FP&A Storytelling: Improving the Decision-Making Process
This blog was written in collaboration with Amrish Shah
In this article we will explore why storytelling is, and has always been, an essential skill for FP&A and why it can be complicated to execute in practice.
Crafting a story is a creative task. FP&A has to work on these skills to build up their confidence as they take a step away from the comfort zone of only doing the planning and analysis.
The two essential elements in effective FP&A storytelling
From the beginning of time, humans are driven to action by stories. Today, with the explosion of data, analysis and visualization tools, the challenge is not in developing the “picture” but in translating the numbers to a narrative. More importantly, a narrative that will help decision makers within an organization take considered action towards desired objectives. In other words, the missing piece is often the story.
FP&A exists to support effective decision making and sound business planning, essentially to ensure resources are allocated effectively. In order to do this, FP&A work with data and information from various sources and pull together analysis and reports that drive the business to take action.
However, this is not simple. For a story to be told successfully, there needs to be two sides. One: the creator of the story, the author, in this case FP&A. Two: the consumer of the story, the audience, in this case the business.
Analysis and reporting are only part of the job
FP&A work in the domain of the Information Value Chain. The below table summarises the Information Value Chain and the responsibility areas of FP&A within the chain. For the purpose of this article, FP&A would also cover business control.
Although analysis plays a major role in FP&A, it is only part of the job. How often have you sat through mind numbing presentations or read reports filled with analysis only to leave with questions like: “so what?”, “and now what?” or “did we agree on anything?”
Dashboards are no longer able to solve this issue. Data visualization basically takes the same raw material, the data, and presents it in powerful, graphical and visual ways that can create better insights. Yet, as business intelligence grows, it is likely that businesses have lost track of how many dashboards they have and how effectively they are being used.
The first critical step is problem definition. While it is not covered in this article, it is perhaps the most important stage to do well. At this point, the audience and the story type are being defined. FP&A might need to start by spending some quality time with their audience to better understand its needs.
To turn insights into decisions, FP&A needs to implement an appropriate story design.
10 things to consider in creating a great FP&A story:
1: You need to have a clear message
The key point around a story lies in its message. Without a message the audience will not know what is expected from them.
2: The analysis should support the story and the key message
The analysis is rarely the message. Presenting analysis is not what the audience needs because no matter how it is presented, it rarely motivates human activity. And after all human activity is what drives performance. If the analysis does not support the story, it needs to be removed.
3: Keep in mind your key message and the audience
There are two basic types of story that are relevant in an FP&A context:
- Factual or declarative: This is the communication of information.
- Hypothetical or exploratory. This is the process of figuring something out.
The audience engages with the story in two ways:
1) With little effort due to time constraints or lack of expertise
2) Deeply, where a strategically important topic is being covered
We can thus represent this in the following way:
4: Summarize your message in one sentence
In a time constrained situation, there may not be opportunity to explore the richness of the whole story. An outline of the story, the key takeaway, cannot be neglected.
5: Ensure that your context is relevant
Elements of a story can be misleading if presented in isolation. A relevant context is required and can be provided in various ways. For example, inclusion of relevant comparators or trends, explanations using analogies or description of potential implications and interpretations.
6: Start with the takeaway
Traditionally, the presentation of analysis is followed by relevant insights and perhaps some messages and takeaways. This is not effective. It is better to invert the process. First, present the takeaway, then the message that supports it and finally the analysis that supports the message.
7: End your presentation on a positive note
The audience is made up of individual human beings. How they feel about the story will depend not only on the message but also on their end emotional state after the discussion. Messages may be positive, negative or neutral. It is good practice to end on a positive message to induce a positive emotional state in the audience.
The story will be overshadowed if the supporting analysis is not simple enough, not powerful enough or does not engage the audience. The improvements in visualization practices should be utilized to the fullest. For example, considerations should be made on the type of visual, the colours, any annotations, positioning and the use of relative sizes.
9: Manage your time
If sufficient time is not set aside to create the story, then it will not happen. Therefore, managing expectations, especially under tight deadlines, is critical. Working in an agile manner by creating iterations and testing them can be a sensible approach. Being ruthless during the editing process will challenge the conventional FP&A mindset of more is better.
10: Use technology to make your story powerful
The latest explosion in visualization tools can greatly help stories become much more powerful than before, with the traditional data tools. This is especially true where stories involve a lot of data analysis. However, given the creative nature of storytelling, sometimes the best tool is a pencil and a blank piece of paper to sketch out the story.
This article has illustrated why storytelling remains essential for FP&A, while providing the key considerations required for FP&A practitioners to make full effective use of the storytelling tool. Although the above list is not exhaustive, it can be a good framework for those who would like to improve this skill.
To learn more about FP&A Storytelling and Analytics: