I F YOU had to write your organisation’s obituary, what would it say? Would there be any mourners? Has it made any difference to anyone? Would the world be worse off without it? Would anyone actually notice?

Faced with this question, say Klaus Fog and Christian Budtz, most chief executives are struck dumb, with no idea how to reply – a telling indication of the tenuousness of their companies’ hold on their purpose and meaning. If those inside the firm cannot encapsulate the core story, how can those outside be expected to understand it?

Both Fog and Budtz, of the small Danish communications group Sigma, believe that in a world of trivia, artifice and information overload, ‘the story’ is critical not just to a company’s brands, but to its whole existence. In most companies it is lost under accretions of history and bureaucracy it takes the obituary test to uncover and reinvigorate fundamentals.

Together with Baris Yakaboylou, Fog and Budtz have written a book about their findings (Storytelling: Branding in Practice, Springer). Significantly, Fog and Budtz have a newspaper and media background, but for all of them ‘the story’ is primordial.

The argument goes like this. In the West, we live in a world of material excess. Almost everything is in oversupply and whatever it is, you can probably buy a knock-off Chinese version that is cheaper and not much inferior to the original (which was probably made in China anyway).

Given this, traditional marketing methods lose their effectiveness, which is why so many brands are in trouble. This is partly a matter of messages becoming lost in the clutter – each consumer is exposed to an estimated 3,000 messages a day, almost all extolling a product’s features and how much better it is than rivals. But more importantly it is because, while companies have not changed, we have: we are not even listening to this kind of advertising any more.

Fog and Budtz invoke Abraham Maslow’s hierarchy of needs: consumers’ physical needs having been satisfied, they are now looking for sense or meaning, something they can use psychologically to realise their own potential.

Here is where the story comes in. Stories go back as far as humankind, for the good reason that the world is incomprehensible without them. By establishing relationships between things, a story permits meaning and memory. Plain lists are notoriously hard to remember: stories and theories act like mnemonics, allowing elements to be strung together and interrogated. Uniting emotion and intellect, stories can recount a complex technological narrative with breathtaking economy.

An example. A journalist in San Francisco is trying out his iPod as he waits for a bus. A young woman joins him at the stop, also with an iPod. Observing her neighbour, she wordlessly switches their earphones, so each is suddenly listening to the other’s music. As her bus arrives, she switches the earphones back, flashes a smile and is gone.

Now, some people will hate that story. But, says Fog, it encapsulates Apple’s cool ease of use in a way the company has never been able to do with its computers. No accident then that only now is the Mac making inroads into the Microsoft-Intel dominance as it bathes in the radiance of the iPod halo.

The important story can come from almost anywhere. What first drew Fog’s attention to the phenomenon was the launch of the world’s first digital hearing aid in 1997. Developed by a then little-known Danish company, Oticon, the device was presented as a ‘computer in the ear’ devised by the best audiologists and computer specialists. However, to the company’s surprise, in testing users reported not only that they could hear better, but that they experienced an unexpected flush of well-being. How could that be?

A neurologist friend of the CEO identified it not as a psychological but a physiological effect. With the computer filtering out the extraneous noise, the brain is freed up to do other things, such as noticing the surroundings, the food being eaten, and so on.

The scientific story was picked up by the Washington Post and then other media. By launch time, the company had a full order book and a reputation as a digital pioneer. Its stock price trebled in a year.

Underlying these stories are several key points:

* the story must be authentic: with all that practice, consumers home in on bullshit

* a corollary of the above, the story comes first. It cuts across the silos of marketing, sales and advertising

* the story is ‘out there’ – it’s a question of finding not creating it (a good place to look is the customer-service department’s filing cabinets)

* you cannot control it: it’s what consumers do with it that matters. ‘Viral marketing is having a good enough story to tell your friends,’ Budtz says. An unfavourable story travels as fast as a favourable one, maybe faster.

Of course, storytelling has always been part of marketing. In public eyes, 3M was a boring industrial company until the often-told invention of ‘Post-it’ notes established it as an innovator. It could be argued that the whole global bottled-water industry is ultimately built on the legend that 2,000 years ago Perrier was an essential ingredient of rest and recreation among the Romans.

What is new is that a brand without a narrative has literally lost the plot. On the other hand, with a strong enough story it can not only survive but rewrite its own obituary. The cult notebook Moleskine, now expensively on sale at a stationer near you, has served as a jotter for writers and artists from Van Gogh to Hemingway. Bruce Chatwin never undertook a journey without a stock – until the small French manufacturer stopped making them in 1986.

‘Now,’ recounts an insert in the revived version – a perfect example of the product-as-story – ‘the Moleskine… has set out again on its journey. A witness to contemporary nomadism, it can once again pass from one pocket to another to continue the adventure. The sequel still waits to be written, and its blank pages are ready to tell the story.’

The Observer, 13 November 2005