If you work in finance, you should and likely do understand the paramount importance of the job you do. Any decision your organization makes is founded upon the critical base of financial data/information. An overlooked aspect of this foundation of decision making is the quality of data storytelling. Too often people underestimate the significance of data storytelling, the best methods in gathering data and establishing the stories foundation, and how to create structure when you actually present your insights. This post will outline various methods how you as a finance professional can use the best practices in data storytelling to maximize your contributions to your organization. Such methods include understanding data storytelling’s place in FP&A, how you can use specific techniques and technologies to establish a foundation for the point you're driving home, and how to properly organize the information you’re presenting.
What is Data Storytelling?
Data Storytelling is a discipline at the intersection of data analytics, psychology, and design. It empowers you to convey data insights in the form of a compelling visual story. Although the term "Data Storytelling" is being used more and more often, to the point that it has become a buzzword, many of us are still wondering why we need data storytelling at all. Why can't we share our financial information without wrapping it up with some kind of story?
The answer to this question is hidden in our evolutionary biology. The visual nature of our brains have remained relatively unchanged for the past 10,000 years. So, we inherently have hunter-gatherer mentalities navigating the age of data and data insights.
The human hunter-gatherer brains are very good at recognizing shapes to distinguish predator from prey. We are good at recognizing colors to distinguish edible from poisonous. And we have always had a knack for telling and listening to stories as a primary way of sharing and providing information.
Unfortunately, we are not naturally good with numbers, tables, and financial statements. To communicate these types of information in an understandable and memorable way, we need to use what we have at our disposal.
How can we use stories, shapes and colors to help our audience understand financial information, connect emotionally to it and use it to make data-driven decisions?
5 Critical Tips in Data Storytelling
Many of us, who have realized the importance of Data Storytelling, are still overwhelmed by its perceived complexity. It seems like a completely new craft, we need to learn from scratch. It is certainly true that we were not taught data storytelling at college or university, but it is hardly something entirely new to us. We are all born storytellers. That is exactly the main reason, we turn to storytelling as a form of communicating complex data insights – it is natural and understandable for all of us.
Creating a Base of Information
1. Gather Anything Relevant:
As financial storytellers, your objective is to turn dense, impenetrable financial data into something decision-makers can actually use. That requires an abundance of information on matters related to both finance and operations. This step is the most involved on the list because storytellers must collect data from disconnected and disparate sources, requiring time and labor-intensive effort. However, you must be thorough; otherwise, your narrative risks omitting important details and pushing unsubstantiated conclusions.
2. Ace the Analysis:
For financial storytelling to have any value at all, the analysis it offers must be free of errors and biases. You need to ensure that you’re working with the most complete, up-to-date, and accurate information available. An excellent way of doing this is by adopting an FP&A software that provides real time analysis of your data in a cloud based centralized database. Just as important, you must craft your narrative from what the data tells you instead of what you want it to say. Ideally, you have tools at your disposal that expedite and automate more of the analysis so that quality and objectivity become givens.
3. Identify Key Metrics:
The best stories are clear and concise. For financial storytelling, that means focusing on a limited number of metrics to build the narrative and support the conclusion. Less is more, and it’s possible to build illuminating stories out of a deep dive into just one or two metrics like the current ratio or working capital. For your own sake and the sake of your audience, resist the urge to overstuff narratives with irrelevant metrics.
Crafting Your Story & Presentation
1. Follow a story arc:
You will most likely notice a structure in every story you tell or hear. A story arc is a curve or plot line that can be found in any medium of storytelling: books, fairy tales, movies, and of course your story told to friends. Practice using the same structure when telling your business stories. Start by introducing the main character and his/her desire.
In business stories, it is typically not a person. Your brand, product, business unit, the team of people can be the main character. And your typical business goals, such as growing sales, increasing market share, eliminating inefficiencies may serve as desires. Bring in a catchy inciting incident that significantly changes the main character's circumstances. Business or market change, new unforeseen obstacles or unexpected opportunities. Make clear what the conflict is. Will our business be able to overcome obstacles or seize opportunities?
You then need to describe the climax. It is the most dramatic moment of the story and deserves to be told with extra detail and emotion. How do new circumstances affect our customers, partners or employees? How do they feel? What does this mean for our business performance?
The end of your story needs to suggest a solution. Change in a story arc is usually your recommendation for the next action. That is how you want a story to continue. The beauty of business stories is that they are not finished yet, and how they end is up to us. There is always a message at the end of the story. What are we learning? What are we taking away for better decisions in the future?
2. Tell Your Story With Context:
Often, the “why” (context) is missing. Yet, including context in data storytelling is one of the easiest ways to make your reporting more effective. Your audience, whether they are your colleagues or clients, are not looking for you to regurgitate statistics. You need to drive results and provide insights. If there is a meaningful change in performance, you must give context in addition to the stat. Going a step further, the context you provide should differ depending on the situation. Lead with the stat when results are good and lead with context when results are lackluster. If it was an off week, leading with context helps clarify the “why” before the reader has an initial negative reaction.
For example, instead of:
Lead volume dropped 70% week-over-week. This was due to us taking [whitepaper A] out of rotation.
Try this:
Taking [whitepaper a] out of rotation led to a 70% drop in lead volume week-over-week.
It’s a subtle, but impactful difference. In the event of delivering subpar results, starting with context helps reduce the negative emotions. Even if performance suffers due to something outside of your control, you should be aware of perception and craft your reports to mitigate mixed emotions.
Pro Tip: Reporting must balance the amount of information provided. Adding hyperlinks with additional context helps to strike that balance. Providing platform screenshots, screen share videos, data visualizations, and support articles helps provide additional information without the noise that adding all of that content inline would create.
What is the Result of FP&A Storytelling?
At the end, we get a single chart or series of charts that convey financial insights to their viewers and enable data-driven decision making. We might still want to present such charts to our audience, however as a part of an article, report or dashboard they will be pretty self-sufficient. Your charts and dashboards can and should tell their own stories.
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