Have you ever heard the phrase “Money Talks”? Here’s my response – “what does money say?” My mother taught me that if something seems too good to be true, it probably is. I’m sceptical if someone offers me money without explaining what it’s for. It’s a classic butter-up trick when you get something for nothing. At the same time, a message supported by money is credible and persuasive. It’s important to get that we don’t have a chicken and an egg problem here – the message needs to come before the money, not the money before the message.

So why do we, as financial analysts, often provide financial information without a message or story to go with it? Financial information without a story will be viewed as a confirmation of the end-user’s pre-existing beliefs. How do we make the information more meaningful? With stories, of course! It’s important that we’re telling the right stories to fight for good, so we’re allocating capital to create a return on investment – not to have stories that let politics triumph over fundamentals. Let’s take a recent example.

One of our business unit managers asked for his monthly results. We provided him with the analysis in two Excel files with the following caption: “Attached is your monthly update.” The response was as follows: “This is concerning. I’m very, very surprised that our year-over-year is 1.5% for October. How can we verify that the carrier commission was appropriately booked?” 

This response goes on to include more criticism regarding the accuracy of the numbers, positioning the end user as a victim of poor data. Unfortunately, such a reply is too predictable, as it always happens when we provide data without a story.  

What could we have done differently? Here’s an 8-step process for converting your boring, ambiguous spreadsheet into a story.

Step 1 – Recognise the characters in the story

Have you ever heard that every person is the hero of their own story? In this case, the end user is the protagonist of their own story. What does the end user want, and what is standing in his way? The villain here can be the bad numbers or data. It’s those people who can’t process the data properly, which results in poor performance in the numbers. Use this framework for storytelling to prevent the end user from being a victim:

• Once upon a time, there was a character,
• The character encountered a problem,
• The character meets a guide,
• The guide gives a plan,
• The character takes actions,
• That helps avoid failure,
• And ends in success!

Step 2 – Position yourself as the guide in the story, not the main character

The main character is the end user of our reports. We can establish ourselves as the guide by showing expertise and empathy. Remember that numbers don’t provide messages, and they only support pre-existing beliefs. End users don’t want to hear stories about what battles the guide overcame in presenting the data. They want information to advocate for their needs. In this case, we need to identify that the character believes his growth rate is 10+% instead of the 1.5% shown in the month before providing the information.

Step 3 – Start by discussing the big picture and demonstrating that you really understand the business

This helps to set your story and focus your users on what is truly important. Something like this works: “on the year performance, we’re running 11.5% growth year over year, in line with expectations. This is the result of a 10% new business, 98% customer retention, and 3.5% inflation. Not bad, as we only forecasted 10% growth at the beginning of the year.”

Step 4 – Identify potential conflicts and obstacles

The secret to compelling storytelling lies in conflict. The conflict may be the sub-par monthly performance or a legacy recurring problem the user is trying to overcome. Say something like this: “October came in a little lower at 1.5%. Preliminary results show 5% new business, 97% retention, and negative 0.5% inflation. However, there’s likely some noise in these numbers that will likely normalise in November. Here are some things we’ll investigate to assess whether we’re getting fair treatment – review new business against what we had self-reported, do high-level analyses for each carrier to determine if cash was misapplied, and ask carriers for their forecast to determine if the trend reverses in November.”

Step 5 – Highlight potential actions to take for both the character and you as the guide

We have to recognise that actions should be driven by strategy instead of numbers. The character should be setting strategy and not deriving actions by reviewing monthly numbers. What is the character doing to help the business seeking new clients grow? Do we know how to measure effectiveness against that strategy as opposed to only the monthly results? The numbers reflect past actions, with the results always coming in later. Numbers by themselves don’t inspire actions. It’s better to remind the end user of those things they need to do regardless of the results. Typically, that’s to sell new business, keep negotiating favourable commission terms for both us and the clients, etc. Don’t let monthly performance distract from those things we know we need to do regardless of the results!

Step 6 – Use comparable stories and analogies to provide reassurance and comfort

Say things like “we’ve been doing this a long time. We’ve never seen a bad month drive the year in isolation.” Tell a story about another branch in a similar situation and how they overcame it. People tend to love sports analogies. I usually compare myself to a referee who needs to make tough calls within the rules of the game; however, we can’t cook the books and determine the outcome of the game. The players determine the outcome. The NFL catch rule is my favourite example. Paradoxically, what’s considered a catch in the NFL isn’t clearly defined. Many times, referees need to interpret ambiguous data. In these grey-area situations, we’ll give the end user the benefit of the doubt. But we can’t control the outcome of the game – only ensure the tough calls are viewed from a favourable camera angle.

Step 7 – Hand over autonomy

Given our data, say, “here is what I would do if I were in your shoes. That’s just me. I’m here to support you and help.” Ask questions and understand how the data we’re providing helps make decisions.

Step 8 - Redirect to establish boundaries

From time to time, the user will want more analysis. That’s okay. We’re happy to go back and do it if we understand what it’s going to be used for. Here are some things we can say to redirect when we don’t think the additional analysis will be helpful. “People are always worried about these issues, and in the end, that never ends up being an issue at all. There are twenty-five different things to worry about, but there are three things that really drive all the results. New business, lost business, and how we pay our employees. Get distracted by the other twenty-two issues, and you’ll waste time and money and end up with the wrong thing.”

Conclusions

Finally, realise that you will have different users of your data. As each user is the hero of their own story, you can’t tell the same story to different users even though the data is the same. We need to repeat the same eight steps above to tell a different story to a different end user. I like to think of this as a cameraman in a sports game. We are covering the same play, but the user will see different things depending on the angle from which we show the instant replay. We need to make sure we are establishing ourselves as the guide in each user’s story (where they are the hero), and that forces us to anticipate how they will interpret the data before we present it.

Good luck with your financial storytelling! It’s a big responsibility to make sure that you are telling stories that drive actions and ultimately support the growth of the business instead of stories that let users position themselves as victims of poor data, avoiding responsibility for making the tough call.