Monday, November 20, 2017

Using Numbers to Tell a Story

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. 

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