Stories are the oldest and probably the best way to communicate ideas, truth, and beliefs. Stories as business strategy can be extremely powerful.

Think of the key stories that are foundational in the great religions. Or think about the stories behind the phrases “sour grapes,” “the fox in the henhouse,” and “the emperor’s new clothes.” They all have power because they communicate. They resonate. We recognize their truths.

“All human beings have an innate need to hear and tell stories and to have a story to live by.”

– Harvey Cox

Stories are a great way to define and communicate business strategy. A strategy that can’t be told as a story is doomed. And a strategy could be laid out as a story that includes the main factors, for example.

And it could be as simple as a story defining the problem your customers have, the solution your business offers, and the factors that make your business especially suited to offer the solution.

In this method the problem is also called need, or want, or, if you like jargon, the so-called “why to buy.” Strategy should be flexible. And a lot of successful presentations start with the problem and its solution.

Your essential business story

Strategy starts with an essential business story. Imagine a moment of purchase. Somebody is buying what you sell. It happens with every business. For example:

A group walks into your restaurant.
A web browser subscribes to your membership site.
A customer in your store picks up one or more products, puts them into a basket, and walks to the checkout counter.
A potential client decides to take on your management consulting or social media marketing.

In every case, there is a story. Think it through. Who is this person? How did he or she find you, your store, your restaurant, or your website? Was it by answering an email, looking at an ad, talking to a friend, or maybe searching in a Yelp app on a mobile device?

Every transaction is a solution to somebody’s problem. Understand what problem – need, want, or why-to-buy – you’re solving. Marketing author Theodore Levitt used to point out that people don’t want to buy a quarter-inch drill, they want a quarter-inch hole.

So you don’t invite somebody to a sushi restaurant just because you’re both hungry. You want an interesting meal; you want to sit down together for a while and talk. It’s an event, an activity, with hunger satisfaction far from the top of the list.

You also need to understand what business you’re in. The restaurant business is often about occasions, not meals. The drive-through fast food business is about convenience. Starbucks is about affordable luxury, not just coffee; and in some cases, a place to meet, or a place to work.

So the solution has to match the problem, but it should demonstrate what’s different about one company when compared to all its competitors. For example, to make a restaurant story based on fine food credible, you need to add in how this restaurant’s owners and team can credibly deliver fine food. And in the software company example, there must be a sense of this company being qualified to deliver useful content in this topic area. That takes us back to the Identity component of the IMO framework; but it could also be called simply the secret sauce, or why we’re different, and presumably better.

A Real example

Let’s return to a social media consulting company: HavePresence.com. Here’s its essential business story:

Terry loves her business, puts her heart and soul into it, and is successful. Her sales are growing, her customers are happy, and her employees are happy and productive.

She’s worried about social media. She knows it’s important for her business’ future. She knows her business should be on Twitter, Facebook, and the other major platforms. Experts seem to agree that business owners should engage. However, she’s already busy running a business, and she doesn’t have time to do meaningful social media as well. When she’s not running the business, she wants to be with her family, not on the computer.

Terry tried having an employee handle the social media, but it was still taking too much time. She made inquiries with some consultants, but they are expensive.

Finally, on the web, Terry finds Have Presence, a small business like her own, run by three co-owners who love social media, understand small business, and do only thoughtful, strategic social media updates for clients they know and represent well. They aren’t selling expensive consulting, telling Terry what and how to do it. Instead, they do the work, manage the social media, and give Terry’s business social media presence, for a monthly fee that’s considerably less than a half-time employee, without the long-term commitment.

That story defines three important factors. Identity is there in the phrase that begins “the three co-owners love social media and understand small business.” Target market is there in Terry, the business owner, and her problem with social media. And offering is there in the sentence that begins with “They aren’t selling expensive consulting.”

Stories can describe some important visions of truth better than, say, statistics. The real market isn’t a number on a chart or in a table; it’s that collection of people. Sure, the number is nice, once you know the people, but first you have to feel like these people actually exist, and the reason to buy exists, and that the people and the reason match up.

The story your customer tells

Imagine how your customer found you. What did he think was good or interesting or remarkable about you or your business? Why does she go back for repeat business? What do you want that story to be, and how can you influence that story? This is where the story leads to better business planning as alignment of all the elements of the business with your ideal story.

Your most powerful branding, like it or not, is the story that the customer tells her friends. Imagine your customer explaining your business to a friend. How would she describe your business? What can you do to influence that story?

Even before social media, there was viral marketing, and before that, referral marketing, guerilla marketing, and going back even further, word of mouth. John Jantsch, author of Duct Tape Marketing, calls it getting people to know, like and trust you. Seth Godin, author of All Marketers are Liars, calls it being remarkable.

And now, with social media, Jim Blasingame, author of Age of the Customer, says your customers control your brand. Your business depends on collective opinions published in tweets and Facebook updates, Google+, Pinterest, and LinkedIn. It’s amplified word of mouth, and it’s in the hands of the world at large, independent of your advertising budget, signage, and tag lines.

Know the story. Create the story. Plan in useful steps how to make it true.

Management, done well, is a collection of stories

Your business revolves around the story of your history and your values and your team as it grows.

With business planning, you don’t just tell the stories of the past, you also create and develop the stories of your future. Look ahead with your plan, control your destiny, and drive it in the right direction. Go from vision to imagination to focus and step-by-step concrete measurable activities.

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Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

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Why Your Strategy Needs a Story