What Is Organizational Narrative?

This post is an excerpt from my upcoming book, Organizational Psychology for Managers.

Humans are pattern-matching creatures. We are built to try to make sense of our environment. Indeed, as more than one psychologist has observed, we see patterns even when they aren’t there! This tendency toward pattern-matching is a very powerful tool, though, because it enables us to impose structure on our environment. If we’ve done a good job of imposing structure, we can not only make sense of what is happening now, we can make reasonably accurate guesses about what will happen in the future. In fact, our ability to impose order and identify patterns is a big part of what enables us to think and plan strategically.

Culture, you will recall, is a device for making the world predictable. It tells us what to do when. Structurally, what we have is a narrative: in a certain situation these actions led to these results or these actions expressed these values, and that’s why we do things that way today. Quite simply, we impose a narrative structure on our own experiences and those of the organization. Consider how many of our metaphors reflect this view: “turning over a new page,” “starting a new chapter in our lives,” “taking a page from his book,” and so forth.

This narrative structure is so powerful that many people will ignore information that doesn’t fit the narrative: for example, there are still many people who believe that Humphrey Bogart said, “Play it again, Sam,” in the movie Casablanca. He didn’t, but he should have. It’s a much better line than the one he actually says.

This narrative structure helps us understand, or at least explain, our own lives: Elizabeth Loftus, a psychologist and Harvard professor, is also the world’s expert on memory. She believed that this stemmed from her experience of repressing her memories of discovering her mother’s drowned body in the family swimming pool. She later recovered her memory of the event and, over the course of a few years, the rest of the details came back to her. It made sense; it explained her fascination with memory. Then one of her relatives told her that she hadn’t discovered the body, her aunt had. Other relatives confirmed this. The memory expert had, herself, created a false memory and believed it because it made sense.

Organizational stories are most obvious in older organizations, be they corporations, religious institutions, professional groups, and the like. However, even small organizations, including start up companies, quickly develop their own organizational narratives. Indeed, the question is not whether you will develop a narrative, but who will do it. Will you define your narrative or will others define it for you? If you don’t define your own story, you can be certain that your competitors will be only too happy to do it for you. All too often, companies allow themselves to accept default stories about their business and then wonder why they are seen as “just like everyone else.”

Think about how often you’ve heard someone talk about your company’s “story.” We assemble incidents into chronological events and draw lessons from those events. The following three snippets play out in organizations all the time:

“Bob ignored his assignment to deal with what he felt was a serious problem and the boss fired him even though Bob was right.”

“Bob ignored his assignment to deal with what he felt was a serious problem. The boss saw what Bob did, and thanked Bob for saving the company money.”

“Bob stood up to the boss, the boss was going to fire him for insubordination, but the boss’s boss said, ‘Hey! Bob just saved the company a ton of money! What is wrong with you?’”

Each of these stories teaches a different lesson about how to behave. The first says never argue with the boss. The second says you should bring up problems. The third says that if you bring up a problem and your boss doesn’t appreciate hearing it, don’t worry, his boss will see that justice is done. I saw this one play out in just my first few weeks at IBM after I graduated from college. When Bob’s boss was subsequently reassigned to a remote branch office, that cemented the lesson that employees should act on serious problems.

The problem with most organizational stories is that they just happen. Events occur and are assembled after the fact into stories that current employees tell one another and pass along to new hires. These stories become part of the background, repeated often without really thinking about it. Frequently, the lessons taught to new employees are not the lessons management thinks are being taught. Taking control of the process, however, can dramatically improve organizational performance in all areas.