One of the primary roles of a leader is to help construct the story of what the organization is and does. Of course, everyone in the organization plays a part in this but usually what the leader says has a disproportionate impact. I've seen organizations transformed or ruined by narratives from leadership. Organizations with bad narratives have trouble recruiting, have low productivity and morale, and hemorrhage talent. Organizations with great stories attract and retain the best and people work hard to live up to the narrative. As humans we think we understand the world through facts but on the whole I've found that isn't the case. As Nietzsche famously wrote, "There are no facts, only interpretations." We really understand not through facts but through stories.
Good leaders understand these dynamics. In some cases it can seem manipulative or artificial to consciously construct a story but I believe it is essential. If the leader doesn't construct the narrative someone else will and that someone else might not have the overall good of the organization as his/her primary goal. We simply cannot live comfortably without a story to put what we do and where we work in context.
But great leaders also understand the limitations of the narrative. While stories make rallying a group of people to collective effort easier they also have their downsides. Narratives have a way of reinforcing our biases. A mistake you should learn from can become a noble attempt to defy the odds. A victory due to luck from which you should learn nothing can be portrayed as the inevitable conclusion to a perfectly constructed process. Neither of these stories reflects the truth.
As a result stories can blind you to the wider world. You risk getting trapped in your own narrative. Leaders need to constantly challenge their narrative, look for feedback from stakeholders, and gather whatever knowledge they can about the wider world in which they operate. This is especially important for organizations seeking to innovate and stay on top of trends. To paraphrase Ronald Reagan great leaders believe but verify.