How can data storytelling better inform financial decision-making?

Financial data can be dense with detailed facts and figures, but if it is presented in the right way, it can be used to tell compelling stories about an organization’s financial health. Powerful, persuasive stories are far more convincing than static spreadsheets. Financial planning and analysis (FP&A) teams now need to hone presentation skills in visual storytelling if they are to capture the imagination of an organization’s stakeholders when it comes to narratives of finance that explain their impact on the bottom line.

FP&A teams immerse themselves in figures every day and sometimes forget that the people they need to explain those figures to do not. They need visuals that convert those figures into interesting stories that help other organizational stakeholders understand what is being communicated and what actions and decisions need to result from it, effectively steering by numbers.

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What is data storytelling vs. data presentation?

Data-driven storytelling transforms financial analysis that might otherwise be presented on spreadsheets into easy-to-translate narratives that can support decision-making. Cutting-edge tools and technology can piece together different financial metrics and results that can then be displayed in images, infographics, photo-based case studies, videos, animations, graphs, and charts to create visualizations that help to tell the full financial story. However, that story still needs the narrative along with the visuals. Data presentation is a tactic used to enhance your storytelling. Human communication around visuals is still essential if the whole process is going to influence better-informed financial decision-making and how it impacts the whole organization in an easy-to-understand way.

Why is data storytelling important?

Data storytelling can add value to financial presentations so the people, sometimes of a non-financial background, you are talking to can connect the dots in your story. It can help them to retain the information you are giving them and increases its credibility. However, too much data can be overwhelming, so it’s important to get the right balance between visuals and context to keep the story engaging. Raw data alone won’t provide the intended takeaway message, but together with visuals, the intended message will be communicated and remembered so more informed decisions can be made.

How does data storytelling influence financial decision-making?

To answer this, we need to look at the process of creating a data storytelling template or framework. Like any story, it needs a beginning, a middle, and an end. The context and results of data analytics are what underpin and stitch the information together to tell the story.

The first element to be identified is what question the story should provide an answer to. What is it that you want your audience to make a financial decision about, and how can you best give them all the information they need to consider an answer? You will be able to analyze your financial information to provide you with this, and you must then think about what narrative and context will be persuasive and which visuals will help to back this up. The question is your beginning, your analysis, narrative, and visuals are your middle, and a clear call to action on a decision to be made is your end.

Steps to building an impactful story

Work out your audience – who are you trying to influence, what is their position in the organization, and how will their take on your story influence outcomes?

What do you want to tell them – what do you want them to know or to do with the information you are telling them? 

Message – what is the most important message that you want to get across?

Is there any bias? – does the audience have any bias either way, and how can you persuade them or play to their views?

Questions – what questions can you anticipate from them? Have answers ready.

Once you know this, you can start to analyze your data to pick out what is needed. Remember, too much data can be overwhelming, so decide what is necessary and then create your narrative and visuals to back it up.

For data storytelling to impact financial decision-making across the organization, FP&A teams must take the data available to them and make meaningful stories around each decision to be made:

• Focus on one story or one idea at a time – don’t confuse it with too much information.
• Speak to your audience in their own language and avoid technical jargon that will result in perplexity or too many questions.
• Explain each visual with the right words for context and the story behind it.
• Make your audience care about the story. Attention-grabbing intros help here.
• Support the data with evidence and credible resources.
• End your story with a call to action, letting your audience know what decisions you are leading them to make.

Presenting your narrative and visuals

Guy Kawasaki, American marketing specialist, author, and Silicon Valley venture capitalist, evangelizes the 10/20/30 rule. His thinking is that people lose interest when presentations have too many slides and take too long. They read ahead if there is too much written information on each slide, and they stop listening to the narrative. You know the narrative so let your words do the talking and let the slides provide more of the visuals.

The premise is no more than 10 slides, no more than 20 minutes, and a minimum of 30 font size on each slide. Kawasaki says this rule is applicable to any presentation, such as trying to make a sale, raise capital, impress an investor, or form a partnership.

In recent years, FP&A teams have evolved from being those that record and evaluate data into strategic business partners of influence. They provide C-suites with meaningful business insight, provide rapid decision-making support, and steer the organization in a profitable and sustainable direction using financial planning and analysis. Data storytelling is now a valuable and strategic part of this process.

FAQs

What are the most important elements of data storytelling?

Data storytelling is a structured approach to communicating data insights, and it involves a combination of three main elements: data, visuals, and narrative. It's important to understand how these different elements combine and work together in data storytelling. The data is the basis for your story; you just need to be able to extract the value from it by translating it into easy-to-understand information through visuals and narrative. It’s also important to stick to the beginning, middle, and end formula with a clear call to action.

Why is it so important to visualize data?

Data visualization is helpful for activities such as data cleaning, exploring data structure, detecting outliers and unusual groups, identifying patterns, trends, and clusters, spotting localized trends, evaluating output, and presenting results. We have all heard ‘a picture is worth a thousand words’, and it’s clear that storytelling and visualizations can reveal data features that statistics and models may miss.

How Unit4 can help your organization

Our intelligent FP&A software solutions free your teams to spend more time delivering insights and creating value for the business. We help you understand the numbers more deeply and then turn that insight into action for better business results.

You can harness the power of fully aligned teams and Unit4’s intelligent FP&A software to drive success. Our solutions help you by combining automated financial planning and analysis, budget management, and financial forecasting with highly interactive dashboards and powerful, pre-configured models.

Our cloud FP&A software solution gives your people better, faster ways to put the numbers to work — through smarter planning, budgeting, forecasting, reporting, visualization, and analytics. Your organization can take a flexible, integrated approach for all your organization’s financial planning needs, whether planning cash flow, managing operational budgets, or forecasting sales, costs, and revenue.

Organizations can better manage their operations with industry-leading software for Financial Planning and Analysis (FP&A), Enterprise Resource Planning (ERP), and Human Capital Management (HCM).

You can check out Unit4's People Experience suite here.