The Wonder of Storytelling

8 November 2023 | Newsletter

Welcome to The Fight for Fairer Funding newsletter where we share the latest in the fight for fairer funding in investment, raise awareness and provide education in line with our Mission. This newsletter from Funding Focus founder, David B. Horne, is part of the platform that sheds light on the uneven playing field that female and under-represented entrepreneurs of all genders face when it comes to raising capital for their businesses. We hope you enjoy it!

Read our latest edition below.

Members of the finance and accounting profession can be described as many things. Unfortunately, being a good storyteller is rarely one of them. My job in this article will be to address that, and to give you tips and tools to counter it, that will enable you to become a good storyteller. I shall plant a seed in your minds.

To do that, we are going to explore anthropology and the development of human language over millennia. Then we will cover what makes a good, compelling story. It’s not difficult, and I will give you a tried and tested storytelling architecture.

Finally, we will look at the public accounts of a company that most of you will have heard of: Apple. We will craft a story around some of their numbers. Armed with that information, you will be able to go back to your companies and apply what you have learned today to radically improve your financial storytelling. The seed will have been planted, and then it’s down to you to let it grow.

Let’s first look at anthropology and the development of human language.

Anthropologists suggest that human beings developed the ability to speak between 50,000 and 200,000 years ago. Today, in a world of just under 200 countries, there are more than 6,000 languages, and academics agree that one of the key distinctions between humans and other animals is that we learned how to talk.

Every human being has the capacity for languages, and it has been shown in academic studies that a human baby has the ability to learn any language. The same applies to adults, but it is often much harder for adults to learn another language. Please drop a “yes” in the comments if you can speak more than one language.

Academics agree that the evolution of language was a 2-step process: new sounds were created by combining old sounds, and at the same time the human brain was able to control our ability to make these sounds. Biology also played a role. The human larynx, or voice box, is lower in the throat than in other animals, and the human tongue and soft palate are rounder. This allows humans to create a wider range of sounds. And did you know that the ideal frequency of sound received by the human ear is in the range emitted by the human voice?

Taking it to the next level, language is intricately connected with culture. We could not have culture without language, and language is the basis for communicating and sharing culture with others.

Cast your imagination back 20,000 years. You live in a small community of cave-dwellers, and a scouting party has just returned, having discovered a herd of woolly mammoths. Catching and killing just one of these huge animals will provide food for the whole community for weeks, as well as clothing, bedding and a whole host of tools, but it is a highly dangerous venture. Mammoths were massive beasts, weighing as much as eight tons, and they had long tusks that could easily gore an unwary human being.

Through the development of language and storytelling, our ancestors were able to pass on critically important knowledge and information. Not just on the tools and tactics necessary to hunt and kill the mammoth, but also how to transport the dead animal back to the cave, how to preserve and store the meat so it wouldn’t rot, how to tan the hide to make clothing and bedding, how to use the tusks and bones from the carcass to make tools and weapons.

Without the development of language and communication, each time our ancestors faced a woolly mammoth they would have had to figure this out. Many more hunters would have been killed.

For tens of thousands of years, the only way of passing information from one person to the next, or from one generation to the next, was by storytelling. Humans are hardwired for stories.

That didn’t change until 1454, when Gutenberg’s printing press revolutionised the process of capturing and sharing the written word. Communication shifted from verbal to written, enabling a much wider dissemination of information and the ability to have a permanent record that survived beyond the death of the author or storyteller whose words had been captured.

Fast forward to the 21st century. To the age of digital communications, when all the captured knowledge of humanity is available within a few seconds on a device that you hold in your hand.

And yet the vast majority of the information on the internet is rarely used. Why not? Because it isn’t telling a story.

Look at the mainstream media channels, the influencers, the experts that people turn to. Each one of them uses the power of storytelling to grow their audience and their influence.

With anthropology and language covered, let’s now turn to what makes a good, compelling story.

First, we’ll look at the architecture of a story, then we’ll move on to discuss communication.

The architecture is quite simple, really. When you look at the most successful films, novels, songs and literature, they all tell a story using a variation of something called The Hero’s Journey. This was successfully codified in a book by Joseph Campbell called The Hero of a Thousand Faces. Please type “hero” in the chat if you have heard of the hero’s journey.

Long before Campbell’s book, storytellers from our cave-dwelling ancestors understood and used The Hero’s Journey to convey their message. Humans learned over time the kinds of stories that were successfully passed on.

At a high level, there are three stages to the hero’s journey: Departure, Initiation and Return.

1. Departure starts in the ordinary world, when the hero is called to an adventure, meets a mentor and is guided to cross the threshold into the unknown.

2. Initiation happens in the unknown, where the hero faces tests and challenges, must fight enemies, and after the ordeal claims a great reward.

3. Return is when our hero crosses the threshold back to the ordinary world, bringing the knowledge, treasure or other reward which may be shared with people. The hero is transformed by the adventure.

Later I’ll address how to apply this to financial storytelling, but first, let’s look at communication.

Communication is a two-way street. You, as the presenter of information, have a message you wish to convey. Your challenge is not just the conveying, but also understanding how the audience receives your message.

When crafting your version of the hero’s journey, it is important to recognise that people learn and process information in different ways, and there are three primary styles: Visual, Auditory and Kinesthetic.

1. Visual people need to see pictures, graphs and people to visualise the information.

2. Auditory people need to hear the information.

3. Kinesthetic people need to engage in some activity, to touch or feel something.

It’s important to blend all three of these into your story.

Equally important when passing on a story is the way it is delivered. Research published in 1967 by Albert Mehrabian from UCLA found that for verbal communications, just 7% of the message received was from the words used. Just 7%. A staggering 55% of the message you are communicating is perceived by the recipient based upon your body language, and 38% your tone of voice. Think about that next time you are presenting financial results to your boss or the Board of Directors.

The ancient storytellers knew this. They used more than just words to reinforce their message and make it more memorable. They would embellish their story by creating visual images, using people and tools that are relevant to the story — the cave-dwellers would re-enact the chase and kill, showing the spears and other weapons they used, holding up the head or the tusks of the beast they had killed. These stories were often told around a roaring fire, adding to the dramatic impact, which reinforced the story.

One of the finest storytellers of the 21st century was the late Steve Jobs, co-founder of Apple. If you have never seen Jobs’ commencement speech to the Stanford University Class of 2005 or the Macworld 2007 event, when he announced the creation of the iPhone, I highly recommend both as tremendous examples of modern storytelling. If you have seen them, you will know what I mean. Type “Jobs” in the chat if you have seen one or both of these.

Having talked about anthropology, language, storytelling architecture and communication, let us now look at crafting a story around Apple’s numbers.

We’re going to look at two line-items on the latest published 10-K for Apple’s year ended 24 September 2022: Gross margin and Research & development.

The non-storyteller might say that gross margin is up by $18.0 billion from $152.8 billion to $170.8 billion. They might add that the gross margin percentage grew by 1.5 percentage points from 41.8% to 43.3%. Research and development increased by $4.4 billion from $21.9 billion to $26.3 billion, growth of 19.8%. Factual information that anyone with a calculator could easily figure out. Boring.

A storyteller, on the other hand, would use the architecture of the hero’s journey.

When presenting financial results, think about your company as the hero. The departure stage is the beginning of the period, the initiation is what happened during the period, and the return is the result your company achieved.

A storyteller would drill into the details to understand what drove the numbers. For visual learners, they would include graphs to present the numbers, splitting out the gross margin between products and services and showing the year-on-year movement in the numbers. For auditory learners they would vary the tone and pace of their voice during the presentation. For kinesthetic learners they would include a handout, something the person can touch and feel, or if it’s online there might be a button to click.

A storyteller would remember that 55% of the message the audience receives comes from body language, 38% from tone of voice and just 7% from the actual words used.

That, ladies and gentlemen, brings us to the end. Or in the context of the hero’s journey, back to where we started. We looked at anthropology and the development of human language, before turning to what makes a good compelling story — using the architecture of the hero’s journey and understanding that communication depends on both the presenter and the recipient of the information. Finally, we put this into context by telling a story around a couple of line-items from Apple’s latest full year financial statements.

I said at the beginning that I was planting a seed in your minds. I hope this talk has helped that seed to germinate and grow inside you. It is now down to you to apply this inside your company and to become one of those rare things: a finance professional who is also a good storyteller.

The year ended 24 September 2022 was one of great change for global markets, and as a global company we had to ride that wave of change. Markets were still buoyant at the beginning of the year. The SME market, in particular, was strong, due to the continuing growth of startup businesses that were well-funded by the venture capital industry. Conditions changed significantly on the 24th of February 2022, when Russian tanks and infantry invaded Ukraine. This led to a geo-political crisis as Western nations grappled with how to act in the face of the first war in Europe since 1945. Rampant inflation in the energy and food industries soon ensued. This led to higher interest rates, resulting in a cost-of-living crisis affecting businesses and consumers around the world.

Despite these challenges, Apple delivered continued growth across both products and services, recording gross margin up by $18 billion or 12%, from $153 billion to $171 billion.

As a product-led technology business, the regular release of new products is key in driving growth. Series 7 of the Apple Watch was released in October 2021 and has contributed to most of the last financial year. The new Apple M2 chip was launched in July 2022 and brought strong sales across both MacBook Air and MacBook Pro lines. The iPhone 14 hit the market just fifteen days before the end of the financial year, and it has been the best performing iPhone release — most of which will impact the next financial year. Gross margin from products was up by $10 billion, growth of 9% over the prior year.

But products are not the only thing Apple does, and our gross margin in the service business grew by nearly as much as products, despite the products business being four times the size. The main driver, was again, our digital content, with strong growth across the App Store, Arcade, Fitness, Music and TV services. We launched a new all-in bundle of these services and the uptake from customers has been strong. Gross margin from products was up by $8 billion, growth of 17% over the prior year.

We remain committed to bringing bleeding edge technology to the world. Our investment in research and development is critical to ensure Apple stays at the vanguard of the business and consumer technology markets, and we continue to invest significant sums to maintain that leadership. The regular releases of new products and services are driven by this expenditure, and we are continually seeking opportunities to improve speed, storage and quality, while maintaining Apple’s obsession with design and the look-and-feel of our products that Steve Jobs and Steve Wozniak were so passionate about when they founded Apple in 1976. To achieve this, we increased R&D expenditure in the year by $4 billion, and the share of revenue going to R&D grew from 6% to 7%.

As always, looking forward to reading your thoughts and questions in the comments.

With love and gratitude,


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