Role of data visualization in business decision-making

Role of data visualization plays in business decision-making.

8 min read — by Amos Wong

As per MIT, the brain can process an image within 13 milliseconds, highlighting the significance of visual information which constitutes 90% of transmitted data to the brain. This aligns with a study from the University of Minnesota, which found that our brains process visuals 60,000 times faster than text. In today’s world, executives and managers are often under time pressure and are snowed with information. Receiving concise and clear input which gets to the heart of the matter helps them navigate operations and focus on strategic topics. In a fast-paced and data-driven environment, presenting information visually can effectively capture the attention and engage decision makers.

The data presented showcases the performance of two products, database and cloud, across four distinct time periods: Q1-23, Q2-23, Q3-23, and Q4-23. In Q1-23, the database product recorded a value of 1.5, while the cloud product achieved a higher value of 1.642. As we move to Q2-23, the database product shows a decrease to 1.2, while the cloud product demonstrates a substantial rise to 2.3. Moving forward to Q3-23, we observe a massive improvement in the database product with a value of 3.8. However, the cloud product experiences a slight decline to 1.6. Finally, in Q4-23, the database product registers a value of 1.0, while the cloud product significantly recovers and reaches a high value of 3.3. Comparing the performance of the cloud product between Q1-23 and Q4-23, the cloud product demonstrates an impressive percentage increase of approximately 103.7% (rounded to the nearest decimal).

Data visualization is a communication tool, and a way to provide the information needed to support and enable decision-making. When used well, it can speed up communication through faster data delivery, reducing the time and effort needed to digest content in comparison to text memos. It is also a process that involves much more than just converting data into visuals. To use a real-life illustration, let us find similarities with providing healthy food/eating.

Healthy eating process steps.

Choosing the right ingredients

In order for a meal to provide maximum benefits, it should be tailored to the needs of the person consuming the meal. The food elements for toddlers, teenagers, and adults for example, should be chosen in a way that secures the right nutritional balance in line with their individual conditions.

This concept is also applicable to communicate needs in the business world. Heads of the supply chain, strategy, R&D, finance, HR, and IT need different kinds of information. Consider the scenario where you share project updates: your colleague may require technical insights, your supervisor needs an overview, and a chance meeting with the CEO demands a concise pitch. Understanding these diverse information needs ensures that each audience receives the right message, akin to serving a personalized meal. By eliminating unnecessary details and focusing on relevance, you optimize the impact of your communication, fostering a well-informed and productive business environment.

Different, but the same

Regardless of what exactly the individuals should be eating, there are common traits when it comes to their food. Traits like quality, nutritional value, cooking process (not overcooked, and not served raw unless this is what the recipe specifies), timing and portion of serving.

Similarly, regardless of the department you work in or the function you support, the information you provide should be up-to-date and reliable (freshness and quality), valuable (nutritional value), prepared in a way that is easy to understand (cooked properly so it is digestible), delivered in a timely fashion and with the right portion (bite-size).

Timing matters

Keeping people hungry in the name of healthy eating tends to make them nervous. It is no surprise that executives are uncomfortable with waiting for input until the last minute. To manage this challenge, you can provide the information in batches – serve bite-size sets, while working on the main course. For example, at the beginning of the month, first, provide the update about the total volume sold, and then in the next iteration, provide more details or breakdowns as relevant (broken down by brand, by territory, etc.). By adopting a "spoon-feeding" approach to information dissemination, you can ensure that stakeholders receive the necessary insights in a digestible manner. Just as one wouldn't serve a multi-course feast all at once, offering information incrementally helps recipients absorb and appreciate the content without feeling overwhelmed. Like a skilled chef, you can gauge when to present new "dishes" of data, aligning with the recipients' readiness to consume and apply the information effectively. This strategic and thoughtful approach fosters a more engaged and receptive audience, making the communication process smoother and more effective.

Be open and agree on realistic deadlines, specifying which information will be available and by when. When a decision maker knows the timeline for input and insight availability, he/she can plan activities and actions accordingly. Defining a feasible schedule is best achieved through dialogue, so transparency is welcomed from both parties.

Be flexible

A good nutritionist considers not only the needs of the individual but also the real-life circumstances at stake and adapts the menu accordingly. The meal served will be affected by the ingredients that are available and achievable, how much time one has for preparing the meal, and when the person should actually eat.

This is why when designing the reports, you should consider:

  • available data and in which formats it exists
  • how data/input can be obtained (does the team have relevant access, are there incremental costs (license, subscription, training to use the software), are specific authorizations required
  • the time required to convert data into an adequate visual output.

By recognizing the significance of adapting to real-life circumstances and making timely choices, a nutritionist and a business leader share the common goal of maximizing benefits. As a nutritionist carefully crafts a meal to suit the individual's needs and constraints, a business leader must consider the available resources and market demands to seize opportunities and avoid unfavorable outcomes.

Kitchen aid

Technology can be of great assistance throughout the entire process, from sourcing and compiling the information, to converting it into suitable output and presenting it. Here, it is relevant for the user to consider:

The “self-service” concept

This is for the cases when the person prefers to explore the output by themself, in line with their specific needs. Your role is to ensure the availability of

  • Valid information: Imagine a marketing manager who needs to assess the success of different advertising campaigns. If the data provided is inaccurate or outdated, the manager might make critical decisions based on flawed insights, leading to ineffective allocation of resources, and missed opportunities.
  • A flexible tool: Consider a sales team working on a diverse portfolio of products and regions. A rigid reporting tool that cannot accommodate different data views or customize metrics may hinder their ability to analyze performance effectively.

The “set-menu” option

This is for the cases when the decision maker favors relying on pre-defined structures. Your role is to define those set structures, also respecting the purpose for the user. By providing a comprehensive explanation of the pre-defined structures, the content becomes more approachable and empowers users to make informed decisions based on the insights presented.

Grand finale - serving

The work and effort invested in defining the content and analyzing the information are at risk of losing its value if the output is not easy to understand. Would you rather eat from a messy or a neat plate? Do the layout and harmony among served elements matter? If the presentation looks appealing, it triggers the drive to dive in and enjoy the content. As such, the visuals you use should:

  • attract the reader
  • be clear and simple to understand
  • be easy to navigate

Information overload can be prevented by applying the approach of “less is more” and the pyramid principle. The "less is more" concept emphasizes the value of simplicity and minimalism in communication. Instead of overwhelming the audience with excessive data or lengthy content, this approach focuses on distilling information to its most essential elements. The pyramid principle, introduced by Barbara Minto, involves structuring information in a pyramid-like hierarchy. The most critical points or conclusions are presented upfront at the top of the pyramid, followed by supporting evidence and details arranged in descending order of importance. All components included in the output (e.g., colors, shades, patterns, fonts, font size) are part of your storytelling. Make sure that they are not misleading the reader.

Figure about too much information leading to confusion.

Take the reader’s perspective – consider the scale to avoid confusion. If you need to zoom into a particular segment, make it easier for the reader by applying suitable aids (e.g., annotations, data labels).

Some companies use a standardized set of colors and fonts throughout the organization, and this is part of their visual identity. If a similar practice exists in your organization or with the client you are working for, but you would like to apply other options, better check before diverting from the internally set standards.

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