From Loss to Upside Through a New Narrative


Data v. story - a new narrative

At some point in his career, Joe Moglia went “from a company that had incredible stability to a company that was blowing up as the dotcom bubble burst.”

Moglia also went from head football coach and defensive coordinator at a number of esteemed college teams to Wall Street. 17 years at Merrill Lynch, then as CEO and Chairman at TD Ameritrade.

This conversation with Barry Ritholzt touches upon a couple of business pointers. Underestimating impact in the short term is common. The second lesson is about customers. Day traders, which was TD Ameritrade's niche, went out of business. Both show how hard it is to estimate and predict, even for veterans.

The real business model emerges when you figure out the true narrative: “Ameritrade [was] really a technology firm and a financial service wrapper.” Then, you restructure the business. From there, the company's story and business focus converge to compound impact.

Moglia went back and forth between coaching and bond salesperson. He borrowed from one for the other, and vice versa. As he says, in football you have 11 people functioning as one, with zero error. Your decisions need to be fast. Your game strategy needs to include contingencies.

But also make it simple enough to execute. Which is also true for business. If your strategy is not simple enough to execute, you miss out. The tools are the same: ability to understand people, so you can motivate and inspire them; the right people, discipline, incentives, ability to delegate.

Principles:

execute well, build unity.

First discover: identity and influence. Who am I? Then, explore the narrative. What is my story? Execution flows from walking the talk. Unity is an outcome of clarity on what has value. The plot thickens once money is introduced in the story.

Just as you can use storytelling more objectively to bind people together, uncovering a new narrative can transition a business from loss to upside and tangible impact.

 

Why stories are so hard to change

Stories are tricky. They attach to emotion. Thus, they hack into decision making. Emotional attachment to stories also affects you long term. Because it turns stories into identities. And this gives you a false sense of security.

I worked with a startup that saw itself as whimsical. People joined the company for the vibes. Marketing and sales support focused on the technology. This works well when your customer is tech-savvy and has some purchasing independence.

What appeals to business executives is entirely different. You're having a conversation about execution, costs, and risk. Rationally everyone gets that. But the resistance is baked into the story the company tells itself. And it sabotages projects and deals in big and small ways.

So it's important to understand how the story fits within the larger narrative. Then spot the ways in which it persists through identity. One of the ways companies create silos happens as they expand. A startup adds strategic functions like marketing and communication.

The engineers and developers think and operate one way, and ideally marketing translates and connects to customers. But that's not always the case. For one, how we work together on a new implementation is an area few address. And also managing the emotional sphere of risk.

Emotional risk is why it's so hard to let go of a story. Even when it doesn't serve you anymore. And it's as real as operational risk. Many digital transformation projects fail for this reason alone. “We were fine before, and we're still here” is the common rationalization.

How many times in the last year have your heard something like: “We didn't have vaccines during the Black Death plague. And we're still here.” Yes, but the descendants of one third of Europe's population didn't get to be here with us. And we do have a new technology: vaccines.

There's a bit of plague thinking around technology. Transformational technologies also trigger pain and suffering. Downstream it shows up as resistance and frustration. Upstream it's risk management and cost savings. The feeling of loss is real.

 

Real world impact

Narratives carry ideas,

their reincarnations keep them alive.

I'm reading the chapters in Robert Schiller's Narrative Economics where he talks about the persistence of labor-saving machines will take your job narrative. Temporary recessions and depression in the last couple of centuries created economic hardship.

But the narrative of machines destroying jobs kept people from innovation. Which then became a self-fulfilling prophecy.

Fears of robot-like autonomous human replacements date to the tripod of Hephaestus (8th C BC) in Homer's Iliad and the statues of Daedalus (1st C BC). His research includes the role of the media in stoking those fears and tracks the narrative through different contexts.

The tech-eats-everything narrative went from curiosity in 18th C technology to mounting concern in the 19th C through depressions (1870s and 1890s) and tech unemployment (before and during the 1930). Of interest is the story around underconsumption and overproduction and its impact on wages.

Technocracy is a word born in the early 1930s. A whole vocabulary emerged, along with a new kind of money: electric dollars. Predictions and alarm bells went off on permanent unemployment due to machines. We've been in a high state of alert since then.

After World War II, the narrative evolved to electronic brains. Automation and artificial intelligence followed (AI). Peaks around AI in the 1960s, 1980s, 2990s, and 2010s. Each was a major, world-changing turning point. Until the next one.

What I like about Shiller's book is that he follows the economic narrative to its next reincarnations. Because humans have a need to make sense of what's going on.

It's clear even in our everyday behavior. Gossip as social grooming, and rumor its more dangerous sibling under the duress of uncertainty and fear.

 

Where and what can help with the shift

However, there are ways to help bring people up to speed and join a new narrative with their story. First, you parse how you're communicating. Transmission and ritual are two metaphors we associate with communication. Mostly unconsciously. 

So that helps you explore some avenues. Just by reframing how you use communications. Where you can identify existing communities around stories. The stories we tell are ritual culture. Think for example how much of Western storytelling focuses on the hero's journey.

Companies love the resolution part of the journey.

The part we all dislike is the bottom part:

the pain, the challenges, the uncertainty.

But, they're the good parts. Unless you go through those, you won't metabolize the change. You don't need more data for that. Data are the worst kinds of stories, because they give you a lot of information, but nothing happens to transform.

With data, you can see the patterns, and don't know what they mean. An executive brief with charts and projections doesn't tell you why you're having pain. So you don't just wake up one day, write a memo, and people start working well together. People have to know what's going on.

There's a reason why rituals persist in culture. They help us make sense of what's going on. Rituals assist humans in the transformational processes of identities. There's little ritualistic with social media, for example. Mostly a lot of data and information.

People come across all kinds of information. Some of that is emotional hacking. And that's what usually rises to the top. Not the good information. Now, if your narrative is solid. If your points of reference are grounded on meaning and evidence, then you're on higher ground.

Without meaning, you're drowning in a sea of despair. Your stories keep you stuck into a loop of fear. Your decisions are in peril. But we're blind to the very story that keeps us stuck. If you want to go from zero to one here, the first step is to act from story, knowing which narrative it favors, rather than automatically.

New narratives are not as gutsy as we think. They might be reincarnations of ideas past in new clothes. A better version and outcome are possible with execution. Unity is possible.

 

[the imagine on your right above is a detail of the Mausoleo of Galla Placidia, Ravenna]

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