The narrative framework in financial communications
Since we published our first essay on the Power of Story in November 2005, we’ve witnessed a dramatic shift in the use and perception of narrative in financial communications. In the early years of this century, firms put aside initial skepticism about the value of story and embraced the narrative approach. They realized that the investment community needed more than just numbers to evaluate financial performance, the merits of a transaction, or a proposed investment. Narrative adds context to figures and footnotes, animating the data with a descriptive account that helps sort out the complexities inherent in the companies themselves, as well as the environments in which they operate and the transactions they pursue.
The approach caught on, and narrative communication branched out from the world of banking and finance to the broader political and policy arena, and even into sports, where “narrative” became a much-used (some might say overused) entry in the popular lexicon. At the same time, the narrative’s scope grew beyond information and explanation to accommodate the task of interpreting and even defining performance, sometimes with the data itself apparently downgraded to a supporting role.
Of course, the laws that regulate financial communications leave little room for spin. But once attention shifts from the data to the narrative, there are ways to affect how the reader perceives information. For example, dense technical jargon can deflect attention from unfavorable details in a financial report, or lack of organization in a proxy statement can leave readers wondering how to vote on a particular proposal. Shareholders have become increasingly unyielding in their calls for transparency, and obfuscatory initiatives of this nature do not pass unnoticed.
By insisting on unimpeded communication, the financial community has challenged institutions to cultivate corporate transparency in a deliberate, systematic fashion. The narrative framework meets that challenge when it provides useful context and clear, informative explanations for the issues under discussion. Careful writing, intuitive organization, and rigorous editing will minimize jargon, avoid irrelevant digressions, and provide meaningful, accessible narrative content — a sure-fire way to hold the reader’s attention, and deliver the corporate message with persuasive precision.
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