The 3 stories every leader needs to inspire successful transformations

Humans are programmed to appreciate communication through stories. It is natural to assume that in times of great change and uncertainty, people might just want the simple facts. But if you want your case for change to capture employees’ attention, facilitate their recall, and activate motivation and behavior, you need a suitable narrative.

As telecommunications executive Ana White said to us, “Often we’re in this ‘GSD’ mode—get stuff done, move on, prioritize. But when you pause, and emotion is evoked through storytelling, it’s more memorable. It’s stickier. People tend to remember that and act on it.”

Banking executive Ira Robbins offered a similar view: “The higher you go, the more you believe that if you tell someone to do something, it will just happen. But it’s usually the opposite. Being less direct — using stories — creates connection and resonance. That’s how you influence outcomes.”

The question is: What narrative might be right for your situation?

There have been many attempts to categorize narrative types across different fields and contexts. For fiction, author Christopher Booker identified seven basic plots: overcoming the monster, rags to riches, the quest, voyage and return, comedy, tragedy, and rebirth. And, Booker adds, there are “well over 1,000 versions” of the rags-to-riches Cinderella story: the orphan girl who, after suffering execrable treatment by her vain stepsisters, marries a prince.

For economies, Robert Shiller identified nine narratives, including “labor-saving machines replace many jobs,” “real estate booms and busts,” and “the wage-price spiral and evil labor unions.” He explained that these economic narratives have “the potential to change how people make economic decisions, such as the decision to hire a worker or to wait for better times, to stick one’s neck out or be cautious in business, to launch a business venture, or to invest in a volatile speculative asset.”

For transformation, we observe three archetypes: threat stories, fitness stories and destiny stories. Let’s examine each one.

Threat stories: “If we don’t change, we’ll suffer or die.”

In a threat story, you describe an external force that poses a danger to your company. It may be a rival company, a new technology, a regulatory change, a change of consumer preferences, a macroeconomic shock, or something else that may negatively affect your business. You then argue that change is needed to prevent or minimize the likely damage.

For example, take Ford Motor Company. In 2006, Ford faced intense internal and external pressure, reporting a record $6 billion quarterly loss amid fears of bankruptcy. Like other Detroit automakers, it struggled with overcapacity, high labor costs, and uncompetitive products while also contending with rising fuel prices, shifting consumer preferences, and stronger global competition from Japanese automakers.

On October 13, 2006 — just two weeks after becoming Ford’s new CEO — Alan Mulally wrote a simple email to the entire company about the threat they faced: the increased competition that demanded success across the entire organization, not just in isolated areas. He told them:

“It wouldn’t take anyone very long to realize that Ford people are winners by nature. The sense of pride in the value Ford has always created in more than a century is obvious and justified. It is encouraging that there are so many areas of excellence we can point to within our company right now. But pockets of success aren’t enough. Not today. Not in this competitive environment. We need success across our entire enterprise. … Competitors may try to ‘divide and conquer’ us; I’m determined we are not going to do that to ourselves.”

The subtext of his message was clear: You, the good people of the Ford Motor Company, are not the problem. The problem is that we have new and ferocious competitors who are coming for our business. We must fight back. We have proven that we can win. This time, we can only win together. This is the essence of a threat story.

Mulally ended his message with an inspiring note: “Everyone loves a comeback story. Let’s work together to write the best one ever.” And fight back they did: In less than three years, Mulally led Ford back to profitability, without needing a government bailout, while other American automakers were still recovering from the financial crisis.

Fitness stories: “Changing will make us stronger.”

In a fitness story, the problem you describe is not external but internal. This time, you are your own enemy. You describe unhealthy practices inside your company that make it too slow, too complex, too costly, too fragmented, too variable, or something else. You argue that change is needed to make the company stronger, healthier, more successful.

For example, in 2003, Danish toy company the Lego Group was in serious trouble. Despite being one of the most popular toy brands in the world, Lego had mounting debt, collapsing profits, and strategic overreach — 94% of its products were unprofitable, the company had lost focus on its core, and a culture of complacency masked the severity of the crisis. The crisis wasn’t due to competitors or market disruption; it was self-inflicted. As David Robertson assessed in his book Brick by Brick, “The company lost much of its focus and discipline while pursuing every conceivable adjacency.”

Robertson recounts the story of a very honest interview that then-CEO Kjeld Kirk Kristiansen gave to the Financial Times in February 2004, explaining why Lego was struggling: it was an internal challenge, he said, rather than an external one. “We have simply not had enough focus on our core products,” he said. “Too much of our growth has been generated by licensed products.”

Later that year, newly appointed CEO Jørgen Vig Knudstorp made the same storytelling choice. As he recalled in interviews with David Robertson:

“We wanted to break the back of the culture. We had to go through a one-year, painful process of beating ourselves up and saying, ‘You know what? There’s no reason to be so enthusiastic. We’re not such a world-class brand, as we go around telling ourselves. We say we do a lot for child development, but we’re not selling a lot, so how can we be?’”

Faced with the reality and severity of the situation, Lego launched a transformation to cut unprofitable lines, reduce complexity, and rebuild the company around its core: bricks, creativity, and disciplined innovation. Lego had to stop believing its own hype and start earning its place again, brick by brick. And it worked. By the end of 2005, Lego had rebounded from a $292 million loss to a $117 million pretax profit and nearly doubled its market share from 2004 to 2020 in one of the most famous business turnarounds in modern corporate history.

Destiny stories: “By changing, we can realize our potential.”

In most situations, it is most effective to explain a change to employees as a response to a specific challenge, either external (in the case of a threat story) or internal (in the case of a fitness story). If your company is clearly in a position of strength, however, it can sometimes be more effective to use a destiny story. In this story type, you describe what makes your company special and argue that change is needed to give the market more or better access to those special qualities — to help the company become what it was always meant to be.

This was exactly what John Deere did when it launched its Smart Industrial transformation. Since its founding in 1837, John Deere has been a leading manufacturer of agricultural machinery, with a beloved brand and fierce customer loyalty. In recent decades, company leaders found that even with that legacy, they were struggling to differentiate their machines solely on the basis of traditional equipment features such as size and speed. They knew that the future demanded smarter, more connected, and more productive machines that could meet the evolving needs of modern agriculture and construction. This would require better communication with their employees and the public about the company’s transformation from the traditional work of shaping iron to the more current building software.

[I]f you want your case for change to capture employees’ attention, facilitate their recall, and activate motivation and behavior, you need a suitable narrative.

To energize employees about one of the largest shifts in its history, the company launched a new smart industrial strategy. To help lead this effort, it commissioned a mini-movie in 2021 that framed the catalyst for change not as an imminent threat or internal dysfunction but as a desire to achieve the maximum potential from the company’s inherent strengths. The voiceover began:

“Sweat and smarts … that’s what got us here. We’re in a position of strength, thanks to the dedication and character of all John Deere people. Whether we make or market, inspect or perfect, we all deliver and keep delivering. Together, we move earth and move the Earth forward, with machines made of hard iron and hard data. To keep leading, we need to take our next leap. We’ll build up tools and technology. We’ll support customers across the whole life cycle. We’ll make production systems that produce more — more worth for our customers with less waste. … From Illinois to India, around the globe, no one is more equipped to make this leap.”

This story furthered a successful transformation for John Deere. After one year, it was able to report to investors that “by lowering structural costs, the smart industrial redesign process has had a major impact on profit margins, which shot to 17% last year.”

Stay focused: Why you shouldn’t tell hybrid stories

Having understood the difference between threat, fitness, and destiny stories, you might be thinking, “My company has external threats, internal challenges, and special qualities. Can I combine them into one story?”

Our view is: mostly, no.

Of course, in a long-form environment such as a speech or all-staff email, you will have the opportunity to reflect on multiple features of your company and its environment that you think deserve employees’ attention. But virtually all stories get condensed in the listener’s mind and memory. Creating a 20-word summary of why, what, and how the company will change, and including it in every communication, is essential. It is unlikely that such a summary will cover multiple elements across threat, fitness, and destiny. Our advice is to pick one of the change stories and stick with it.

This article The 3 stories every leader needs to inspire successful transformations is featured on Big Think.