Behind every number is a story…

Recently, I had the pleasure of reading Aswath Damodaran’s Narrative and Numbers (Columbia Business School Publishing 2017).  Right from the opening pages of this compelling book, NYU finance professor Damodaran makes it clear that numbers need narratives – and vice-versa. I couldn’t agree more! As I’ve stated in previous blog posts, it’s time corporations invested real resources into analyzing stories – “the narrative behind the number” – just as we do big data. Who’s your Chief Story Officer?

As someone with limited financial modelling experience, Narrative and Numbers presented valuations in ways that even I could grasp. And as Damodaran stressed, when numbers are changing – as they most certainly do – you need logical narratives to help explain them. Numbers never exist in isolation and external forces (markets, economies, government…) are always moving and evolving. Because of that, today’s business world demands that we are constantly revisiting the narratives – the “scene data” as I like to call it – so that our stories (and data) are not just skewed to what we want to tell. Are your “story scenes” matching market conditions?  Does your scene data clearly point to a narrative with a realistic problem-solving objective? Establishing audience connection becomes challenging when you are relying only on numbers to be “convincing” – no matter how thorough your financial model. Quoting the book, “A well-told story connects with listeners in a way that numbers rarely can.”

I recommend Narrative and Numbers for those who want to understand how valuations can impact a story. (An alternative, though not nearly as catchy title for the book could have been, “The Importance of Valuations to Business Storytelling.”) Numbers are not always as accurate as the forecasts claim. As Damodaran illustrates (with the support of fascinating case studies and his lengthy research), both sides, finance and storytellers, can have their biases, reinforcing the point that the merging of numbers with narratives is only going to get bigger and more important to the communications requirements – and demands – of business stories.

Finance team meet the story team… you’ll get along just fine. Actually, you have to, there really is no other option.

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