How storytelling can boost a business

The business world is always looking for that great new idea, but what if the next big thing was something as old as humanity?

Great storytelling has been around for eons, but prowess in that skill can propel growth in a company or brand, attract new talent and boost employee morale. Carmine Gallo tells this story in his new book, The Storyteller’s Secret: From TED Speakers to Business Legends, Why Some Ideas Catch On and Others Don’t, on the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111.

An edited transcript of the conversation appears below.

Knowledge@Wharton: What was it that got you started on this path?

Carmine Gallo: I’ve been studying communication for 25 years, and I was a journalist. I was a CNN journalist for quite a while. Today, I still write for Forbes andEntrepreneur, and a bunch of other outlets. And I’ve appeared at Wharton and Stanford and other business schools as well.

And what I keep hearing — over the last few years especially — is this lament that many business students and business professionals cannot communicate as effectively as they should be communicating. But what does that mean, to be a better communicator? The word “storytelling” seems to be coming up time and time again. So I wrote The Storyteller’s Secret, not because it’s something that I thought was important, but because this is what I heard.

It’s almost like I had to [write it, especially] when a person like Vinod Khosla, billionaire venture capitalist here in Silicon Valley, where I live, tells me that the biggest problem he sees is that people are fact-telling when they pitch him. They’re giving facts and information and he says, “that’s not enough, Carmine. They have to do storytelling.”

When Ben Horowitz, co-founder of Andreessen Horowitz, another big venture capital firm, tells me the most underrated skill is storytelling, or when Richard Branson, who I interviewed, said, “entrepreneurs who cannot tell a story will never be successful” — at some point, I have to agree that maybe they know something I don’t.

Knowledge@Wharton: It’s not that this is really a new concept. But the key here could be that maybe storytelling, at some level and among some people, is not viewed as an important topic.

Gallo: I think many business professionals today understand that they need to be doing this. They just don’t know what it means, because if you think about it, it is a somewhat esoteric or abstract notion: storytelling. Storytelling in books? Storytelling in movies? What does that have to do with my next business pitch? What does that have to do with employee engagement? I think some people understand — at least, the folks who listen to your show, they get it. They’ve heard of it. They understand that narrative is important. I’m just not sure they know exactly how to do it.

In The Storyteller’s Secret, there’s a whole chapter on Steve Wynn, the great Las Vegas hotel mogul. And we talk about storytelling in hospitality. Now, here’s a guy who has made an incredible success in hospitality. But he said he only discovered in the last five years the secret that has changed his business and his life was storytelling. And what he means by that — and this is something that applies to all of your listeners today — is that if you can get all of your employees and your management to begin sharing stories of great customer experiences, and what that means and how to do those better, that creates much more emotional resonance with the people.

“Many business professionals today understand that they need to be doing this. They just don’t know what it means, because … it is a somewhat esoteric or abstract notion: storytelling.”

Knowledge@Wharton: That obviously has a positive effect on the back end, where the feeling around the company is much more positive overall.

Gallo: At first I thought that would be hard to find empirically. But as I did my research over the last couple of years, it’s actually not. There’s plenty of empirical evidence to prove what you just said.

Southwest Airlines is a storytelling culture. As Herb Kelleher, the founder of Southwest Airlines, had to move out of his position — he was the charismatic leader who started the company – they wondered: How do they keep his mission and values alive? Those were all about taking care of each other, and taking care of the customer and the passenger.

So they created what’s called a storytelling culture, where every week the HR teams go out, and they take videos of real passengers who have had a struggle, or have maybe almost missed a funeral or a birth, or a life-changing event, and stuff like that. But they were able to do it because of Southwest. Most of these are heart-wrenching stories. I’ve seen the videos. They send the videos out constantly, every week, and then they try to solicit more employees to be heroes of their own stories. So it’s almost like you’re taking employees and turning them into company crusaders. That’s where you see profits going up, and productivity [rising] higher, and higher employee engagement. But it all starts with narrative and storytelling, and getting people immersed in that culture.

So we’ve got Southwest. We’ve got KPMG. We’ve got Whole Foods. We’ve got Apple. Now Wynn Resorts. Many of these companies are examples of storytelling cultures.

Knowledge@Wharton: The interesting part about that is realistically, to push that needle doesn’t cost a lot. That’s the investment that people make in themselves, in their co-workers. That can be the best way, sometimes, to make a company’s message resound more strongly with consumers.

Gallo: Ritz-Carlton was one of the first to do this, and they’ve done an extraordinary job of elevating that customer experience to a gold standard.

They’ve been doing storytelling forever. What they did – and this is what I try to tell other companies to copy, because it’s free — in a Ritz-Carlton hotel, every day, every department meets for 15 minutes. It’s a group meeting. And instead of just going over the day’s events, here’s what the housekeepers need to know about this floor, or whatever, they start telling stories. And they ask the question of the employees: “Is there a great customer experience that you’ve been a part of, that you can share with the rest of us?” I was part of one of these. I checked it out. It was really fun. They start sharing stories with one another, and then they start competing for who has better stories. They get recognized publicly. That was the key. The president of the Ritz-Carlton said, “The key is, you are recognized publicly for being the hero of your customer’s story.”

And I remember leaving the Ritz-Carlton after I studied that, and saying to myself, “Wow. That was free.”

And how do you replicate that emotional engagement other than narrative? You can give perks all you want. That’s fine. But it’s very difficult to replicate that deep emotional connection with the brand.

Knowledge@Wharton: When you think of storytelling in general — not in strictly this business sense – it’s something that is, in most families, passed down. Your mom and your dad are going to tell you all kinds of stories over the course of your lives about family members. You would think it would be a natural thing for people to just have within them.

Gallo: I think that storytelling … is so natural to us, especially in families. That’s the way you raise courageous kids, in my opinion — telling stories, epic stories of heroes. I have several examples of people like Malala Yousafzai, the 18-year-old Nobel Peace Prize winner, who talks specifically in her documentary and in her books about how she got the courage to face her enemies only after spending her entire youth listening to mythical stories of heroes that her father taught her. So we know that storytelling raises people’s courage.

I think it’s just a little more abstract when you begin saying, “Well, wait a minute. How does that apply to business?” Also, let’s not forget that a lot of people don’t want to be vulnerable. They don’t want to be too transparent — they feel like they’re being vulnerable. So when it comes to individual storytelling, one of my biggest suggestions — and this is a hard hurdle for people to get across — is, if you have had times of struggle and triumph over adversity in your life, the best thing to do if you really want to engage people, is to share those stories.

Knowledge@Wharton: That transitions nicely to one of the people you talk about who I wanted to bring up: Howard Schultz of Starbucks, and how the struggles his dad had when Howard was younger really inform the culture at Starbucks right now.

Gallo: Isn’t that interesting? Howard Shultz has said that people who come from uninspiring origins — here’s the full quote, because we have to get the quote right, it’s beautiful — he said, “The more uninspiring your origins, the more likely you are to use your imagination and invent worlds where everything seems possible.”

Here’s the guy who embraces what I call the backstory. That’s what movie-makers call it. You cannot feel connected to a particular leader or an initiative unless you understand the backstory. That’s why the first third of all great commercially successful movies introduces you to the characters. If you don’t like the characters and you don’t get to know the characters, you don’t care what happens to them. Backstory is very important.

Howard Schultz has a great backstory, and he shares it very openly. He talks about the day that his father was injured at work. They were living in the projects, in the Bronx, and they did not have health insurance. Money was tight, and it scarred the young man. He was about 16. And he said, “If I am ever in a position to help people in my life, that’s never going to happen to them.” And that is the “why” — you folks have talked about this endlessly, right? The importance of the “why” behind your initiative.

That story underpins the “why” behind full-time health benefits for part-time workers. It underpins why he wants to pay for college education for his employees. Or hire vets. Sometimes he pushes the envelope in a way that gets him a little backlash on social media. Like when he wanted to talk about race in the morning. That didn’t go over too well. But what I celebrate about him is that he is willing to be open and transparent and authentic, and to use his backstory to make business a better place.

“We want to hear information through stories, with heroes and villains and characters, and a hero to rally around. It’s the way the world and our brains work. We’re wired that way.”

Knowledge@Wharton: Is it also that he recognizes that the value of his employees grows over time, especially in that type of industry, where you can see a lot of rapid turnover? How much of this is him recognizing that if you are invested in the people that work for your company, in the end, they will be successful — whether with you, or somewhere else?

Gallo: He has a wonderful quote, too, that reminds me of what you just said. “Treating employees benevolently shouldn’t be viewed as an added-cost that cuts into profits, but as a powerful energizer that can grow your enterprise.”

Knowledge@Wharton: Richard Branson is another one of the people that you talk about in the book. Talk a little bit about how he fits into this realm.

Gallo: Love Richard Branson. I think he’s the real deal.

I’ve spent some time with him. I’ve interviewed him twice. What you see is what you get. I love that about people. I just love that about authentic leadership. He’s very inspiring. He carries his mobile phone around with him, and he tweets. It’s not delegated to a whole team of people: It’s him. So it’s authentic. It’s a natural voice, and he loves to have fun, as you know. He says, “What’s business if you can’t have fun?”

Knowledge@Wharton: And he does all this in the scope of working in industries — especially considering what he’s doing now in aerospace — where he is trying to literally take that philosophy out of this world.

Gallo: That’s exactly right. He’s dealing with some very complex stuff, and big visions. But for him, storytelling is everything. Now, storytelling — these are direct quotes from Richard Branson. Storytelling, he said, can be used to drive change. It’s the best way we have of coming up with new ideas.

So Richard Branson — this is interesting — is doing the very same thing that humans began doing 400,000 years ago. According to anthropologists, 400,000 years ago, we started gathering around a campfire to share stories. On Necker Island, where Branson lives, he commissioned a local artist to build this big, beautiful fire pit. And that’s where he gathers his team.

In his own storytelling, there’s a lot we can learn about him. He gets pitched all the time, and he’s given me a few tips over the years. One is, you have to keep your language simple. He’s acknowledged that he has dyslexia. “Growing up having dyslexia, I had to keep things very simple. Very short, very concise,” he said, “but it actually helped me to be a more succinct and clear speaker.” So he’s looking at that dyslexia as an advantage. As many great leaders do, don’t they?

They look at some of their past and their experiences as advantages. So he wants things to be very simple, very clean. When he gets pitched, he said, “It better not be more than 10 minutes. If you’ve got a PowerPoint that lasts more than 10 minutes, you’re going to lose me.”

Branson said, “Carmine, if your idea cannot fit it on the back of an envelope, it’s rubbish.”

Because he was saying, if you don’t understand your idea well enough to encapsulate it clearly on something as simple as the back of a small napkin — outline it, at least — you haven’t thought through it clearly enough. As Steve Jobs said, simple is harder than complex.

“If you don’t understand your idea well enough to encapsulate it clearly on something as simple as the back of a small napkin — outline it, at least — you haven’t thought through it clearly enough.”

Knowledge@Wharton: Obviously, companies with leaders who subscribe to the storytelling idea have an advantage over companies with leaders who don’t subscribe to it. How difficult is it, though, for leaders who aren’t on that page to change their path and tap into that storytelling aspect? I think we agree that everybody has it. It’s just being able to pull it out.

Gallo: It’s in our DNA. That’s the beauty and the power of story. And I won’t go too far into the science. But I have many pages in the beginning on how storytelling is hard-wired in our DNA. We process information through story. We want to hear information through stories, with heroes and villains and characters, and a hero to rally around. It’s the way the world and our brains work. We’re wired that way.

So the best thing you can do, especially to engage your team and build brands and pitch products and sell products, is to wrap those ideas in narrative. I believe that ideas that catch on are wrapped in some sort of narrative. No, it’s not the easiest thing to turn around a larger company. But I’ve seen it done, and I’ve seen it done in a couple of famous areas. One was KPMG, one of the big four accounting firms, now in consulting. KPMG actually came up with a pretty extensive study not too long ago — they found that morale was declining somewhat. They were having all of those issues, especially around young people, that many global companies are having these days.

And here’s where it saves us all a lot of work. They studied thousands of managers, and they sent out thousands of studies and surveys. And they came to the conclusion that people, young people, especially, wanted to be part of a bigger mission. A purpose. OK. We’re starting to understand that. That’s fine. Now, how do you teach them about the purpose of your company? Through storytelling.

So they literally took their managers, and helped transform them all into storytellers, so that the managers were constantly telling stories of the history of KPMG — how KPMG has shaped the world; how they continue to shape industries and lives, and make the world a better place.

And they said as they got immersed in the storytelling culture, engagement scores went up substantially. Turnover was reduced substantially. And this is a study that is online. They’ve broken it down. They’re showing to you empirically how profits began to soar. So in all of those empirical models that we look at, storytelling helped transform that company in a big way.

Now, I’m a storytelling guy, and [even] I can express some skepticism. Was that really the reason? According to KPMG, it certainly was. So I think that we are seeing companies that get it. It does have to be pushed from the top, because the top leaders need to be the chief storytelling officers of the brand.

If you don’t get it from the top, then there’s very little chance of transforming yourself into a storytelling culture. But it is happening at big companies.