There are three stories you must tell well to grow your business.
If you want to attract high-paying clients and top talent, you need to get your story straight. Actually, you need to get three stories straight.
That is the advice of former CEO turned business mentor Ernest Wassmann.
Wassmann has a 40-year track record of success. As CEO of Rexon Business Machines, he led the company out of bankruptcy, raised $32 million through a public offering, and rebranded the company and its products. As CEO of Tallgrass Technologies, he restored the company to profitability and facilitated a sale to Exabyte. As vice president of marketing for Exabyte, he grew distribution to $165 million, profits grew 60% and the stock rose from $6 to $22 a share.
“There is no shortage of creativity in today’s entrepreneurial leaders, each reflecting inventive, outrageous, out-of-the-box and potentially game-changing ideas,” says Wassmann.
Stories are important to entrepreneurial leaders because discoveries in neuroscience prove decision-making is largely emotional, not logical. So how can you persuade the emotional part of the brain of investors, customers and top talent? The part of the brain that makes decisions is hardwired for stories.
When writing a book about Warren Buffett, I discovered how the legendary leader of Berkshire-Hathaway uses stories to persuade, gain media coverage and become a world-famous brand (for transparency, Buffett’s stories and those of his various company presidents convinced me to invest in Berkshire-Hathaway stock).
To grow a business, Wassmann says there are three stories that must be told well:
1. How do you create customers?
2. How do you create cash?
3. How do you create talent?
The Customer Story. “This story should begin with the customer experience ensuring the problem is identified and being guided with a plan to be successful,” says Wassmann. “This story continues to the industry to be sure they have a competitive advantage, and then through the company aligned with the customer experience.”
The Cash Story. “This story begins with the formula Revenue-Profit = Costs,” says Wassmann. “If the customer is successful, they are generating cash, have the profit, and costs are under control. That means ROIC (return on invested capital) on all investments.”
The Talent Story. “This story has three parts: attracting, retaining and compensating talent,” says Wassmann. “The policies, procedures, training, validation and compensation drives ownership thinking.”
Wassmann says there is actually one more story. What makes the company unique?
This is a story of why you are unique. This means your tale of how customers have a great experience, competition is neutralized, the balance sheet shows the company generates cash, talent has ownership thinking and you have a working strategy to build out management processes and action items.
“This comes with trials and sorrows, a three-step process of order-disorder-reorder,” says Wassmann. “A good strategy and tactics will equal growth, but a bad strategy and tactics will equal death.”
Be warned: a bad strategy and great tactics means you will die faster.
According to Wassmann, the company must go through a period of disorder.
“When the organization is surviving the day-to-day business, that is hard enough,” says Wassmann. “They will feel chaos before reorder comes into play. Anyone who has been through it will confirm that cultures don’t change, they are replaced; value comes with strife. The new strategy will drive management processes, which drives action steps to align the company. There are business process and technology knowledge to make all this work.”
Once the stories can be told, the rest is time and hard work.
With success you can tell the overall story. This is how it feels being unique and having loyal customers, predictable cash generation and the ability to attract and retain talent.
“You will be able to tell that story clearly over and over,” says Wassmann.
