"The most successful companies in the world have profound stories behind them (often deeply tied to their founders) that instill a sense of bigger purpose and meaning into what they do. For example, Apple, Tesla and Google are so much more than companies - they are legacy brands created by visionaries who aspire(d) to change the world."Most of these "profound stories", however, belong to the field of hagiographic edification literature for executives. They are post-hoc rationalizations in which the interplay of talent and (happy) coincidences is subsequently interpreted as the work of an entrepreneur led by visionary foresight. But where do stories get this power from?
The brain organizes knowledge as storiesSchank and Abelson , two American psychologists who, among other things, have made fundamental contributions to AI research, assume that stories (as remembered personal experiences and experiences of third parties) are fundamental components of human memory, knowledge and social communication. They argue that
- practically all human knowledge is based on stories (= reconstructions of remembered experiences);
- new experiences are interpreted in the form of old stories; the content of remembered stories depends on whether and how they are told to others; the reconstructed memories form the basis for the remembered self of the individual;
- memories of shared stories within social groups define the social self; memories only take on a stable form in memory when they are told and retold. This stable structure takes precedence over the "individual parts" that were originally stored in scattered places;
- stories help to retrieve information because they contain many indices. These indices can be locations, attitudes, beliefs, dilemmas, decisions, conclusions or the like. The more indices we have, the more likely it is that we will remember a story.
New things are difficult to do, because we would have to rework convictions, make new generalizations and carry out other complex cognitive operations - an effort that we rather shy away from. If you have a hammer, everything looks like a nail to you.
Stories are not there to be questioned.The Israeli psychologist and winner of the Nobel Prize in economics, Daniel Kahneman , explains very clearly why we tend to react sluggishly to new developments. He divides mental activities into two systems:
- There is the automatically working system 1. It works fast, with little or no noticeable effort and without the human being having the feeling to control it deliberately. Example: If you see someone and spontaneously have the feeling that you´d better watch out, then this "gut feeling" comes from system 1.
- But there is also a system 2. It shows itself in (strenuous) mental activities that require concentration. When system 2 is "switched on", its activities are often associated with the subjective experience of action, choice and concentration. Example: System 2 is in play when you consciously revise your gut feeling. Over time you may have more information that does not justify your gut feeling or you tend to blandish your initial feeling.
In other words: System 1 proposes a story from a small amount of information. System 2 lets the story pass if it is plausible, i.e. essentially free of contradictions. The paradox is that the less information there is, the more consistent a story is. In case of doubt, therefore, more information leads to System 2 being activated. The acceptance of information is quasi the default setting in the brain. Critical reasoning must be initiated consciously. We do this to the point of believing wrong statements in a fictional text that are wrong in the real world. Only if for some reason we are motivated and able to judge the truthfulness of information do we begin to question it .
Another feature is that system 1 uses only available information. Kahneman calls this "what you see is all there is". But this promotes false conclusions. He gives the following example: A person is described as shy and withdrawn, helpful but with little interest in people or the world. But he can be enthusiastic about order and structure. Is this person more of a librarian or a farmer? System 1 will "intuitively" guess a librarian and be wrong. Because for the answer to the question all available information is irrelevant. One would have to know rather whether there are more librarians or farmers. If the question had been presented to system 2, perhaps, it would have tried to find the answer via a detour: "Are there probably more agricultural enterprises or more libraries? System 1, however, does not make any creative detours.
In stories nothing happens without reasonNassim Talib  points to another weakness inherent in thinking in stories - narrative fallacy. Our ability to leave a sequence of facts as such is limited. To "understand", we connect the facts, give them a direction, or explain one fact from the other. By giving "meaning" to the facts, we not only make them more memorable, we also reinforce our impression that we understand them. The setback comes when we try to analyze current events with such stories.
Stories make us dumberTyler Cowen, an American economist with a very recommendable blog (marginalrevolution.com), lists his problems with storytelling . Stories are not only created solely from existing information. They don't even process all available information. On the contrary - they act like filters. Anything that doesn't fit into the narrative logic is made to fit or is left out. There are several reasons for this:
- Stories simplify for the sake of effect. Strong stories can be told in a few sentences. Details fall by the wayside. There are no such things as opportunity costs or unpleasant side effects. Stories serve dual "worldviews" and conflict situations.
- Often the same stories are told again and again; in most cases, these stories are stories of good versus evil. In the case of stories that call for a tough stance against a foreign group, the conclusion always comes before weighing up the arguments.
- The theme is interchangeable. The same facts can theoretically be told as a quest, as the story of a rebirth, a struggle or a triumph.
- A story always has actors with intentions. In reality, however, there is not a consciously acting actor or group behind every event. In stories, therefore, chance is not coincidence, but conspiracy.
- Stories distort history: Even stories that everyone knows never happened like they are remembered and passed on. Cowen cites the legends of Washington's cherry tree and of Paul Reveere's ride.
In a nutshellObviously we cannot do without stories, but if stories are really so dangerous, then one must wonder that the last story of Homo Sapiens was not been told 200,000 years ago at the campfire in the cave. Therefor, the problem is probably not so much that we organize our thinking with stories. It's that we often tell ONE story, think it's true, and defend it with teeth and claws. Especially economy and politics are full of such examples.
The Nigerian-American writer, Chimamanda Ngozi Adichie, sums up the danger of ONE story: Stories contain (also) stereotypes. Stereotypes do not have to be wrong, but they are always incomplete. To balance this out, we need many stories. In her own words:
"Stories matter. Many stories matter. Stories have been used to dispossess and to malign, but stories can also be used to empower and to humanize. Stories can break the dignity of a people, but stories can also repair that broken dignity." ______________________________
 Schank, R. C. & Abelson, R. P. (1995). Knowledge and Memory: The Real Story. In: Robert S. Wyer, Jr (ed) Knowledge and Memory: The Real Story. Hillsdale, NJ. Lawrence Erlbaum Associates. 1-85. (link)
 Kahneman, D., & Egan, P. (2011). Thinking, fast and slow.
 Prentice, D. A., Gerrig, R. J., & Bailis, D. S. (1997). What readers bring to the processing of fictional texts. Psychonomic Bulletin & Review, 4(3), 416-420. (link)
 Taleb, Nassim. (2007). The Black Swan.
 Cowden, Tyler. (2009). Be suspicious of simple stories. (link)
 Akerlof, G. A., & Shiller, R. J. (2010). Animal spirits: How human psychology drives the economy, and why it matters for global capitalism.
 Chimamanda Ngozi Adichie. (2009). The danger of a single story. (link)