Tales of Transformation: The Universal Language of Narrative 

August 2024

"The most powerful person in the world is the storyteller. The storyteller sets the vision, values, and agenda of an entire generation that is to come." — Steve Jobs 

Stories and Narratives

Storytelling is an ancient and universal thread woven into the fabric of human existence. Across millennia and cultures, narratives have served as vessels for knowledge, morality, and imagination, shaping societies and individual minds alike.

Joseph Campbell’s concept of the monomyth—the Hero’s Journey—reveals a universal narrative structure underpinning myths worldwide. From Ramayana, Gilgamesh to Luke Skywalker, heroes traverse stages of departure, initiation, and return, reflecting shared human struggles and aspirations. This archetypal framework suggests storytelling is a cultural universal, a tool for encoding collective wisdom. 

In recent times, historian, Yuval Noah Harari expands this idea, positing that myths and “fictional stories” enabled large-scale cooperation among humans, from religious beliefs to modern political systems. Stories like money, nations, or human rights are “shared fictions” that bind strangers into cohesive societies, illustrating narrative’s role as a social glue. 

As Harari says…

“…..We talk about stories, and maybe the first thing to say is simply that humans—Homo sapiens—are a storytelling species. We think about the world and our lives in terms of stories. Very few people think about the world in terms of numbers, equations, or statistics. This belief in shared stories is the basis for almost all human cooperation. Stories are extremely important…

..When we look at the broad history of the last hundred years, as you just described, we see a shift. In the 20th century, politics was a battleground between huge visions about the future of humankind—grand stories that explained, or claimed to explain, everything that had happened in the past, what was happening in the present, and what would surely happen in the future.

We had three such big stories: the fascist story, the communist story, and the liberal story. They were knocked out one after the other until, by the end of the century, only one remained—the liberal story. This led many people around the world to believe that this was it—the end of history. Not in the sense that nothing else would ever happen or that time would stop, but in the sense that we had figured it all out. We believed we perfectly understood the past, we knew where we were, and we knew where we were heading.

According to this story, we were moving toward a world of increasing globalization and liberalization. Democracy would be the dominant political system, the free market would be the dominant economic system, and borders and walls would gradually disappear—perhaps even vanish completely—until all of humankind became a single global community. Many people believed this, not only in the core Western countries but all over the world…

…Then, quite rapidly, over the last ten years or so, people lost faith in this story—not just in the developing world but, above all, in the core countries of Western Europe and North America. If, ten years ago, some governments were still trying to impose this vision of history on others around the globe, even at the cost of war, today, they are no longer even sure of this story within their own countries…”

The human brain is inherently wired for stories. Neuroscience reveals that narratives activate regions associated with sensory experience, emotion, and memory. When we hear a vivid tale, our brains simulate the events, blurring the line between story and reality. This neural mirroring explains why stories feel immersive, akin to dreams—another narrative form the mind instinctively generates.

While the terms "story" and "narrative" are often used interchangeably, they hold distinct roles in human understanding and expression. A story, at its core, is a sequence of events—a linear account of what happens. A narrative, however, transcends this simplicity. It is the lens through which a story is framed, imbued with meaning, purpose, and significance. Narratives are not neutral retellings; they shape how we interpret events, often embedding lessons, values, or worldviews. They operate subtly, weaving into the fabric of human cognition to influence assumptions, beliefs, and decisions at a subconscious level. Unlike conscious communication—a deliberate tactic to convey information—narratives work beneath the surface, molding perceptions of reality itself. 

A narrative’s power lies in its universality. Found in every culture, era, and medium—from ancient myths and religious parables to modern films, news cycles, and social media—it transcends language. It can be conveyed through words, images, gestures, or hybrid forms like cinema. Crucially, narratives often hinge on transformation: a character’s evolution, a societal shift, or a reversal of fortune. This change of state invites audiences to reflect on cause and effect, morality, or identity. 

Joseph Cambell on The Hero with a Thousand Faces

…there is a certain typical sequence of heroic actions that can be detected in stories from all over the world and throughout many periods of history. Essentially, you might say it is one deed done by many different people.

Because that’s what’s worth writing about. Even in popular novels, the main character is usually a hero or a heroine—someone who has found, achieved, or done something beyond the normal range of experience. A hero is often someone who has given their life to something bigger than themselves.

In all cultures, regardless of the costume the hero wears, what is the defining deed?

There are two types of heroic deeds. One is the physical deed—the hero who performs an act of war, saves a life, or sacrifices themselves for another. The other is the spiritual hero—someone who has found a way to experience a higher, supernormal level of human spiritual life and then returns to share that knowledge.

It’s a cycle—a journey and a return. This pattern can also be seen in initiation rituals, where a child must give up childhood and become an adult. In a way, they must "die" to their infantile self and return as a self-responsible adult. It is a fundamental experience that everyone must undergo.

For at least 14 years, we live in the psychological dependency of childhood. To move beyond that into psychological self-responsibility requires a kind of death and resurrection. This is the basic motif of the hero’s journey: leaving one condition, discovering the source of life, and returning in a richer, more mature state.

Even if we are not heroes in the grand sense of redeeming society, we each must take this journey within ourselves—spiritually and psychologically…”

Moreover, narratives are inherently persuasive. By depicting the consequences of actions over time, they seek to align the audience with the storyteller’s perspective. A political speech, for instance, might deploy narratives of “resilience” or “threat” to evoke shared values, while a brand’s advertising might craft a narrative of self-improvement through product use. In this way, narratives are not merely stories told but frameworks that quietly govern how we see the world and our place within it. Their enduring presence across human experience underscores their role as both mirrors and architects of collective consciousness.

Narratives are intricate constructs that shape human understanding through a blend of structure, meaning, and medium. At their core, narratives are built from events—singular or linked—that form the skeleton of a story. While some theorists argue even a single event suffices, others emphasize causality as the connective tissue, transforming isolated incidents into a purposeful sequence. This causal linkage imbues narratives with direction, turning a mere chronicle into a journey of progression. Central to many definitions are human or human-like entities, though debates persist: must narratives revolve around characters, or can they emerge from abstract forces or natural phenomena? This tension underscores narratives’ flexibility, accommodating both personal sagas and impersonal chronicles.

As frameworks, narratives weave coherence from chaos. They stitch disparate events into a tapestry of meaning, offering a lens to interpret the world. By compressing complex causality into digestible arcs, narratives act as cognitive shortcuts, distilling sprawling realities into situational models that inform beliefs or policies. Politicians and strategists harness this power, crafting narratives to sway public opinion or justify actions, illustrating their role as tools of influence. The structure of narratives often mirrors life’s rhythms: a beginning, middle, and end map onto order, disruption, and resolution. Whether through a hero’s rise, a tragic downfall, or a quest’s trials, plots leverage cause-and-effect to mirror human experiences, reinforcing themes of transformation and consequence.

Narratives transcend text, thriving in images, gestures, and performances. A film’s visual metaphor or a mural’s symbolism can convey stories as vividly as words. Here, the distinction between story (events) and discourse (presentation) becomes vital—a tale’s essence remains, whether told orally, enacted on stage, or depicted in art. This adaptability highlights narrativity, the latent potential for events to be framed as narratives. International affairs, for instance, possess narrativity, but only through audience interpretation do they crystallize into shared stories, revealing how context and perspective shape meaning.

Stories are a big part of how humans think and make sense of the world. They don't just show time as a straight path but as a series of meaningful events. Our memories work like stories, shaping how we remember things and helping us build our sense of identity. By shaping our experiences, stories influence how we see the world, whether it's through cultural myths or personal memories. They help us understand the past, deal with the present, and dream about the future. In simple terms, stories are essential to human thinking, turning life's confusion into meaning.

Narratives are engines of causality, distilling the tangled webs of cause and effect into digestible arcs. At their heart lies the principle of compression: they condense sprawling, intricate causal networks—economic shifts, political maneuvers, environmental feedback loops—into streamlined subgraphs, spotlighting only the most salient links. A drought triggering migration, a betrayal sparking war, a technological breakthrough reshaping society—these are not random events but causal transformations that propel characters, nations, or ideas from one state to another. Narratives simplify complexity, not by erasing it, but by curating a chain of because: this led to that, and that altered everything.

This causal logic fractures into distinct narrative types, each tailored to specific realms of human experience. System narratives map the invisible architecture of power—the rules, alliances, and hierarchies that govern international relations. They explain how sanctions ripple through economies or why treaties collapse, framing causality as a structural game. Identity narratives, by contrast, delve into the who: they trace how historical grievances, cultural myths, or collective traumas forge a people’s sense of self. A nation’s origin story, for instance, might compress centuries of migration and conflict into a causal arc of “struggle and triumph,” cementing identity through selective cause-effect linkages. Issue narratives are more tactical, weaponizing causality to shape policy. Climate activists, for example, might frame rising emissions as the root cause of disasters, compressing science into a moral imperative: act now, or catastrophe follows.

Narratives also vary in scope. Short-term narratives—a diplomatic crisis, a viral scandal—zoom in on episodic sparks and consequences, while long-term narratives stretch across decades, weaving events into grand arcs like “the decline of empires” or “the march of progress.” Both rely on narrative templates: preexisting causal frameworks that color how new events are interpreted. A recession might be cast through the lens of “corporate greed” or “government failure,” depending on which template audiences invoke. These templates are cognitive shortcuts, allowing societies to process the unfamiliar through the scaffolding of the known.

Narrative as Strategic Tools

Narratives, when wielded as strategic tools, transcend mere storytelling—they become blueprints for shaping reality. At their core, strategic narratives are instruments of influence, crafted to stitch fragmented events into a coherent plot that serves political, economic, or social objectives. For states and corporations alike, they are not passive tales but active frameworks that define what matters, why it matters, and what must be done. A political leader might frame a nation’s history as a saga of resilience against oppression, while a corporation might cast its origin as a disruptive underdog challenging giants. Both are deploying narratives to anchor perceptions, legitimize actions, and steer behavior.

In politics, strategic narratives operate on dual fronts: domestic legitimacy and external persuasion. A government might invoke a narrative of “national rebirth” to unify citizens around austerity measures, while projecting an image of “global leadership” abroad to secure alliances. These narratives are dynamic, constantly renegotiated in the tug-of-war between state agendas and public reception. They thrive on causal linkages—connecting past grievances to present policies, or current crises to future visions—to manufacture inevitability. For instance, framing climate action as both a moral duty and an economic opportunity compels audiences to see policy not as a choice, but as the next logical step in a preordained arc.

Yet their power is tempered by friction. Narratives collide with competing stories, historical baggage, and the anarchic nature of new media ecosystems. A state’s carefully curated narrative about “democratic values” might unravel when social media amplifies contradictions—a leaked document, a protest gone viral. Audiences, far from passive, dissect and remix narratives, turning them into battlegrounds of interpretation. Autocracies may struggle to reconcile rigid nationalist tales with the globalized aspirations of their youth, while democracies grapple with polarized factions weaponizing the same narrative template (“freedom,” “security”) to opposing ends.

In business, strategic narratives are alchemists of value. A startup’s “disruption story” transforms lines of code into a revolution, while a legacy brand’s “heritage narrative” turns tradition into timeless trust. These stories compress market complexities into digestible arcs: a missionary narrative might frame a product as essential to solving a societal crisis, while an underdog narrative rallies customers against monopolistic rivals. Crucially, corporate narratives must walk a tightrope between aspiration and credibility. A tech firm promising to “democratize innovation” risks backlash if its practices contradict its plot—a reminder that audiences demand narrative coherence, not just spectacle.

The lifecycle of a strategic narrative reveals its fragility. Political narratives ossify when they ignore shifting contexts—a “Cold War hero” narrative faltering in a multipolar world—or when leaders fail to adapt their stories to new crises. Businesses, too, must evolve their narratives as they scale: the rebellious “outsider” must mature into a responsible industry leader, or risk irrelevance. Meanwhile, the rhetorical coercion embedded in narratives—compelling audiences to endorse a stance or face cognitive dissonance—can backfire if overplayed. A government’s relentless “security threat” narrative may initially mobilize support, but erode trust if perceived as manipulative.

Ultimately, strategic narratives are paradoxes: they simplify to persuade, yet thrive on nuance; they seek control, yet depend on collective buy-in. Their potency lies not in their truth, but in their resonance—the ability to turn chaos into causality, actors into archetypes, and moments into momentum. Whether on the world stage or the marketplace, they are the invisible scripts that turn spectators into participants, and ambition into action.

Narratives & Communications

At the heart of human communication lies the narrative—a dynamic tapestry woven from the raw materials of discourse, framed by intention, and projected across the ever-shifting terrain of media ecology. Narratives are not mere stories; they are the scaffolding of meaning, the battleground of conflict, and the invisible architecture that bridges individual cognition with collective action.

Narratives begin as fragments of discourse—ideas, symbols, and conversations—that actors stitch together to construct coherent plots. Through framing, certain facets of events are amplified, while others fade into the background, steering audiences toward specific interpretations. A political leader might frame an economic crisis as a “test of resilience,” while activists might frame it as “systemic failure,” each narrative bending reality to its purpose. The media ecology—the digital, social, and traditional channels through which narratives flow—acts as both amplifier and disruptor. In today’s fragmented information landscape, narratives vie for dominance, their success hinging on adaptability to platforms where virality often trumps veracity.

Narratives operate at the core of cognition, transforming chaos into coherence. They are not passive reflections of the world but active engines of meaning-making, shaping how individuals and groups understand their identity and purpose. A nation’s origin story, for instance, compresses history into a mythic arc of struggle and triumph, fostering collective identity. This coherence is not neutral; it is a cognitive lifeline, allowing humans to navigate a world too complex to process in its raw form. By organizing experiences into cause-and-effect arcs, narratives answer existential questions: Who are we? Why did this happen? What comes next?

Conflict is the heartbeat of narrative. Without tension—a clash of goals, values, or survival—there is no story. Narratives underpin every conflict, from personal disputes to geopolitical crises, as competing factions weaponize plots to claim moral authority. Narrative warfare unfolds when adversaries battle to control the meaning of events: Is a protest a “fight for freedom” or “anarchy”? Is a military intervention “liberation” or “imperialism”? These battles are waged not with weapons alone but with symbols, slogans, and strategically curated images. Stories here are both shield and sword, defending one’s worldview while dismantling the opponent’s.

Beneath the surface of storytelling lies a complex web of theoretical puzzles, illuminating narratives as cognitive-causal interfaces that shape our understanding of the world. One key concept is "causality as compression." Narratives function as situational compressions of internal causal models, simplifying intricate networks of cause and effect—such as economic policies or climate feedback loops—into more digestible arcs. For instance, a CEO's narrative about market disruption may transform the complexities of global trade dynamics into a hero's journey, pitting innovation against tradition. However, this form of abstraction can lead to distortion; higher ontological layers, like “freedom” or “justice,” often prioritize rhetorical power over causal clarity, creating space for competing interpretations.

Another critical aspect of storytelling involves pragmatics and the Rational Speech Act. Humans have an instinctive ability to grasp the underlying "point" of a story, even when the logic may seem flawed. This understanding hinges on pragmatics—the unspoken rules of context and shared understanding. According to the Rational Speech Act model, listeners infer a speaker’s intent by simulating their worldview.

There is also the notion that narratives might possess a Chomsky-esque grammar—a universal syntax that governs plot progression. Computational models suggest that stories follow hierarchical structures: simple tales often adhere to linear cause-and-effect chains, while epic narratives nest various subplots within grand arcs. Yet, environmental constraints—such as the brevity of a tweet compared to the expansive format of a novel—significantly shape how stories are crafted and understood.

Furthermore, the interplay between internal narratives (personal beliefs) and collective narratives (cultural myths) plays a crucial role in fostering group cohesion. Teams that share aligned narratives, such as startups united by a common mission to disrupt, frequently outperform their fragmented rivals. However, this cohesion can have a dark side; motivated reasoning can warp narratives to confirm biases, transforming stories into echo chambers where dissenting voices struggle to be heard.

Lastly, one might ponder whether “good” narratives effectively reduce cognitive entropy, crystallizing into accepted truths that influence public behavior. For instance, when a government promotes a narrative of economic recovery, individuals may align their actions with this narrative, thereby reinforcing its validity. Yet, such control is often temporary; the democratization afforded by digital media allows narratives to evolve, escape, or even rebel against their original creators, leading to a constantly shifting landscape of meaning and interpretation.

As Hariri put it, ultimately, narratives are the operating system of human collaboration, enabling strangers to coordinate around imagined futures. They are the bridge between the chaos of raw experience and the order of collective action—a reminder that to shape the story is to shape the world.

Architecture of Narratives & Stories

From campfire tales to blockbuster films, stories are the scaffolding of human experience—universal yet infinitely varied. What makes a story resonate across cultures and centuries? The answer lies in its structure, the invisible skeleton that gives narrative its shape and momentum. Whether etched in ancient myths or streaming on Netflix, stories follow patterns as old as storytelling itself. Here’s how these frameworks work—and why they endure.

At its core, every story is a journey through time and tension. Aristotle distilled this into three acts: beginning (setup), middle (conflict), and end (resolution). But Gustav Freytag, a 19th-century novelist, gave us the more nuanced five-act structure, often visualized as a pyramid:

This structure mirrors life’s rhythm: calm, storm, aftermath. Even non-linear narratives (e.g., Pulp Fiction) adhere to this logic in fragments.

The Hero’s Journey: Myth’s Universal Code

Joseph Campbell’s monomyth, distilled from global myths, reveals a deeper template: the Hero’s Journey. Its 12 stages, from departure to return, map a psychological metamorphosis:

This arc isn’t just for myths. Startups pitch it (founder-as-hero), politicians weaponize it (campaigns as quests), and brands monetize it (Nike’s “Just Do It” as a call to action).

The Seven Plots: Storytelling’s DNA

Christopher Booker argued that all stories boil down to seven basic plots, each a lens on human struggle:

These plots hybridize and mutate—Star Wars blends “Quest” with “Overcoming the Monster”—but their roots remain primal, tapping into fears and desires we all share.

Why Structure Matters: The Psychology of Pattern

Structures endure because they mirror how humans process reality. We crave:

In business, these frameworks shape brand narratives: Apple’s “Rebellion Against Conformity” (a Rebirth arc), Tesla’s “Quest for Sustainability.” Politicians frame campaigns as Voyage and Return (“Make America Great Again”) or Overcoming the Monster (climate change as the foe).

Subverting the Template: When Stories Break Rules

Great storytellers bend structures to surprise us:

Yet even rule-breakers lean on hidden frameworks. Pulp Fiction’s scrambled acts still resolve; The Office’s mockumentary “comedy” masks a subtle Rebirth arc for Michael Scott.

From cave paintings to TikTok, humans are pattern-seeking animals. Story structures endure because they’re wired into us—maps for navigating life’s chaos. Whether we’re pitching a startup, writing a novel, or making sense of our own lives, we default to these blueprints. They remind us that every ending hides a new beginning, every monster slain reveals another waiting, and every quest, no matter how futile, changes the seeker.

Strategic Narrative in Business

In the realm of business, communication is often reduced to data-driven pitches, bullet-pointed strategies, or transactional messaging. Yet, the most impactful organizations recognize that humans are wired for stories. A strategic narrative transcends traditional communication by framing a company’s purpose within a broader, emotionally resonant story. It is not merely a marketing tool but a foundational framework that aligns teams, attracts customers, and guides decision-making. Here’s how it works—and why it matters.

Traditional business communication often mirrors what entrepreneur and author Andy Raskin terms the “arrogant doctor” approach: diagnose a problem, prescribe a solution, and position the company as the infallible expert. While logical, this method fails to inspire. It centers on the seller’s expertise rather than the audience’s journey, leaving little room for emotional connection or shared purpose. A strategic narrative, by contrast, replaces this transactional dynamic with a story that invites the audience to become protagonists in a meaningful movement.

The Anatomy of a Strategic Narrative unfolds as a compelling story rooted in a significant shift in the world—whether that be technological, cultural, or economic. A prime example is Salesforce’s transformation from on-premise software to a cloud-based model. By framing this transition as a move from an “old game” to a “new game,” businesses can contextualize their relevance in an evolving landscape. For instance, a car manufacturer could define its shift to electric vehicles (EVs) as part of a broader movement toward sustainability, thereby positioning itself not just as a carmaker but as a catalyst for environmental progress.

An effective strategic narrative also clarifies the stakes involved in this new paradigm. It raises questions about who stands to win or lose and the consequences of resistance to change. When Netflix emphasized the decline of DVD rentals, it highlighted the urgency of adapting to streaming services or facing obsolescence. By doing so, the narrative instills a sense of immediacy, motivating the audience to act.

Moreover, articulating the new rules of success is crucial. In this “new game,” winning often requires adopting new skills, tools, and mindsets. For the EV manufacturer, success may hinge on mastering battery technology or developing extensive charging infrastructure. This transition shifts the company’s role from merely selling cars to empowering customers to thrive in a redefined marketplace.

While change can be daunting, a strategic narrative embraces and acknowledges potential obstacles. Whether they are technical challenges, cultural resistance, or increased competition, addressing these issues positions the company as a trusted guide. By empathizing with the struggles faced by audiences, such as legacy automakers retooling factories for EV production, the narrative fosters trust and positions the brand as an ally in navigating transformation.

In this storytelling framework, products and services take on a supporting role rather than being the main focus. The essence of Apple’s “Think Different” campaign is a testament to this approach; instead of spotlighting technical specifications, it celebrates rebels and innovators, portraying Macs as tools for creativity. Similarly, Slack emphasizes collaboration over software, positioning its platform as a conduit for effective teamwork in modern workplaces.

A well-executed strategic narrative serves as a guiding North Star for an organization, influencing every aspect of its operations. It fosters alignment, as teams rally around a shared purpose and reduce siloed thinking across departments such as marketing, R&D, and sales. Customer engagement transcends mere product features, inviting buyers to partake in a larger movement grounded in shared values. Additionally, strategic clarity is enhanced as decision-making becomes streamlined; initiatives are prioritized based on their alignment with the overarching narrative, impacting everything from product roadmaps to potential partnerships.

The narrative also contributes to resilience during times of disruption. For instance, Microsoft’s pivot to cloud computing under Satya Nadella was framed as an initiative to “empower every person and organization on the planet to achieve more,” providing a clear guidepost for its resurgence in the market.

To craft an effective strategic narrative, several principles come into play. Naming the shift concisely can encapsulate the transition from old to new in a memorable way, such as “The Fourth Industrial Revolution.” Clarity and relevance take precedence, with jargon left at the door; the story must resonate with the audience's lived experiences. In an age marked by information overload, narratives that convey purpose can cut through the noise, establishing a deeper connection with the audience.

Moreover, while various tactics may be employed—such as sales pitches or social media campaigns—the core narrative should remain consistent across all platforms. Raskin further expounds on the idea that narrative goes beyond merely creating new market categories. Instead, she argues that a powerful story can redefine an existing category or transcend it altogether. Tesla didn’t just invent electric vehicles; it reframed them as symbols of innovation and climate action, thus outshining traditional competitors.

A strategic narrative is more than storytelling—it is the articulation of a company’s raison d’être. It transforms abstract goals into a shared journey, turning customers into advocates and employees into ambassadors. By anchoring strategy in a story of change, stakes, and collective triumph, businesses don’t just sell solutions; they lead movements. In a world hungry for meaning, the organizations that master this art will not only survive but shape the future.

In the world of finance, the act of valuation often gets boiled down to cold spreadsheets and intricate formulas. Yet, as Aswath Damodaran—widely recognized as the "Dean of Valuation"—reminds us, numbers lack vitality without a narrative to bring them to life. This becomes especially apparent when dealing with young or complex companies, where uncertainty reigns supreme. In these cases, the convergence of storytelling and numerical analysis becomes not merely an artistic endeavor but a strategic necessity.

Valuation, as it turns out, is not a monologue but a dialogue between stories and numbers. The "number crunchers" meticulously analyze cash flows and multiples, while the "storytellers" weave visions of disruption or industry dominance. Damodaran’s insight reveals a crucial truth: neither group can thrive independently. A compelling equity story breathes life into cold numbers, whereas solid numbers provide a grounding framework for ambitious visions. Take Tesla, for example—its valuation transcends simple car sales; it embodies a narrative about catalyzing the world's shift towards sustainable energy, underpinned by metrics such as battery cost trends and the scalability of its gigafactories.

Narratives hold significant weight because of their inherent human element. They foster connection, evoke memory, provide context, and wield persuasive power. For instance, when a biotech startup’s valuation is framed as a quest to discover a cure for a disease instead of merely comprising a collection of molecules, it resonates more deeply with investors. Similarly, investors may overlook the specifics of EBITDA margins but are likely to remember an underdog story, like Shopify’s challenge to Amazon’s market dominance.

To craft an engaging equity story, Damodaran identifies five narrative archetypes that resonate in the business landscape: the Underdog, the Disruptor, the Dominant Player, the Low-Cost Player, and the Missionary. These archetypes reflect the diverse paths companies can take to capture the hearts and minds of investors. However, storytellers must adhere to certain rules: specificity is crucial—merely saying "we're expanding into Asia" is less impactful than detailing a strategy targeting Vietnam’s booming e-commerce market. Using data as evidence strengthens their claims, while acknowledging imperfections can lend authenticity. For instance, a fintech startup might highlight regulatory challenges but frame them as hurdles that are manageable through innovative compliance solutions.

Jeff Bezos framing his acquisition narrative…

“ I'm always trying to assess something when I meet with the entrepreneur who founded the company. First and foremost, I try to determine: is this person a missionary or a mercenary?

The mercenaries are focused on flipping their stock, while the missionaries love their product or service, love their customers, and are dedicated to building something great.

Interestingly, the great paradox is that it's usually the missionaries who end up making more money. “

The valuation process itself can begin with a strong narrative—for instance, positioning oneself as the "Tesla of vertical farming." This narrative must then be grounded in reality; if a company’s gross margins fall short of industry norms, it’s vital to explain the underlying reasons, such as investments in research and development or the challenges of scaling operations.

As stories drive the narrative, numbers should seamlessly align with these tales. When the narrative focuses on market disruption, models should reflect potential market share capture rates rather than settling for a simple EBITDA figure. Feedback loops also play a critical role; any growth assumptions should be stress-tested. If forecasts hinge on a potential regulatory change, input from policy experts could provide valuable reality checks.

Navigating uncertainty and potential biases is paramount in this process. For early-stage or pre-revenue startups, forecasting must embrace a range of scenarios rather than relying on overly precise estimates. Encouraging dissent among team members can also mitigate cognitive biases. If a narrative boasts "unparalleled technology," it’s essential for engineers to critique the competition’s patents to ensure the claims are grounded in fact. In financial strategy, success often comes from being "less wrong" than the crowd, rather than achieving perfect accuracy.

However, there’s a cautionary tale in weaving narratives—particularly when they stray too far from reality. Damodaran cites the story of WeWork, which faltered dramatically when its lofty ambitions collided with unsustainable metrics. The words of Charlie Munger resonate here: “You’re the easiest one to fool.”

In our digital era, where information is abundant but often chaotic, it’s the narratives that resonate with meaning that stand out. Moderna’s mRNA technology story transcends mere vaccines, embodying a revolutionary rewrite of biological science. Similarly, crypto narratives thrive on themes of decentralization and skepticism, even amid shaky underlying fundamentals.

When it comes to financial modeling, narratives must respect economic first principles. The concept of terminal value shouldn’t be arbitrary; it should reflect the present value of future sustainable cash flows. For example, any discounted cash flow model for a climate-tech firm should incorporate declining renewable energy costs based on historical trends, rather than optimistic projections of widespread adoption.

Ultimately, valuation is a delicate balance—transforming stories into numbers while allowing those numbers to shape conviction. The most skilled analysts are bilingual, fluent in both the language of Excel and the language of narrative. For nascent companies, this dual structure is not just beneficial; it’s essential. Without a coherent story, numbers can fall flat, leading to misguided valuations, while stories without numerical backing risk being dismissed as mere fantasy.

In recent times, the Nvidia valuation narrative driven by AI proliferation….

Doug Clinton, Deepwater Asset Management managing partner on Nvidia valuation

“……I think it is sustainable. You know, it always sounds smart to ask the question, "When will this be over?" You look at the hockey stick that you just described, Brad—it feels a little scary; it looks a little scary on the chart. But I think the reality is this: We are in inning three or four of this AI bull market. I think that we are still early, as uncomfortable as that sounds and maybe feels, but I think it's going to feel uncomfortable all the way until we get to eventually being in a true AI bubble, which we think is the culmination of this bull market. Then people will stop talking about valuation altogether.

So, that's the odd, sort of counterintuitive reality—right now, we're worried that things might be over. It's probably not over. When we stop worrying, that's when you should start worrying.

I think the reality with Nvidia is that they continue to show business momentum. That's really the most exciting piece of the entire story. Despite all of us worrying that eventually, this demand for chips will slow down, we haven't really seen that slow down happen yet. And it may take longer to slow down than we think. That’s kind of the new opinion that I think the Street might consider.

I think that's the right question going forward. Right now, from a market share perspective, they likely have 80% to 90% of the accelerated compute market share—the market share for chips that power this AI revolution. I think going forward, they probably need to maintain share in that realm.

I think they can for the next three to five years. We should, however, pay attention to all of the hyperscalers building their own chips. There is going to be competition out there, but I still think that, at least for the next three years, Nvidia is going to be the go-to company…”

In the end, every valuation constitutes a bet on the future—a future that is molded not only by the numbers we trust but also by the compelling stories we believe in.

Narratives and Economics

Traditional economics, with its neatly organized equations and assumptions about rational actors, often falls short in explaining the emotional tides that sweep through markets, leading to episodes of irrational exuberance or crippling fear. Nobel laureate Robert Shiller introduces the concept of narrative economics to bridge this gap. He contends that it’s not cold, hard data that dictates decision-making; rather, it’s the viral stories that capture our imaginations.

For instance, take the Laffer Curve, a simple doodle sketched on a napkin that transformed tax policy into a compelling narrative about incentivizing growth. This idea became a foundational pillar of Reaganomics. Conversely, the specter of the Great Depression haunted policymakers during the 2008 financial crisis, amplifying a sense of panic and influencing the strategies they employed in response to the crisis. Another narrative, the Tech Apocalypse, emphasizes the fear that “robots will steal jobs.” This story perpetuates a public anxiety that shapes labor markets and fuels debates around universal basic income.

Reagan address in 1981 …setting the stage for Reaganomics…

“We're victims of language. The very word "inflation" leads us to think of it as just high prices. Then, of course, we resent the person who puts on the price tags, forgetting that he or she is also a victim of inflation.

Inflation is not just high prices — it's a reduction in the value of our money. This happens when the money supply increases, but the goods and services available for buying do not. In other words, we have too much money chasing too few goods.

Wars are usually accompanied by inflation. Everyone is working or fighting, but production focuses on weapons and munitions, not on things we can buy and use.

One way out would be to raise taxes so that the government doesn't need to borrow or print money. But after all these years of government growth, we've reached — indeed surpassed — the limit of our people's tolerance or ability to bear an increase in the tax burden.

Prior to World War II, taxes were such that, on average, we only had to work a little over one month each year to pay our total federal, state, and local tax bill. Today, we have to work four months to pay that bill.

Some say we should shift the tax burden to business and industry. But business doesn't pay taxes. Oh, don't get the wrong idea — business is being taxed, and taxed heavily, to the point where we're being priced out of the world market.

However, business must pass its costs — including taxes — onto the customer in the price of the product. Only people pay taxes. The government just uses business in a sneaky way to help collect the taxes, hiding them in the price of goods so we aren't fully aware of how much tax we actually pay.

Today, this once-great industrial giant of ours has the lowest rate of productivity growth among virtually all the industrial nations with whom we must compete in the world market….”

“…..we cannot delay in implementing an economic program aimed at both reducing tax rates to stimulate productivity and reducing the growth in government spending to reduce unemployment and inflation.

On February 18th, I will present in detail an economic program to Congress embodying the features I've just stated. It will propose budget cuts in virtually every department of government.

It is my belief that these actual budget cuts will only be part of the savings. As our cabinet secretaries take charge of their departments, they will search out areas of waste, extravagance, and costly administrative overhead, which could yield additional and substantial reductions.

Now, at the same time we're doing this, we must go forward with a tax relief package. I shall ask for a 10% reduction across the board in personal income tax rates for each of the next three years. Proposals will also be submitted for accelerated depreciation allowances for businesses…”

These narratives spread like contagions, with Shiller observing their “hump-shaped” trajectory: they surge, evolve, and eventually dissipate, only to return in new disguises. Their power often relies on emotional triggers—fear, greed, hope—that easily elude rational scrutiny. For example, when Bitcoin advocates heralded it as “digital gold,” they were not simply promoting an innovative technology; they were offering a vision of freedom from centralized banking. The allure of the story propelled its dramatic rise, overshadowing the underlying code.

Narratives construct their own realities. If enough individuals believe a bank is on the brink of failure, their collective withdrawals can catalyze its collapse. The 2008 crisis was more than just a story about subprime mortgages; it was a narrative of systemic decay, amplified by media coverage and collective memory. Similarly, the “dot-com bubble” flourished on tales of limitless digital possibility, causing stock prices to drift away from traditional profit evaluations.

Recently Silicon Valley Bank, a major lender for startups and venture capital-backed firms, faced a sudden and massive withdrawal of deposits. This bank run was triggered when SVB announced it had sold a large portion of its investment portfolio at a loss and planned to raise capital. Panic ensued, with startups and investors rushing to withdraw funds.

Similar sentiments as shared by Stephen Weiss of Short Hill Capital led to the sudden collapse….

“……We're in numerous early-stage companies, and I sit on the board of a couple of them.

The first call was, "Get the money out." Some of the resistance was, "They'll survive this, and then they'll remember that we weren't there for them." I said, "You're not hearing me. Get the money out."

There was no resistance after that. It's not worth betting your company on it. If you take a look at Lehman, they weren't all made whole. You need your operational capital in a place where you can access it.

It was not a controversial decision whatsoever. There's no upside to keeping the capital.

He went to the bank, stood in a long line of founders, and got a cashier's check for a very sizable sum. He walked over to another bank, sat there, and initially, they wouldn't take it into a business account. He had to deposit it into his personal account and is now transferring it to the business account.

So, it's a mess. Look, you don't really know what's going on there. They had credit lines out — I mean, they were the banker of choice. Others do it, but Gallant Capital is smarter in how they handle it. They take a lot of collateral, sometimes even personal guarantees.

I'm sure there's risk to others as well. But this is ground zero for us….”  

In the realm of politics, narratives can wield significant power. Leaders understand that they do not merely debate policy; they also mold stories that define identities, address crises, and shape visions for the future. The Brexit campaign, for instance, used the slogan “Take Back Control” not merely as a policy initiative, but as a narrative steeped in themes of sovereignty, nostalgia, and liberation from bureaucratic restraints. In the context of climate change, framing it as an “existential crisis” rather than a “hoax” has polarized responses, transforming data into moral narratives.

Narratives extend beyond mere words; they permeate our cultural practices, symbols, and art. They manifest in rituals—like national anthems—symbols that shape perceptions, such as how the “Made in China” label influences global trade views, and even in art, like Soviet propaganda posters that convey powerful messages. Silence speaks volumes too, evident in the haunting stillness of London’s streets during the COVID lockdowns, a vivid story of fear and isolation.

..another popular narrative was Fukuyama’ s The End of History and the Last Man…

“ We usually associate history with the routine flow of events—things like the Persian Gulf war or the Berlin Wall's fall. But my book tries to ask a larger question: Is there a history of human society that considers all peoples' experiences across virtually all times? And is there a coherent evolution in the nature of societies as they progress—from primitive agricultural tribal societies, through monarchies and aristocracies, to the liberal democracies and technologically driven capitalist systems we see today?

The "end of history" refers to what I believe remains an open question: Can this process of societal evolution reach a definitive endpoint? In other words, does human civilization culminate in a final form—a political and social structure that is, in some sense, the last one humanity will achieve because it best aligns with human nature?

I argue that liberal democracy comes closer to fitting human nature than virtually any previous form of government, political organization, or social structure…”

In economics, branding embodies narrative visually: the bitten apple of Apple symbolizes rebellion against conformity, while Nike’s “Just Do It” connects sneakers to personal accomplishment. These symbols bypass logical thought and embed themselves deeply within our cultural consciousness.

Shiller offers a critique of economics’ fixation on quantitative metrics—like GDP and unemployment rates—as myopic. He emphasizes that humans are not merely rational optimizers; we are inherently meaning-makers. For instance, the rise of Bitcoin is less about its functional utility and more about narratives surrounding decentralization and distrust of traditional fiat currencies. The 2008 recession rekindled Depression-era themes of thrift, profoundly altering spending behaviors even when the broader economy began to recover.

Political science often overlooks how narratives, such as “American exceptionalism” or “the European dream,” inform policy-making. The cohesion of the EU hinges not solely on treaties but on a shared narrative of peace forged from the aftermath of war. To navigate this narrative landscape, leaders must cultivate narrative intelligence. This begins with identifying emerging viral stories across social media, art, and subcultures. For instance, the meme-stock frenzy surrounding GameStop originated on Reddit, merging financial rebellion with internet humor.

Leaders must also frame their narratives strategically, resonating with fundamental identities. Barack Obama’s “Yes We Can” campaign tapped into a collective sense of agency, just as Patagonia’s “Don’t Buy This Jacket” redefined consumerism as a commitment to environmental stewardship. Importantly, leaders should anticipate how adversaries may exploit narratives to sow division. Relying solely on fact-checking is insufficient; presenting competing narratives, such as promoting the idea of vaccines as a means of community protection, is vital to counter disinformation effectively.

Strategic Narratives and Statecraft

In the 21st century, the practice of statecraft has transformed significantly from its historical reliance on traditional diplomacy and military strength. Today, the art of storytelling has emerged as a crucial element in shaping international relations. Strategic narratives—cohesive and purpose-driven stories crafted by political actors—have become essential tools for states seeking to articulate their goals, interpret global events, and influence audiences both at home and abroad. In an era characterized by digital interconnectedness and diverse media landscapes, these narratives are no longer just rhetorical devices; they are vital instruments in fostering cooperation, projecting national identity, and navigating the intricate dynamics of global politics.

Strategic narratives are multifaceted, operating across three interconnected levels that enhance their persuasive power. The first level is system narratives, which define a state's vision of the international order. For instance, following World War II, the United States established a narrative around a "rules-based order" that supported institutions such as the United Nations and NATO. This narrative framed global governance as a collective effort.

US Secretary of State Antony Blinken has described “ruled-based order” as a “system of laws, agreements, principles and institutions that the world came together to build after two world wars to manage relations between states, to prevent conflict, to uphold the rights of all people”.

“The relationships we maintain around the world are not designed to be zero-sum. Take China, for example—we are not advocating for decoupling economic and investment ties between other countries and China, nor our own. On the contrary, we see tremendous value in these relationships. However, there are certain aspects of the trade and economic relationship that are critically important to address.

One major concern for many countries is the lack of reciprocity in economic and trade relations, which is both unacceptable and unsustainable. China imposes conditions and restrictions on foreign businesses and investors that we do not impose on them, and this imbalance simply cannot continue. Countries around the world are increasingly recognizing and responding to this issue.

At the same time, while we support trade and investment and do not seek to decouple our economies, there are specific sectors of strategic importance—those with security implications—where we must remain highly vigilant. In China, there is no clear distinction between private companies and the state. Under Chinese law, businesses operating in investment and trade are required, upon request, to share any acquired information with the government. In certain industries, this presents significant security and strategic risks that we cannot ignore.

More broadly, let me add this: our approach to China is not about holding it back or keeping it down. Rather, it is about upholding the rules-based international order—the system of laws and norms designed to govern relations among nations in a way that promotes peace, security, and stability. This framework minimizes the risk of conflict and enables all nations to compete in a race to the top, where everyone—including China, we hope—can succeed.

When that order is challenged, we will defend it, and we will do so collectively. But, again, this is not a zero-sum game. Our aim is a global system in which all nations rise together, fostering prosperity and mutual success..”

China has its own view of the international order as described by Qin Gang

“The U.S. claims that its China policy is about defending the rules-based international order and ensuring the implementation of global rules. But what are these rules? Who made them? Who enforces them? The U.S. has not provided clear answers to these fundamental questions.

In our view, there is only one international system in the world—namely, the international system with the United Nations at its core. There is only one international order—the one underpinned by international law. And there is only one set of rules—namely, the basic norms governing international relations, based on the purposes and principles of the UN Charter.

International affairs should be addressed through consultation, and genuine multilateralism must be practiced”

In contrast, Russia has propagated a narrative of multipolarity, positioning itself as a counterbalance to Western hegemony.

As Putin point out his narrative …

“…..Now, you just mentioned an order based on rules. Have you ever seen these rules? No, because no one has ever written them, and no one has ever agreed upon them. An order based on rules that no one has seen? From the point of view of common sense, this is nonsense—it’s like some kind of absurdity.

But this approach benefits those who promote it. If no one has seen these rules, it means that those who talk about them are the ones inventing them—adjusting them case by case, according to their own interests. This is a colonial approach. Colonial powers have always considered themselves first-class people. They spoke of their colonies as places where they were bringing civilization to so-called second-class people.

It is not surprising that today’s political elite—say, in the United States—talks about their exceptionalism. This is simply a continuation of colonial thinking. When they claim that the U.S. is exceptional, it implies that others are not. In other words, all other people are considered second-class. How else can one interpret it? This is a remnant of colonial thinking—nothing more.

Our approach is entirely different. We believe that all people are equal, and everyone has the same rights. The rights and freedoms of one country or one people end where the rights and freedoms of another person or an entire state begin. This is how a multipolar world should gradually emerge. This is exactly what we are striving for…..”

The second level, identity narratives, encapsulates a state’s core values and role on the world stage. China's narrative of a "peaceful rise" and its aspirations for civilizational rejuvenation often clash with its assertive regional policies, highlighting the tension between the identity it seeks to project and its actions. Lastly, issue narratives focus on justifying specific policies. The Iran nuclear deal, for example, illustrated how reframing historical animosities into a vision of shared futures helped facilitate temporary cooperation by portraying Iran’s nuclear program as manageable through diplomatic means.

The coherence across these three levels amplifies the credibility of a state’s position. A nation promoting democracy while undermining its alliances invites allegations of hypocrisy, as illustrated by the discrepancies in U.S. rhetoric regarding "decline" versus its aspirations for global leadership.

The lifecycle of a strategic narrative comprises formation, projection, and reception. Formation involves the crafting of narratives that are rooted in historical and cultural contexts, intended to legitimize actions, mobilize support, or divert attention. An example of this is the European Union's narrative of "unity in diversity," which reinforces the idea of integration in the face of rising nationalism. Projection pertains to how narratives are disseminated; digital platforms have democratized this process but also complicate control over the message. China's "Wolf Warrior" diplomacy exemplifies this dynamic, as social media is used to project assertiveness, though algorithm-driven content can distort the intended messages. Finally, reception refers to how various audiences interpret these narratives through their unique cultural and political lenses. For instance, Russia's narrative of Western decadence strikes a chord domestically and with groups abroad in Europe and USA, on existing grievances. This feedback loop creates a necessity for adaptability, as evidenced when the U.S. shifted its narrative from a "war on terror" to one focusing on "great power competition" in response to shifting threats and growing skepticism.

The digital age presents both risks and opportunities for strategic narratives. Non-state actors—from NGOs to troll farms—have gained significant narrative power. On the positive side, digital tools have enabled diplomatic engagement, as seen in the JCPOA (Joint Comprehensive Plan of Action), which used digital platforms to broadcast diplomatic concessions and rally transnational support. Moreover, grassroots movements like #BlackLivesMatter illustrate how digital connectivity can transcend borders to challenge state-centric narratives. However, this landscape is fraught with challenges, including fragmentation, where competing narratives proliferate within echo chambers, complicating the possibility of achieving consensus.

The interplay of strategic narratives in the realm of statecraft has shifted significantly in the digital age. Their formation, projection, and reception are critical to understanding modern international relations, with digital platforms offering both opportunities for engagement and challenges in managing competing voices. The emphasis on narrative coherence and credibility remains pivotal, especially as states navigate a complex global landscape rife with both promise and peril.