Narrative and purpose. These are two widely used words in business and life, yet they’re often loosely used. They’re really important words, so I want to at least clarify how I use them, because I think meaning matters.

Defining terms

I’ve been exploring narrative for years, but I have a very specific meaning for the word. As those who have followed me know, I make a key distinction between stories and narratives that I’ve explored here and  here. In short, stories for me have two characteristics: they’re self-contained (they have a beginning, a middle and an ending) and they’re about the story teller or some other people, but they’re not about you (although you can use your imagination to explore what you might have done in the story). In contrast, narratives for me are open-ended, there is no resolution yet, but there is some significant opportunity or threat on the horizon that is yet to be achieved and it’s not clear whether it will be achieved. The resolution of the narrative hinges on you: it is a call to action to those you are addressing, telling them that their choices and actions will play a material role in helping to resolve the narrative.

One of the challenges that I’ve encountered in exploring narratives is that I find people often equate narratives with purpose and yet I think they’re different. Purpose is really big right now. More and more of us have a hunger to commit ourselves to something that’s meaningful and that can have significant and lasting impact, rather than being buffeted about by the tides of the moment.

Now, there are lots of definitions of purpose, so let me offer mine. I consider purpose to be a commitment to achieve some kind of significant impact in the world around you.

Both narrative and purpose can be crafted at the level of each of us as individuals, organizations and broader social entities like cities, religions and movements. But are they the same? I find that many people are equating narrative as I define it with purpose. I would challenge that and suggest that they are different, but related.

What do I mean? Let’s focus on corporate narratives to illustrate the difference. Take the example I have used in previous posts of Apple’s early corporate narrative that was encapsulated in the slogan “Think different”. Unpack the slogan and it basically suggested that for decades we had digital technology that took away our names and gave us numbers, put us in cubicles and made us cogs in a machine. Now, for the first time, we had a new generation of digital technology that enabled us to express our unique identity and achieve more of our potential. But it was not automatic, it wasn’t inevitable. To harness this potential, you needed to think different – it was a call to action to all of us saying that we needed to act in order to achieve the opportunity created by the technology.

That’s a powerful narrative. It’s the reason I believe that, for many people, Apple became the equivalent of a religion.

But it’s not a purpose. Purpose, the way most companies would define it, is about the impact that they, as a company, are committing to achieve. It’s directed to the people within the organization although it can be useful in helping others outside the organization (e.g., investors, partners, customers) to better understand what the organization is trying to achieve. But the call to action is directed to the people within the organization or perhaps those who are considering joining the organization. Those outside the organization are much more passive in this context – it’s not a call to action to them.

So, in this case, Apple’s purpose might have been to design and deliver digital technology that would help people to reclaim their uniqueness and achieve more of their potential. A purpose can be very consistent with, and contribute to, a broader narrative, but it’s not the narrative.

Does this distinction matter?

Why do I put so much emphasis on this difference? Because narratives focus on crafting a call to action targeted to people outside the company, not those within the company. Why does this matter?

Because in a world of mounting performance pressure, narratives provide a powerful way to mobilize others to achieve a significant opportunity that will benefit themselves as well as the company. Corporate narratives can become a powerful source of leverage, learning and loyalty.

By defining an opportunity that’s meaningful and inspiring to others outside the company, narratives motivate others to invest their own time and resources to address the opportunity. Take the example of “think different.” It motivated a lot of people around the world to find ways to use Apple’s technology to help them think and act different. As some of the users began to show the potential value that could be achieved by thinking and acting different, it inspired others to address the opportunity as well. The narrative also drew a large number of third party application developers who were inspired to provide applications and other tools to help users who wanted to “think different.” Together, all of these participants invested significantly more time and resources than Apple itself had invested – the leverage was significant.

But there’s more. As more and more participants were drawn into the narrative and started to take action to address the opportunity, they began to try many ways of thinking and acting different. Some of them achieved greater impact and some didn’t. There was a growing opportunity for everyone to learn faster by observing and reflecting on the impact of various approaches. They certainly learned much faster than if they were attempting this alone without any sense that others had embarked on a similar journey. So, narratives help to accelerate learning.

There’s another benefit of narratives. They instill loyalty in a growing number of people outside the organization.People who were inspired by Apple’s narrative often became intensely loyal, following Apple in its migration from computers to iPods, iPads and mobile phones. They paid premium prices because they valued the opportunity that was being offered to them.

Narratives also build trust. As a call to action, they’re also a call for help. They declare that the opportunity addressed by the narrative cannot be achieved alone by the organization crafting the narrative. The organization needs the help of others outside the organization. The call for help expresses vulnerability and that builds trust. That trust is reinforced if the opportunity identified by the narrative is one that’s meaningful to potential participants – it suggests that there’s a shared interest in achieving an opportunity that can make a difference for all concerned.

Finally, I’ve written before about the increasing importance of strategies of trajectory here and here. In a more rapidly changing world, we need to accelerate our progress and impact, not simply follow a linear improvement path. Narratives can help us do that because they mobilize a much larger ecosystem that can harness network effects – where the value created and the impact achieved increases exponentially as the number of participants increases.

The role of purpose

So, how does this relate to purpose? Narrative is bigger and broader than purpose in the sense that it’s speaking to a much broader constituency about a much bigger opportunity. Let’s stay with “think different.” As I’ve indicated, the constituency addressed by the narrative was the whole world – everyone had an opportunity to think different and achieve much more of their potential. It wasn’t just addressed to the employees of the company although, of course, they too had an opportunity to think different.

And, equally importantly, the narrative wasn’t just about Apple products and services – it went far beyond that. The opportunity was something that everyone could and should do, even if they weren’t using Apple products. Of course, Apple believed its products could be key enablers of the opportunity but, if you look at how the narrative was communicated, Apple products were far in the background – the focus was on you and the opportunity you had.

Narratives are bigger and broader than purpose, but they provide a powerful home and setting to frame a purpose that can be directed to the employees within the company. The narrative actually gives more meaning and inspiration to purpose because now that purpose is part of something much bigger. It becomes an enabler of actions that are being taken far beyond the boundaries of the organization and achieving far more impact than any individual organization could hope to achieve.

As I suggested earlier, the purpose that Apple might have framed around its narrative could have been to design and deliver digital technology that would help people to think different – to reclaim their uniqueness and achieve more of their potential (by the way, I don’t know what purpose Apple actually framed for its employees). But now that purpose takes on much more meaning because the broader narrative is inspiring more and more people to think different and providing compelling evidence of the opportunity that can be addressed. Now Apple is addressing a bigger opportunity that brings it together with others – it’s not just acting in isolation.

Purpose is certainly helpful in this context – it provides a way to focus efforts within the organization, inspire the employees regarding the opportunity and clarify the role that the organization can play in a much broader narrative. But it’s not the narrative – it is, or should be, the derivative of a narrative.

Narrative as catalyst

Hopefully I’ve persuaded you that organizational narratives are powerful. So, how do you craft one of these powerful organizational narratives? Well, the first piece of advice is: don’t hand it off to your PR agency. Narratives aren’t just words on a page; they emerge over time through action. I’ve briefly addressed what’s required to craft strong corporate narratives here.

I will add here that narratives can be catalysts to take leadership out of their organizations and help them to understand the evolving needs of the people or organizations they are hoping to impact. The power of a narrative hinges on its ability to understand the aspirations and frustrations of those it is addressing. Since narratives play out over an extended period of time, the leaders of the organization need to understand how the aspirations and frustrations may evolve over time, rather than just focusing on what they are today.

Bottom line

Narratives are a great example of the power of pull. In this post, I’ve focused on the distinction and the relationship between narratives and purpose as it applies to organizations. As mentioned earlier, narratives can also play a significant role for individuals and broader social entities like cities, religions and movements. Given the length of this post already, I’ll reserve that discussion for future posts.

Right now, let me leave you with three questions to address within your organization:

• Do we have an explicit narrative with an explicit call to action for others outside our organization?
• If so, is our narrative as powerful as it could be? Could we be addressing even bigger and more inspiring opportunities that are meaningful to the people we are trying to reach?
• Do we have an explicit statement of purpose and have we made the effort to show how that purpose is connected to our broader narrative?

John Hagel is co-chairman for Deloitte LLP’s Center for the Edge with nearly 30 years of experience as a management consultant, author, speaker and entrepreneur. He is the author of numerous books, including “The Power of Pull,” “Net Gain,” “Net Worth,” “Out of the Box” and “The Only Sustainable Edge.” Previously, he was Global Leader of McKinsey’s Strategy Practice and Electronic Commerce Practice (which he founded and led from 1993-2000). John holds a B.A. from Wesleyan University, a B.Phil from Oxford University and a J.D. and MBA from Harvard University. Learn more about John’s insights here >>