Profit and revenue charts - why density creates space August 26, 2017

In my last blog post, Report and dashboard design: what we can learn from road signs, I introduced International Business Communication Standards, also known as IBCS®. In the blog I posed: wouldn't it be great if there was a single set of report, dashboard and business presentation standards to be used across all departments within an organisation, across all organisations, and across all countries?  International Business Communication Standards (IBCS®) is a set of standards that can be applied to reports, dashboards and business presentations.  

The aim is to reduce reaction time for analysts and decision makers.  And can you imagine the shorter design and development time if everyone worked off the same report, dashboard and business presentations standards?  Imagine the reduction in cost!

This blog post is the start of a series, where I’m going to apply some of the IBCS® rules to charts and tables, whether they be for reports, dashboards or business presentations in slide decks.

Have a look at these two charts side by side, which I've recreated as they appeared in an annual report.

Profit Revenue Before

Pretty typical charts, wouldn’t you say?  Whilst they are from an annual report, they could be in an internal management report, a slide deck presentation, or a dashboard.

A few questions immediately come to mind …

1. Is three years enough to see a trend?

2. Can you quickly recognise the profit and revenue variances from the prior year?  And I mean quickly … don’t read the numbers, rather look at the charts.

3. Is $701m greater than $1,211m?  Surely this is misleading?  I understand that they probably wanted to highlight the profit, which is a good news story, but there is a better way without compromising the visual integrity.

Profit Revenue Before | Incorrect Scale

First, let’s address the scaling:

Profit Revenue | Before | Correct Scale

Makes a difference, doesn’t it? Charts on the same page, with the same unit of measure, should be scaled identically. Otherwise this could lead to an incorrect decision being made.

Now let’s remove those corporate colours.  Colour should be used to convey meaning.  Colours should facilitate faster and easier understanding of the charts. Corporate colours do not achieve this.  And, even if these were not corporate colours, background colours make a chart harder to read.  

They wanted to visually convey a strong profit, so let’s use colour to highlight the profit with green representing good:

Profit Revenue | After | Scaled

We could do so much better to help compare the profit and revenue.  Let’s condense them using a stacked column chart. Plus we'll decrease the column width to be a little wider than the three digit numbers.

Profit Revenue | After | Condensed

In addition to making it much easier to compare revenue and profit for an individual year, the information is now more condensed.  We could use the space created to add more information.  

What’s the difference between revenue and profit?  Expenses!  So, let’s add the expenses data values and label.

Profit Revenue | After | Expense

There’s a reason why the original charts included 2014, 2015 and 2016 … they wanted us to see a trend and to analyse the variance compared to the prior year. As it stands, we can visually see there is a positive variance by darting our eyes between the year columns.  But, why not make the variance exceptionally obvious, so the analysts and the decision makers do not have to dart their eyes from column to column mentally calculating the variance?

Profit Revenue Expense | After | Variance

What do you think?  Multiple charts!  The variance is quite clear, at a glance, as opposed to the analyst or decision maker doing mental comparisons between columns.  You’ll notice there is a difference in the green representing profit and the green representing the variances.  The difference is to help visually differentiate between a positive raw value (such as profit) and a positive variance.

The charts show a year on year increase in revenue and profit between 2014 and 2016, but now that we've added the variance charts we can see there was a decrease from 2013.  But is three years enough to draw a conclusion and make a decision? We did create plenty of space by condensing profit and revenue into the one chart. We could, optionally, use that space to tell a more complete story by adding in more years.

Profit Revenue Expense | After | Trend 

Immediately we see the year on year increase has not always been the case.  Nevertheless, there is an overall trend upwards.  This is still a good news story.

Let's tidy up the title.  Line one: reporting entity; line two: measure and unit of measure; line three: time period.  Simple ... and let's adopt that structure in all our reports, dashboards and presentations.

Profit Revenue Expense | After | Title

Let's finish off with a message. All reports and presentations should have a message above the title, i.e. the message should be first. Further, highlight any message values in blue within the charts.

Profit Revenue Expense | After

Think back to the original profit and revenue charts, with three columns apiece.  Using the same space we've fitted in significantly more information ... we've increased the information density.

The aim is to reduce reaction time for analysts and decision makers, and prior to that reduce design and development time.  Have we achieved that?  What do you think?

We’ve looked backwards. How about we look forward?  Let’s add a budget/plan.  But, I'll leave that for the next post. 

And for those asking: in which spreadsheet/analytics/business intelligence app did you prepare these charts? Answer: none of the above. I used Balsamiq, a wireframing app, in which I do all my chart/table/report/dashboard mockups.

Until the next post, all the best. 

Greg

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