From numbers to narrative: How CPAs can tell stories with data

CPAs often need to communicate complex ideas to people from different backgrounds, whether they’re clients, colleagues, or executives. However, often these audiences won’t understand numbers as well as accountants do.

“In accounting, we speak a foreign language. When we say ‘depreciation,’ people [outside the profession] think of the value you lose on your car. That’s not what we’re talking about,” said Peter Margaritis, CPA, director of the School of Accounting Communications Center and instructor of professional practice at Oklahoma State University in Stillwater, Okla., and author of several books on presentation skills. “The question is, how do we communicate this complex language to someone who doesn’t have the skill set to understand it?”

Enter data storytelling.

In a nutshell, this concept means giving your data a narrative thrust — investing numbers with more meaning by providing context alongside them. It’s effective because one thing all humans have in common is a craving for stories, according to Bill Shander, who teaches data storytelling and visualization workshops on LinkedIn Learning and at the University of Vermont.

Incorporating numbers into larger stories makes your data more memorable and engaging, he said. “It’s still data — not a Pixar movie — but you can present it in a way that flows,” he said.

Data storytelling is gaining greater currency in business circles. Hopkinton, Mass.-based Shander, who has worked with clients such as PwC, Starbucks, and the United Nations, has seen the growing value and importance of data storytelling to governments and major corporations over the last decade. It’s being taught in universities: The AICPA recently hosted a webinar for accounting educators on the subject, and the Massachusetts Institute of Technology requires undergraduate and graduate business analytics students to take a course on the topic.

Communications skills don’t come naturally to everyone, but data storytelling is a skill that can be learned.

“Students have recognized how critical the skill is to functioning and succeeding in the modern workplace,” said Miro Kazakoff, a senior lecturer at the MIT Sloan School of Management and author of the book Persuading With Data, who created coursework on the subject.

WHY DATA STORYTELLING IS IMPORTANT FOR CPAs

CPAs, too, are recognizing the relevance of data storytelling as they become more data-literate and take on more of an advisory role in their jobs. Accountants who offer client advisory services (CAS) make use of the skill when they analyze clients’ data and interpret it to give them new insights into their businesses. Management accountants and finance professionals use it to move into more strategic roles. As Dan Schmidt, founder of management accounting services and advisory firm EBCFO LLC in Kansas City, Mo., and head of partnerships at Xledger Inc., put it, the profession is shifting away from answering the question, “Is this correct?” and toward answering, “What does this mean and what should we do about it?”

Liz Barhydt, CPA (inactive), founder of She Speaks Numbers and CFO at Pardon, saw the importance of data storytelling in her career at a time when she was looking for ways to provide more value to the professional services startup where she worked. “I took our department and revenue leaders through the story of two different customers and the journey each had with our company,” she explained, highlighting the differences in how each one was acquired and onboarded, as well as how their account was managed and how long they stayed with the company. “Then I shared the financial impact each customer had on our revenue and profit numbers over the course of their time as customers. The difference between a customer who signed on and only stayed for three months and a customer who signed on and stayed for two years was 20 times greater value to our company even when it took about the same amount of effort to acquire and onboard them in the beginning.”

“Financial storytelling isn’t just using stories to make numbers more relatable,” she said. “At its core, it’s persuasion, explanation, and creating motivation to inspire action and change behavior.”

Schmidt recalled how his firm once helped a client develop its accounting systems to analyze more data and provide greater insights. The client had historically split its revenue — but not expenses — between two operating divisions, he recalled. When his firm examined the client’s data, “what emerged was the story that even though one division — where most of the effort was being focused — produced 300% more revenue, it produced less than half of the net income,” he said. After learning this, the client reallocated resources to the more efficient division, Schmidt said, “and the impact on the bottom line exceeded 200% without incurring any additional expenditures.” These are the kinds of narratives that data can uncover.

HOW TO IMPROVE YOUR DATA STORYTELLING SKILLS

Here are some key principles and tips for improving your data storytelling skills:

Set up a narrative structure

A presentation or report containing charts isn’t data storytelling on its own, said Brent Dykes, who is the author of the book Effective Data Storytelling and provides data storytelling training services. Data storytelling should reveal an insight and have a narrative structure that brings it to life with relevant context and supporting details, he said.

Know the elements that make a good story. “Stories organize information so that one thing that happens influences the thing that happens next,” Kazakoff said, and a story has a beginning, a middle, and an end. “One of the fundamental things accounting does is create these time frames so we can analyze data and make decisions,” he said. Fiscal deadlines may be arbitrary but are important for judging where things stand, Kazakoff said. They provide natural beginning and end points, while the story is what unfolds in between to take a company or client from point A to point B.

It can be challenging, he acknowledged, to find a narrative thread among the mess of information that is available. “Figuring out a way to explain how changes in numbers reflect changes in the real world” is a skill many successful people have in common, he said.

Keep a story vault

When you hear or read something that resonates with you, or if something relatable happens to you, add it to your “story vault,” Barhydt recommended. She listens to podcasts while riding her exercise bike, and almost every day she comes away with a nugget of information she can use in the future.

For example, she heard an interview with Jennifer Hyman, the CEO of Rent the Runway, a luxury clothing and accessory rental business. Hyman talked about how the company had employed a flat-rate pricing structure so customers would come back, but that it led to lower margins every time someone returned to the website, ultimately hurting the business. “I thought, ‘I could totally use this anecdote next time I’m having a conversation about the importance of promoting the right customer behaviors,’” Barhydt said.

‘The question is, how do we communicate this complex language to someone who doesn’t have the skill set to understand it?’ Peter Margaritis, CPA, director of the School of Accounting Communications Center and instructor of professional practice at Oklahoma State University

Schmidt also suggested that accountants could draw on their own hobbies and experiences to create effective analogies that clients will understand.

Avoid the ‘curse of knowledge’

When it comes to improving your data storytelling chops, the first step may be admitting you have a problem, Kazakoff said. “One of the critical steps for professionals is to recognize that your own expertise gets in the way of your ability to communicate clearly,” he said. “When we develop expertise, we become blind to what it is like for someone who does not know that topic as well as we do.” He calls this phenomenon the “curse of knowledge.”

To get a feel for how nonexperts might view your presentation, consider a practice run. However, the co-worker you work with every day is usually not a good stand-in for the people who need to make decisions based on your data, Kazakoff said. He recommended practicing your presentation on someone outside of accounting if possible.

Even if you can’t practice with a nonexpert, Shander recommended taking a step back. “Instead of cranking out slides, ask yourself what you’d say if your teenage niece asked you to explain these numbers. Imagine you only have two minutes,” he said. “You’ll generally do a better job packaging up the explanation in a way that’s more like a story.”

Margaritis pointed out that when you change the language you use and incorporate analogies, metaphors, and other storytelling techniques, you’re not dumbing down your presentation. You’re doing your job well.

Consider your audience

Your audience should dictate the way you approach your presentation. Every time your audience changes, your delivery should change. Really good communicators consider their audience every time they present information, Kazakoff said.

Margaritis said if you’re a CFO and you’re talking with the CEO of your business, using jargon may be OK. But if you’re a partner at an accounting firm and you’re talking with a client who owns a small business, you may want to reconsider your word choices. “I ask partners in firms, ‘Does anyone ask any questions during your meetings?’ They never say that anyone does. I ask why, and they say, ‘They don’t want to feel like they’re stupid,’” Margaritis said. “We have to start recognizing when we’re losing people.”

Get to know the greater context

When it comes to data storytelling, CPAs can be more effective if they really develop an understanding of their company or clients, Barhydt said. “Coming out from behind the spreadsheets and software to understand the organization allows you to be more strategic in the way you think about the numbers,” she said.

If you put yourself in the shoes of the client, department, or project team you’re presenting to, you will have a better idea of how to communicate the information they need to know, Barhydt said.

Refine your visuals

Finding a narrative throughline is often the most challenging part of data storytelling, but you can’t neglect your visuals either, Dykes said.

During presentations, he recommends using color to highlight key findings. Avoid adding multiple charts to one slide so that text, titles, and visuals aren’t competing. “We often overestimate how much data is needed to make a decision,” he said.

Use headlines for your charts that help tell your story, too. Instead of “Revenue over the last eight quarters,” for instance, use the headline “Revenue has grown 38% over the last eight quarters” to drive your point home.

Make it a habit

Data storytelling is most effective when it becomes second nature. It should become part of who you are, instead of something you do, Barhydt said. Then you’re more likely to take a narrative approach during all your conversations, she said, and sometimes simple conversations you have in the office — rather than formal meetings or presentations where you have lots of time to prepare — can go a long way to driving change, she explained.

GETTING THE POINT ACROSS

Communications skills don’t come naturally to everyone, but data storytelling is a skill that can be learned, Schmidt said. And it’s what clients and customers are coming to expect. “We rarely see simple answers to simple questions in today’s marketplace,” he said. “Data storytelling is the bridge that enables organizations to effectively grapple with problems that aren’t just black and white.”

About the author

Megan Hart is a freelance writer based in Florida. To comment on this article or to suggest an idea for another article, contact Courtney Vien at Courtney.Vien@aicpa-cima.com.