A
Financial Planning and Analytics (FP&A) professional is essentially a
storyteller. The FP&A analysts dig through numbers, analyze trends,
understand driver and try to answer the question " So what". What are
the insights that can help leadership take the right decisions?
Let’s
consider the analogy of making a stock. To make a stock, one must first
identify what will the stock be used for - soups, stews, sauces etc. Do you
need a vegetable stock, chicken stock or a beef stock? Once the use and
type is identified, then the stock is made by boiling down the right mixture of
bones, meat, vegetables, mirepoix and spices, skimming the foam regularly and
then filtering the prepared stock to be used in various stews and soups. The
clear stock is then used for various purposes while the rest of meat, bones
vegetables etc. are discarded.
In the
same way, to do a good analysis we must start by identifying the goal of the analysis.
Identifying the question, we are trying to answer will help an analyst
understand the story that the numbers might tell. Once the goals are
identified, then we need the right data, assumptions and tools to conduct the
analysis, continuously refine the analysis and then present the output in a
clear and simple manner.
Analysts
tend to present all the work that was done but its imperative to filter down
the analysis to the top 2-3 insights so decisions can be taken accordingly. The
insights can also change based on the audience that the analysis is being
presented to. One of the most important skills that an FP&A analyst
needs today along with strong analytical abilities is the ability to
communicate that analysis. This is a skill most of us learn on the job.
Here are a few ways, analysts can be trained on the art of story telling
through numbers:
1) Case
studies such as HBS case studies do a good job in training analysts to look
through myriad of information and pull out the most important facts.
2)
Provide a problem with bunch of data related to simple question. The
challenge given is to answer that question within 2 slides but the analysts
will need to dig through the data and find the top 2-3 insights from that data
that can help answer the questions.
3)
Provide the analyst with the same set of numbers and some background
regarding the company but difference sets of audiences (for example
Finance director, marketing & sales director, IT lead etc.). The task of
the analyst is to figure out what is the question that each set of audience
will be most interested in and then use the numbers to provide 2 -3 insights
regarding each of those questions.
Numbers
tell a story and the role of an FP&A analyst to understand and communicate
that story in a simplistic manner. It is important to help analysts
develop and hone their skills of how to make a clear stock of the ingredients
they are given.