Exploring narrative strategy: the role of narratives in the strategic positioning of organizational change

Abstract

This article considers how the use of narratives has steadily transformed corporate strategy in the context of organizational change in recent years. ‘Narrative strategy’ is defined in this article as an evolving field concerned with the role of narratives as patterns of expectation and understanding in organizational transformation. In contrast to a post-strategic and communications-based approach of corporate storytelling, developing a narrative strategy clarifies an organization’s position regarding significant societal debates and derives from a change narrative. The concepts’ narrative constellation’ and ‘narrative discrepancy’ will be introduced to describe how organizations align and position their strategy with broader societal narratives. Both concepts are explored via a literature review and the authors’ experience as consultants. One exemplary case demonstrates how an organization developed and implemented a narrative strategy in a change process: Merck Group’s use of narratives during its transformation from a pharmaceutical manufacturer to a science and technology company in 2014. The article, thus, conceptualizes narrative strategy as a crucial aspect of contemporary strategy development.

Keywords:

• Narrative
• strategy
• organizational change
• communication

Introduction

In recent years, the term ‘narrative’ has become a focus of interest, both in public debates and in multiple research fields (e.g. Beckert and Bronk 2018; Jasanoff and Kim 2015; Ächtler 2014; Boswell 2013). Economists such as Shiller (2019) and Krugman (2016) examine narratives as essential economic factors whose spread can favor or disfavor economic developments. Political scientists like Ganz (2009) analyze the use of narratives in the formation of social movements, highlighting their leadership role and their function for ‘translating values into action.’ A key concern common to these recent approaches is how narratives influence societal structures such as economic systems or political movements. One could call this a contextual approach to narratives that aim to understand and conceptualize significant societal effects of such patterns. Rather than studying the linguistic structure of narratives or their social functions for individuals, these approaches are concerned with the impact of narratives on organizations and social systems.

This article argues that narratives – understood as contextual factors – play a crucial role in developing organizations’ and corporations’ strategies in organizational change situations. By the means of a literature review and by reflecting upon our own experience as a consulting company, we aim to demonstrate that a contextual approach can help us conceptualize this use of narratives in strategy. Departing from recent research on narratives as contextual factors, we aim to investigate an emerging segment of future planning: narrative strategy. We hypothesize that narratives as contextual factors serve organizations for managing stakeholder expectations by docking the meaning-making processes of an organization onto broader social narratives. In this way, narratives are embedded in strategy development, in contrast to established corporate storytelling practices that are primarily post-strategic and aimed at communicating and mediating previously set strategic goals. We observe that selected corporations have made narratives a crucial part of their strategy process. Our aim in this article is to conceptualize this approach as a ‘narrative strategy.’ We believe that distinguishing this branch of strategy development can allow a deeper understanding of strategic considerations that organizations are undertaking today.

In order to examine narrative strategy as a crucial branch of strategy development, we will first review recent contextual approaches to narratives. Secondly, we apply these approaches to the field of strategy, and thirdly, we present one case to show how narrative strategy has been used as an integral part of an organizational change process. This case is the Merck Group’s strategic transformation from a pharmaceutical manufacturer to a science and technology company under CEO and chairman of the executive board Stefan Oschmann in the 2010s. We review how the company reframed its narratives within this strategic change process.

Considering these concepts and distinctions, we argue that companies and organizations give their strategies a more resilient foundation by understanding, clarifying, and, thus, shaping their approach to broader societal narratives. The core operation of narrative strategy is to identify critical narratives that can serve as a framework for an organization’s meaning-making and docking it to existing patterns of understanding. As narrative-driven strategy development, this emerging field goes well beyond post-strategic corporate storytelling on the one hand and non-narrative classical approaches to strategy development on the other hand.

Definitions

In recent public and academic debates, the term narrative is often unspecific and sometimes even contradictory. Hübner (2017) claims the term has become a mere empty phrase for any description. Schneider (2017) even attests a ‘propagation of thoughtlessness,’ claiming it would not differ from the term ‘story’ except for its ‘exotic novelty value.’ Etymologically, the term narrative is derived from the verb ‘narrare’ (Latin: to tell, report, recount). As a noun, it refers to spoken or written accounts of events or stories. There is an ample debate on the definitions of the concept ‘narrative’ in the humanities and social sciences mostly focusing on the purpose, functions and structures of narratives (e.g. Abbott (2002), Rudrum (2005) or Nahari, Glicksohn, and Nachson (2010)). While some scholars would use the terms narrative and story synonymously, particularly in the German-speaking debates, narratives are considered to have specific functions that do not apply to all kinds of stories (Ächtler 2014). In this strand of theory, a narrative, in contrast to a story, is considered to be a pattern of narration used to explain, justify, or represent aspects of a discourse present in stories.

Taking these specific functions of narratives into account, we define narratives as exemplary, meaningful, and suggestive patterns of narration. This definition extends recent research on narratives and their functions in social systems as described, for example, by Shiller (2019), Beckert and Bronk (2018), or Ganz (2009). These research projects share a concern with narratives as contextual factors and focus on their systemic functions rather than their structure and individual use. As Shiller (2019) argues, narratives can be considered economic factors that operate on a micro-and macro-level in society. Our proposed definition makes explicit three functions of narratives that distinguish them from other kinds of stories and acts of narration and play a particular role in organizational change.

As exemplary narration patterns, narratives act as templates for communication and as models for contextualizing social behavior. A narrative, in this sense, provides an abstract framework for telling a multitude of adherent concrete stories that manifest its semantic content (Koschorke 2012). As meaningful narration patterns, narratives act as catalysts for meaning-making in a system or organization (Boje 1991). As such patterns of understanding, narratives frame perception as probable, plausible, and desirable activities (Dunne and Raby 2013). As suggestive patterns of narration, narratives are actively involved in suggesting particular framings of events and actions, thus, promoting a specific perspective, expressing and highlighting specific values and intentions, and striving for interpretative predominance (Sukulla 2019; Franke-Schwenk 2014). Thereby, a number of different frames can allude to or activate a single narrative. In conclusion, we can say our definitions allow us to approach narratives as patterns of understanding and expectation.

Fields: corporate storytelling and narrative strategy

While there is ample research on the role of communication in organizations and organizational change (Schoeneborn and Blaschke 2016; Zerfass and Huck 2007; Taylor and Van Every 2000; Seeger, Sellnow, and Ulmer 1998; Czarniawska 1998), research explicitly focused on the role of narratives in strategy development has only recently gained attention (Fenton and Langley 2011). Research in this field falls broadly into two categories. Firstly, projects that analyze the role of narratives for the mediation and communication of strategy, and secondly, projects concerned with the use of narratives inherent to strategy development processes. In the first field, a particular focus of many studies is on the question of how storytelling can ‘create the experience that lets strategy be understood at a personal level’ (Adamson et al. 2006). Research has examined storytelling’s role in supporting or subverting employee engagement via corporate strategy (see Spear and Roper 2016; Gill 2015). The accessibility of strategy via narratives has also been analyzed regarding organizational innovation. Bartel and Garud (2009) argue that innovation narratives play a crucial role in sustaining organizational innovation and translating ideas across an organization. Against this background, other studies have focused on storytelling as an entrepreneurial or corporate strategy to create foundations, gain legitimacy and stakeholder support, or navigate organizational change (Boje 1991; Dunford and Jones 2000; O’Connor 2002).

The second field is concerned with conceptualizing the role of narratives within strategic processes. For instance, Fenton and Langley (2011) observe a ‘narrative turn’ in strategy development. They examine story-based techniques in strategy processes as part of a greater research field investigating ‘strategy as practice’ (Whittington 1996). Further studies also show that storytelling and narratives can play an essential role in strategy development (Kaplan and Orlikowski 2014; Ogilvy, Nonaka, and Konno 2014). For instance, Buchanan and Dawson (2007) conceptualize organizational change as a ‘multi-story process’ in which frequently various narrative versions of a change event are simultaneously active. A relatively recent research branch examines the role of narrative strategy for an organization’s futures (Rindova and Martins 2021). In contrast to many corporate storytelling approaches in the first field, these research projects argue that narrative strategy is an integral part of a strategy process.

Drawing upon this existing research, we will define ‘narrative strategy’ as any strategic use of narratives to plan and outline the direction of organizational change in the context of broader social narratives. Rather than just communicating strategic goals, we argue that narrative strategy aims to position an organization regarding broader societal narratives. In contrast to corporate storytelling, this approach to narratives considers the public understanding of narratives and mobilizes it to develop a straightforward change narrative for an organization. Accordingly, narrative strategy tends to be more concerned with legitimacy and purpose and seems more future-oriented than conventional corporate storytelling. While corporate storytelling is identity-focused, developing narrative strategy clarifies an organization’s position regarding external societal views. As we will see, narrative strategy can contribute to an organization’s mid-term and long-term meaning-making and its legitimacy and purpose.

We propose two theoretical concepts to examine narrative strategy and its application in organizational change processes: narrative constellation and narrative discrepancy. A narrative constellation describes a set of narratives that impact an organization’s external and internal meaning-making operations. This includes internal narratives of an organization such as brand stories, origin narratives, future expectations, and external narratives assigned to the organization and its different contexts (industry, equity, societal). Even though an organization’s narrative constellation is unique, it is apparent that organizations in similar fields frequently display similarities in their narrative constellations. Further, it is essential to note that narrative constellations are subject to ongoing internal and external change in an organization. A narrative constellation can map these changes and, thus, trace their impact on an organization. Narrative strategy then aims to clarify an organization’s position in its narrative constellation.

Our second proposed concept – narrative discrepancy – addresses the ongoing change in narrative constellations. It can be defined as a perceived inconsistency of different narratives within the narrative constellation of an organization. As narratives within the narrative constellation of an organization change over time, certain narratives can turn out to be incongruent or even contradict each other. This is particularly the case when an organization or one of its contextual fields faces a transformational change. In such situations, established narratives do not correspond with an organization’s emerging culture and perceptions anymore. The concept of narrative discrepancy allows us to identify such tensions in a narrative constellation. Therefore, identifying and responding to narrative discrepancies (oftentimes via counter-narratives) is an essential aspect of narrative strategy and often can be the starting point for strategy processes.

From tradition to curiosity – the narrative strategy of Merck

To conceptualize narrative strategy further, we examine the role of narratives as part of one exemplary organizational change process: the transformation of the Merck Group KGaA based in Darmstadt, Germany, from a pharmaceutical and chemical manufacturing firm to a science and technology company in the 2000s and 2010s. More precisely, we will analyze the setting of several change narratives and their realization as frames within the brand repositioning that constituted a pivotal moment within the change process in 2015.

Our case analysis shows how the company developed and implemented a narrative strategy to guide the chance process by clarifying its position towards broader social narratives. By applying our narrative strategy concept, we examine narrative discrepancies at the start of the change process and Merck’s strategic responses to them. We argue that crucial narratives were reframed and used as strategic guidelines and templates for communications as part of the brand repositioning. Considering the mentioned functions of narratives (exemplarity, meaning-making, and suggestion), we analyze brand repositioning as a narrative strategy development beyond corporate storytelling. Accordingly, our analysis highlights that the brand repositioning did not just launch a new brand but also achieved a more fundamental strategic alignment of Merck’s internal and external communication and positioned the company towards three broader social narratives: the narrative of innovation, the narrative of progress and the narrative of science and technology. Merck developed a precise and distinguishable position towards each of these narratives, thus, clarifying its social role and contribution.

Narrative discrepancies

We can identify a range of strategic and communicative challenges that the company was confronted with during its change process. Most notably, at the outset of the brand repositioning, these challenges were perceived as a lack of brand clarity, a weak emotional brand appeal of its brand, and the desire for a more open, agile, and international organizational culture (Eckmann 2017; Löber 2017). Applying the narrative strategy approach, one could attribute these challenges to different narrative discrepancies that had evolved within Merck’s narrative constellation. In short, one could say that the narratives circulating within Merck and externally about Merck in its different contexts did not reflect the present reality and anticipated future directions of the company anymore. As we will see, these narrative discrepancies were partially due to internal factors such as the mentioned change process and partly caused by external factors.

The main narrative discrepancy that Merck was confronted with pertained to the company’s core competence narrative. As a conglomerate with diverse business operations, Merck’s core competence was harder to comprehend before the change process than other companies operating in a more focused field. This is a challenge that many conglomerates are confronted with. Merck’s brand and core competence were still strongly associated with pharmaceutical products even though the company had diversified its business operations for a long time. We argue that this association increasingly became the source for narrative discrepancies during the change process.

This was the case, as the company had extended its science and technology units while at the same time partially disposing of conventional pharmaceutical operations since the 2000s. This strategic shift is evident in the significant acquisitions of that time. In 2007, Merck acquired Serono S.A., a research-intense Swiss biotech company, while selling its generic medical products division only a few months later (Kennedy and Watch 2006; NBC 2007). The acquisition of the life science company Millipore in 2010, the chemical materials firm AZ Electronic Materials in 2014, and the life science and biotech company Sigma Aldrich in 2015 continued this process (Merck 2010; Merck 2014; Merck 2015). Moreover, in 2018, the reorientation from pharmaceutical and chemical manufacturing to science and technology culminated in Merck selling its consumer-health division to Procter & Gamble (Burger 2018). By then, the core competence narrative ‘pharmaceutical manufacturer’ that still influenced external perception did not reflect the competencies, business operation, or future strategy anymore. Instead, it constituted a significant narrative discrepancy and a challenge for internal and external communication.

A second narrative discrepancy concerned the company’s strategic distinction narratives: the narratives used to distinguish itself from competitors. At the departure of the brand repositioning, Merck’s brand and its distinction narratives were hard to differentiate from competitors’. The narratives and their corresponding communication design followed industry conventions (Löber 2017), leading to a uniform and hardly distinguishable approach. For instance, like many other pharmaceutical and health sector companies, before the repositioning, Merck framed its distinction narratives on values such as objectivity, neutrality, and reliability. This led to a situation in which Merck’s organizational identity was hard to communicate externally, as its distinctiveness among competitors seemed marginal. At the outset of repositioning, uniformity was an opportunity to push for a profound change in internal and external communications.

A third narrative discrepancy underlying Merck’s challenges at the outset of the repositioning process concerned its origin narrative and the role of its organizational culture. This discrepancy resulted from a strong focus of the brand and corporate culture on its history and local identity contrasting with its increasingly global, culturally diverse, and multi-disciplinary workforce. Merck is one of the oldest manufacturers in the field worldwide. A pharmacist founded it in 1668 in Darmstadt, and to this day, the founder’s families hold the majority of the company’s shares. Accordingly, the company has built a strong sense of tradition for a long time, reflected, for instance, by the fact that the Merck family as Merck’s majority shareholder keeps the pharmacy of the founder in operation (Merck 2021b). Despite its undeniable merits, we would argue that this focus on history and local identity had resulted in a narrative discrepancy. It was identified as an insufficient framework to integrate and synthesize the different cultural streams of the organization. At the beginning of the repositioning, this narrative discrepancy manifested itself as a desire for cultural change towards a more open, agile, and international organizational culture (Eckmann 2017a).

In conclusion, we can identify three narrative discrepancies in Merck’s narrative constellation (core competence narrative, distinction narrative, and origin narrative) at the change process’s outset. All three of them transcend the fields of strategy and communication. Thus, it is unsurprising that Merck tackled them with an integrated approach combining strategic and purpose-oriented elements (Oschmann 2020) to communicate its identity internally and externally and frame its company’s role in broader societal narratives. In contrast to conventional corporate storytelling processes that focus on describing an organization from the inside out, Merck decided to position itself from the outside in and thus integrate external with internal narrative elements.

‘We are curious minds dedicated to human progress’ – a new narrative for Merck

Merck decided to tackle the mentioned challenges through a series of change narratives describing its identity and purpose derived from broader societal narratives as part of its organizational change process. These change narratives served as strategic orientation and templates for communication and were published in a corporate narrative guideline internally in 2017. From these initial guidelines, three narratives were derived that became the base of Merck’s purpose communication (1), Merck’s brand principle (2), and the company’s strategy and value communication (3):

1. Purpose: We are curious minds dedicated to human progress. (Oschmann 2020)

2. Brand Principle: Breakthroughs begin with curiosity. (Merck 2021c)

3. Strategy and Value: Science is at the heart of everything we do. It drives the discoveries we make and the technologies we create, and it forms the basis of our future growth. (Merck 2021d)

These change narratives and their implementations responded to Merck’s challenges at the time and provided a clear framework for communication and strategy development. We argue that these change narratives also aimed to resolve the described narrative discrepancies. This was achieved by clarifying Merck’s position in and contribution to a particular broader societal narrative. These broader societal narratives include the narrative of innovation, the narrative of progress, and the narrative of science and technology. Each of the change narratives in the manifesto focuses on one of these broader societal narratives and captures a positioning that Merck intended to frame. Merck argues that this positioning could be best described as curiosity drives innovation, dedication to human progress, and the vibrancy of science and technology.

The first positioning, ‘curiosity drives innovation,’ establishes curiosity as a central value for the organizational culture. It is captured in the change narrative ‘we are curious minds dedicated to human progress,’ and the brand principle breakthroughs begin with curiosity.’ Both allowed the company to position itself within the broader societal narrative of innovation in a new way. Associating innovation with curiosity is a unprecedented strategic decision, as Merck frames innovation as a human-centered and emotionally-driven individual activity in this way. This stands in contrast to growth-driven, emotionally distant, or abstract organizational forms of innovation. Innovation becomes a personal project that takes its origin in particular emotion and individual exploration of ideas. Rather than focusing on a quality or a result of innovation, this framing highlights what innovation is preceded by. Merck, thus, positioned itself as an enabler of innovation rather than a manufacturer of innovative products, which corresponds with its more general strategic change from a chemical and pharmaceutical company to a science and technology firm.

After establishing curiosity as a central value via the change narratives, a range of new formats was launched to explore curiosity-driven innovation and cultivate it in the company. This included founding an internal Curiosity Initiative to conduct research and foster discussion on the benefits of workplace curiosity (Merck 2021a). In 2015, a curiosity research program was launched to examine and describe obstacles and enhancers regarding workplace curiosity. Based on the findings of this research, internal educational formats were developed and the State of Curiosity Report that measured Merck and other companies’ workplace curiosity. These measures were first conducted and published internally and later extended externally (Merck 2018).

Together with these primarily internal measures, a range of external initiatives was launched. With the official brand repositioning, a brand ambassador program was initiated and a Curiosity Council consisting of external researchers working on curiosity. This shows how Merck positioned itself step by step as a thought leader on curiosity and innovation well beyond its internal organizational culture and stakeholder-specific communication. The measures also show that the organizational change process did not operate with a fixed definition of the value of curiosity from the start but instead had the aim to develop a position and culture in response to it as part of the strategic organizational change process. This shows how the measures and the change narratives were continuously developed and enhanced within the organization while simultaneously becoming part of the external communication.

The narrative ‘Dedication to human progress’ addresses and reframes another challenge that Merck faced: aligning its strong focus on its history and local identity and the dynamics of a global workforce. Firstly, instead of focusing its strategy on the origin narrative, Merck decided to frame its identity more inclusively. The change narrative ‘we are curious minds dedicated to human progress’ demonstrates this. A shared dedication to a future goal is at the center rather than the company’s historical or local identity. At the same time, the change narrative positions Merck towards the broader societal narrative of progress. Like within the narrative of curiosity, human and individual aspects of progress are accentuated. This stands in contrast to common notions of technical progress as being neglecting or questioning what is human.

A third narrative guiding Merck’s repositioning can be described as ‘vibrancy of science and technology.’ It is most prevalent in the strategy and value communication describing Merck’s identity: ‘science is at the heart of everything we do.’ These change narratives most explicitly reframe Merck’s core competence narrative from chemical and pharmaceutical manufacturing to science and technology development. Interestingly, science and technology are framed here as dedication or value (‘that drives the discoveries we make’) rather than a professional activity. Merck's visual brand identity repositioning also expresses the shift of linking science and technology development with commitment and vibrancy. The new brand design consisted of colorful, round shapes and fonts inspired by the colorful and abstract microscopic image renderings and scientific models from Merck’s research labs (Merck 2015). It constituted a break from the minimalist, sober and neutral previous brand design. Breaking with conventions in the pharmaceutical and healthcare field, Merck’s design-oriented itself more with brands from the science and technology sector such as Google or Twitter than those pharmaceutical companies such as Pfizer or Novartis.

This new narrative of science and technology also served to increase the scope for potential future strategic shifts. The communication of interdisciplinary trends in the company’s fields, such as the CRISPR-Cas9 gene-editing technology, demonstrates this. (Merck 2020) CRISPR-Cas9 is an example of the increasing entwinement of research from the life sciences, computer sciences, and the technology sector. Moreover, it is an example of the interaction of academic science and corporate R&D as it is both a commercial technology and a research tool.

Within Merck’s change process, narratives played a crucial role on several levels. We can discern three primary strategic functions of narratives that guided Merck’s transformation from a chemical and pharmaceutical firm to a science and technology company. Firstly, narratives provided a framework for aligning Merck’s brand with its changing business operations. Secondly, narratives were used to explore the core values for an anticipated organizational culture change, particularly reframing Merck’s brand history from a traditional to a dedication narrative. Furthermore, narratives were used to increase adaptability and diversify the company’s strategy’s potential future trajectories.

Conclusion

This article investigates the role that narratives as contextual factors play in strategy processes in organizational change situations. Applying the theoretical discussion regarding the role of narratives for social systems to the field of strategy can provide a more profound understanding of strategy processes and their considerations. Narratives play a crucial role in the strategy to address and resolve narrative discrepancies, combine and moderate stakeholder expectations from differing fields and clarify an organization’s positioning regarding broader social narratives. We propose that the use of narratives in a strategy goes well beyond the phenomenon of corporate storytelling. As contextual factors, narratives serve different goals than the mediation and dissemination of strategic decisions. We argue that this strategic use of narratives plays a particular role in organizational change situations.

The Merck case from 2015 is one recent example for such a strategic use of narratives providing a framework for emergent meaning-making among its stakeholders. By synthesizing elements from corporate strategy, brand communication and purpose building Merck's narrative strategy was able to dock onto broader social narratives that were already active in its field and develop a precise, coherent positioning towards them. We could further show that for a narrative strategy to be effective, the strategic brand narrative needs to be communicated coherently and cultivated and continuously enhanced within the organization, as the Merck case could show. For this, a narrative must be open enough to allow the docking of different expectations and broader social narratives. Yet, they need to be specific enough to provide a good, meaningful, and suggestive framework for communication.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Bernhard Fischer-Appelt

Bernhard Fischer-Appelt is an entrepreneur, communications expert, and researcher. As CEO of fischerAppelt AG, which he founded with his brother over thirty years ago, he developed the agency group into a leading company in the industry. As a Fellow of the Weatherhead Scholars Program at Harvard University from July 2018 to July 2021, he has been scientifically engaged with future prognoses and their history, autonomy in innovation management, and the trajectory of narratives. He is the author of management books such as ‘Zukunftslärm’ (Redline), ‘Die Moses Methode’ (Murmann) and ‘Führen im Grenzbereich’ (Gabler).

Rafael Dernbach

Rafael Dernbach is a media theorist researching the social and medial constructions of futures. As Director of Emerging Narratives at fischerAppelt advisors, he develops strategy frameworks for organizations in change situations. In 2021, he has been an affiliate researcher at the Käthe Hamburger Kolleg for Apocalyptic and Post-apocalyptic Studies at Heidelberg University. Since 2022 he is Postdoctoral Researcher for the Future of Cinema and Audiovisual Arts at the USI Università della Svizzera italiana in Lugano, Switzerland. In 2019, he received his doctorate on strategies of anticipation at the University of Cambridge as a Gates Scholar. He has previously worked as a researcher at Futurium in Berlin and held visiting researcher positions at Princeton University and Freie Universität Berlin.