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Thinking Visually

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Introduction

• Thinking visually seeks to enlarge your capacity to process vast quantities of data that you possess.

• You need informative and eye-appealing charts and graphs to make data meaningful.

• So you can see in graphic form what is not so clear before.

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Focused measurements• Focused measurements draw attention to important and

highly relevant data by presenting them in a clear and uncluttered manner.

• By using focused measurements companies can move both quickly and assuredly in order to seize new opportunities.

• When management have a framework within which to measure and implement change, then these focused measurements put change in perspective.

• Focused measurements are often best displayed using charts and graphs.

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• Charts and graphics can be used to:– Improve efficiency and effectiveness– Improve quality– Solve problems– Plan– Monitor processes

• Depending on the subject matter, charts and graphs can be clearer and easier to comprehend than writing text.

Focused measurements

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Tools used

• These charts and graphs can easily be put together using electronic tools such as Microsoft’s PowerPoint, Excel and Visio.

• Some people find a blackboard and chalk or pen and paper more comfortable to work with, but have the disadvantage of being difficult to store or distribute on a large scale.

• The decision of which chart to use is often more difficult than the end production of the chart.

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Visual Tool: Tracking

• Tracking is used to monitor fundamental financial concepts such as sales, cash flow, and income statements.

• The following diagrams show the progression from a basic Sales and Margin Vs. Time Chart to a more useful form.

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Sales and Margin Vs. Time Figure 1

 • In the previous slide monthly sales and gross margin data are displayed.

• Gross margin is equal to sales minus the cost of goods sold.

• Although the numbers are accurate, there is no real analysis or information for management behind these figures.

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Sales and Margin Vs. Time Figure 2

• By combining the sales and gross margin dollars into quarterly data, and by adding gross margin percent, suddenly our figures have relative meaning.

• Gross margin is equal to gross margin percent.

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Sales and Margin Vs. TimeFigure 3

• This chart is better still, since it shows graphically at a glance, how well the group is doing.

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Sales and Margin Vs. TimeFigure 4

• This chart is even clearer.

• There is a lot going on; we have added a caption, or key takeaway box, highlighting the most significant aspect of the improvement.

• A key takeaway box answers the question “What does this mean?”

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Overall

• The spreadsheet in figure 1 has matured in to a graph in figure 4.

• The most important point about the transition is not to force your audience to think when you should be thinking for them.

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Variance and Comparisons

• These charts display the relative difference between groups or elements.

• The main diagrams for variance and comparisons are:– Deviation graph – Side – by Side Column Graph – Side – by Side Bar Graph – Radar Chart

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Deviation graph

• A deviation graph displays the differences between data series and some known reference, such as a budget, industry standard, or prior year’s results.

• Deviation graphs are often used to display performance to standard cost, performance to schedule, performance to cost reduction goals, or performance to departmental budgets.

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Figure 5

Actual Data

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Figure 6  

Figure 6  

Deviation Graph

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Figure 5 vs.Figure 6

• Figure 5 shows actual data with the budget of 5 million euro displayed as a constant broken line.

• Figure 6 is the deviation graph, since it shows the difference between actual profit and budget.

• When the actual profit value is above budget, the difference is denoted as positive; when profit is below budget, the difference appears as negative; and when profit is equal to budget, the deviation is zero.

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Side – by Side Column Graph

• A side by side column graph is a column graph with two or more data series plotted side by side for comparison purposes.

• The columns for a given data series are always in the same position in each group throughout the given graph.

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Side – by Side Column GraphFigure 7

• In figure 7, each plant makes the same

product, and the vertical axis displays percent of total cost.

• The information for Plant A is always at the left of each group, followed by the information for Plant B and C. Each data series is a different colour, shade or pattern.

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Side – by Side Bar Graph

• A side-by-side bar graph is a bar graph with two or more data series plotted side-by-side for comparison purposes.

• The bars for a given data series are always in the same position for each group throughout a given graph.

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Side – by Side Bar GraphFigure 8

• In figure 8, the information for Plant A is always at the top of each group, followed by the information for Plants B and C.

• Each data series is a different colour, shade, or pattern.

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Radar Chart

• A radar chart is a circular chart is used primarily as a comparative tool.

• For example the nutritional content of two different foods might be compared based on the percentage of recommended daily allowances of five different vitamins that each contains.

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Figure 9Radar Chart

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