Link business trends to your company’s choices for a compelling story
Original Publish Date: June 10, 2020
I’ve been exploring the concept of strategic narrative lately. Following is my take on strategic narrative: it’s about telling a story on change and how your company will make the most out of the change through what it does.
“There is so much noise and competition in any market/any category today. Even if your product is better, no one is going to believe it because that is what everyone is saying. You have to win by creating a story that earns you the right to then tell people about your product/service. You have to show them the future — and then how you can help get them there.” – Dave Gerhardt
This got me thinking about the stories we tell around strategy to investors. What’s the story that every company needs to tell about the fast-changing world to win and sustain the confidence of its investors?
This story can’t be a collection of buzzwords. Sure, the buzzwords may get you attention initially. But investors catch on quickly. You need a compelling company story that shows a dominant strategy. A story that communicates a clear mastery of the current business trends.
I want to use Facebook as an example here. And explore their company story around everything going ‘mobile’. Facebook’s story is continuously changing. But I’d like to focus deliberately on their choices around the mobile trend – How did they capture value from this trend? How are they continuing to make the most out of it?
“American adults spent about 3 hours and 30 minutes a day using the mobile internet in 2019” – Zenith
“The top 20% of smartphone users have daily screen time in excess of 4.5 hours” – 2019 Screen Time Stats Report
Capitalizing on ‘mobile’
Scale & Target
There should be no surprise at this point that Facebook makes most of its revenue from advertising. Any established brand or upcoming startup relies on Facebook quite a bit to generate leads, create marketing campaigns, conduct consumer research, among other things.
An estimate from Social Capital even shows that early stage, VC-funded consumer tech companies “spend almost 40 cents of every VC dollar on Google, Facebook, and Amazon”. Spending on Facebook for these companies is mostly a way for them to take advantage of its global user base and the brilliant tools to target different subsets of desired consumers.
Intel & Capital
Every tech solution is likely self-learning right now given the advances in AI. And Facebook deploys smart AI solutions to parse the wealth of information every single user provides in the form of conversations, engagements, posts, etc. The almost limitless capital also helps Facebook channel their resources to turn itself into a sophisticated consumer intel platform, while uncovering insights for future product updates.
User Engagement
Every platform does its best to reach as many people as possible while also increasing each user’s level of engagement. And they also deploy every trick in the book to get you to spend as much as time as possible within the platform. The Facebook platform still has a fairly high level of user engagement that almost every traditional content creator (for ex: NY Times) relies on Facebook for exposure to users. This race to access users ‘commoditizes’ a lot of these content creators. Facebook ends up as the winner!
Trying to sustain and grow
Scaling Further
It’s important to look at average user profitability, user loyalty, number of new users when you try to value user-based companies. Therefore, for a company like Facebook, it will always be on a quest to retain and grow users. Acquisitions of Instagram, WhatsApp were meant to grow Facebook’s user base while also serving their goal to continuously mine very valuable user analytics.
“Move Fast and Break Things”
Despite popular opinion, the mantra of ‘move fast and break things’ is not dead. This mantra gets a bad rap given the string of Facebook controversies. The lean innovation methodology of “build-measure-learn” adopted by Facebook allows it to stay on top of new features. Doesn’t matter if it involves ‘Stories’ or ‘Messenger Rooms’ to steal some of Zoom’s thunder.
Free Content
Facebook gets the best content from every individual user. And they get it for free! If Facebook can incentivize a good number of users to stay engaged in its platform; it will look very enterprising to any company looking to advertise their products and services. That might just be the best-case scenario.
So what?
The above example of Facebook reaffirms my central thesis – every company needs to tell a compelling story which shows a clear mastery over a changing future. The only powerful way to do this is to show an easy to understand alignment between the broader business trends and your day to day business choices.