replace institution by “startup”) He lists the following benefits that I’ve summarized here:

• Differentiation – it helps you to stand out from the crowd

• Leverage – it mobilizes people outside your company

• Distributed innovation – it spurs innovation in unexpected directions

• Attraction – it draws people by the opportunity and the challenge you have laid out

• Relationships – it spurs sustained relationships with others that have fallen under the spell of your narrative

John Hagel gives the example of Apple and Nike, two companies that have very powerful narratives. Let’s bring it to the context of startups (although some are now grownups). Twitter is the quintessential new company with a very strong narrative. Twitter’s narrative has been well depicted in their recent S1 filing, as “a global platform for public self-expression and conversation in real time…unique in its simplicity... public, real-time, conversational, and distributed.” If you unpack that narrative, it’s full of benefits for the users. It connects with you. It empowers you. It’s about you (the user), not them (the company). So, what other startups and up and coming companies have great narratives? I haven’t gone to the length of extracting their particular narratives, but these companies strike me as having strong narratives that fit the (stringent) criteria laid out by John Hagel.

AirBnB . Kickstarter . Tesla . Dropbox . Foursquare

These companies engender leverage, distributed innovation, attraction, and relationship. These aren’t product features. These are powerful benefits that come out when you use their product. Coincidentally, there is a BIG idea behind each one of them. Also, these companies capture our imagination, and make us do things we didn’t or couldn’t do before, each in their own way. If you are a startup, what is your narrative? Is it powerful? Does it capture the imagination of your users, or does it have the potential to? Does it produce leverage, distributed innovation, attraction, and relationship? If you’re an investor looking at a startup, you’ve probably played in your mind this question “Does this company have a higher purpose that goes beyond having a great product.?” That’s when you start to  think about billion dollar markets, of course. You know in your mind if a company has the potential of becoming a breakaway. The narrative test might be a good test to run against it. Imagine it, and see if it will stick. What do you think of applying the concept of narratives to startups? Is it possible that a small startup could posses a strong narrative, or is the narrative acquired over time, as the company matures and spreads their footprint further?]]>