“Partial knowledge is more often victorious than full knowledge: it conceives things that are simpler than they are and therefore makes its opinion easier to grasp and more persuasive." - Nietzche
"History will justify anything. It teaches precisely nothing, for it contains everything and furnishes examples of everything."
- Paul Valery
Storytellers are model builders. There is a need to describe the causal basis of experiences. A stream of events needs some causal explanation or sense-making that is realistic and comprehensible. A story will use stylized facts to support an argument, but stories are not the same as models. It is process of causal inference that is not always based on empirical testing from large samples of data.
Stories are especially important when there is limited data for analysis or there is a high degree of uncertainty. In an environment of radical uncertainty or complexity, a story or narrative is a useful tool to describe the environment and make sense of causal relationships.
Organizations use stories to help explain their actions. The story will serve as a model for how an organization behaves. nevertheless, these stories are focused on some mythical themes: rationality, hierarchy, individual leader significance, and historical efficiency.
The story can be flawed, so investors have to question the underlying assumptions associated with any story no different than how model assumptions are reviewed and tested. Stories should be reviewed through a rigorous process to ensure flawed logic based on partial knowledge is avoided.
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