Analysing figures can be hard – but describing findings to non-actuaries even harder. Miro Kazakoff from MIT’s business school has tips for how to persuade with data.
To the casual observer, actuaries exist solely in the realm of numbers and data. When deep in underwriting, you might share that perspective. But to be an effective actuary, it’s not enough to calculate probability and risk accurately. You also need to communicate your results so that others can understand them, accept them and use them to make better decisions. Your work needs to be good – and you need to be persuasive.
“Actuaries need to be effective at communicating the ‘so what?’ complex data and ideas in a succinct and interpretable way to affect change within organisations,” shared Natalie Berfeld, assistant professor at the Carroll School of Management at Boston College and Fellow of the Society of Actuaries, in a recent conversation. “They often also need to communicate with other parties who may not be intimately familiar with a particular model that an actuary uses but have an interest in understanding its implications, such as regulators, accountants, auditors, underwriters or consultants.”
It’s a challenge that experts across every domain face: how do I communicate complex, sophisticated work to others who don’t have my background and technical knowledge? No matter what you’re presenting, data communication best practices can help you share your work clearly and effectively with any audience.
Imagine telling the CFO of your company that a product will be profitable in 99% of modelled scenarios. If you haven’t explained which scenarios are and which are not included in the model, Berfeld explains, the CFO may take that figure at face value and make an overconfident investment decision.
“An unpredictable, unmodelled shock can have an effect beyond the 1% of scenarios where the model says the product would be unprofitable,” she says. “This shock would seemingly come out of nowhere for the decision-maker, although the model was never designed to capture it.”
Those types of catastrophes might only happen in one in 100 situations, but miscommunication about data is common. Your CFO, faced with hundreds of complex daily decisions, probably doesn’t even want to dive into the model. You can still lead them to better decisions by understanding two common communication pitfalls and taking critical steps to increase your clarity.
Different people, different interpretations
Communication is the process of taking ideas and encoding them into forms that can be transmitted to others. These forms include sounds (the words you speak), images (graphs that you create), and text that you write. The people who receive that information then translate those images, sounds and words into ideas in their own minds, using their own experience.
In that encoding–transmission–decoding process, information is lost and noise is introduced. The room for misinterpretation – even among highly trained professionals – is enormous.
Consider that GAAP accounting statements order columns from most recent on the left to least recent on the right. Most other presentations of financial data use the opposite order. If you present a financial statement to someone who just left a meeting where the columns were reversed, they might struggle for a moment, even if they know the convention. And in decision-making meetings with multiple people and limited time, every key moment missed increases the chances of a derailed conversation.
The curse of knowledge
One quirk of the human mind is that as soon as we take in new information, we forget what it was like before we knew it. Once we master a concept, our brains struggle to imagine what the world looks like to someone without that knowledge. We don’t even realise our world view has changed. This effect is so insidious that brothers Chip and Dan Heath, in their book Made To Stick: How Some Ideas Take Hold and Others Come Unstuck, coined an ominous term for it: the curse of knowledge. It isn’t meant to suggest that knowledge is a curse but to remind us that our expertise blinds us to what the world looks like to others. The longer you are in a field, the more acute this challenge becomes.
When you write a report or create a presentation, you draw on your years of experience and the time you’ve spent working through that problem. Your audience, on the other hand, may not have your expertise in the field or may lack background knowledge about the material at hand. A graph that is clear to you may look like an inscrutable cipher to them, and you might not realise it. That’s the curse of knowledge at work.
With those challenges in mind, how can you improve the way you present and communicate data to colleagues and clients? Committing to these six practices will put you on the right path.
1. Differentiate between reading materials and presentations
When you give someone something to read, even if it’s dense or complex, they’re in control. They can speed up, slow down or go back. Your audience doesn’t have that luxury when you present – you set the pace. This difference means that materials designed to read do not present well, and materials designed to be presented don’t read well.
If you don’t modify your materials for a presentation, you’re bartering the time you save for your audience’s attention and comprehension. Consider the costs and benefits of that trade-off carefully. If it’s a high-stakes meeting with the board of directors or a critical client presentation, spend the time to make the right materials for the situation. If the stakes are lower, make a deliberate choice. Don’t assume materials made for one purpose will work equally well when used for a different purpose.
2. Make only one point at a time
Aim to convey one idea with each slide or graph. This lets audiences process information sequentially. If you can’t identify the single point you’re trying to make, it needs to be broken into multiple slides. This can scare people but if you have 150 points to make in a half-hour meeting, the problem isn’t the slide count. It’s that you have too many ideas for that time frame. Clarify what you truly need to convey and cut the rest from the main body of your presentation.
3. Use headlines, not titles
One of the easiest ways to help your audience understand your message is to write that message as a headline, either as the header of a section or at the top of a slide. Headlines convey the key takeaway of the material and are different from titles, which only identify the topic being discussed. For example, imagine a presentation about climate-related insurance claims. Using the headline below clarifies the message. A title only tells the audience what’s being graphed.
Title: 10-year weather claims projection
Headline: Weather claims projected to rise 18% by 2033
4. Maximise the data-ink ratio in charts and graphs
Thanks to the curse of knowledge, it’s hard to identify when our graphs might overwhelm non-actuaries. When we are familiar with a graph, our brains filter out the excess data we don’t need. But a new audience needs to parse every bit of ink on the page, decide whether it’s relevant and process it.
To help them, prioritise communicating data by cutting out unnecessary graphical elements (which software often includes by default) and removing what data visualisation expert Edward Tufte called ‘chartjunk’.
Things to cut:
- Graphic effects that aren’t needed to understand the data, such as 3D or shadows
- Clutter, such as borders, boxes, dark gridlines, tick marks and point markers
- Excess colours
- Unnecessary significant digits
- Excess branding
- Pictures, unless they are needed to understand the point.
Things to emphasise:
- Clear, readable labels and titles
- Large fonts that can be read on even small screens
- Unit labels (like £bn)
- Data selection criteria (eg 5 highest-cost weather events in 2021).
5. Visualise the key comparison
Graphs show comparisons. Make sure the thing you want the audience to compare your data with is visualised. Imagine looking at a chart comparing car accidents per capita in five metro areas. This graph implies that the metro area with the lowest accident rate is performing well, but you need the national per capita accident rate to evaluate that comparison. All five metro areas may be performing much worse than average. Identify the right point of comparison and visualise it (in this case, with an average line). Use averages, targets, goals, tolerances, thresholds or notable events to help your audience understand your point.
6. Fix on the audience’s conclusion
Get clear in your mind the decision your audience needs to make and focus only on the information they need to make it. Effective presentations bring the audience to the answer rather than asking them to take the path you followed to get there. Just like you did the work of solving the problem for them, you’re now processing and filtering out extraneous information when you present it. That allows your audience to understand and use your conclusions without having to think through everything at the same level of detail as an expert. You serve them and make the world just a little easier to understand.
Miro Kazakoff is a senior lecturer in managerial communication at the MIT Sloan School of Management in the US. His book Persuading with Data was published last year