Shifting Your Perspective: How Data Visualization and Six Sigma Can Guide Your Organization in New Ways
Data analytics reveal a lot about an organization’s performance in the past and present — and can help develop a model of the future, such as trends in the field or where the global industry is headed.
However, data is not just about looking at numbers on financial statements. For today’s CFOs and business owners, the way forward is via deeper analytics that use data visualization to go beyond what financial statements show.
To that end, the trend is towards looking at graphics that tell the financial story behind the numbers. Analytics are translated into visual representation to help diagnosis corporate financial health and guide smart business decisions.
Gathering and displaying historical data visually enables stakeholders to see the organization from different perspectives and grasp information easily. Visualized data readily demonstrates trends and provides more detailed knowledge about corporate performance than balance sheets, cash flow, and profit and loss statements. A dashboard, chart, infographic, video, map or other pictorial medium enables decision makers to glean sharper insights into their company’s financials.
Diving into Data Analytics
Different kinds of analytics can be extrapolated from the financials and visualized to show a company’s story — past, present and future:
- Descriptive: See what’s happened to the numbers over a certain period regarding sales figures, customers, views and revenues.
- Diagnostic: Hypothesize why sales, service calls or inquiries were up or down, or why staffing numbers have shifted across diverse data sets.
- Predictive: Determine what will happen in the foreseeable future or near term based on the data.
- Prescriptive: Decide what actions should be taken based on predictions to ensure success.
Taking Guesswork Out of the Equation
Rather than hypothesize and predict, there’s a methodology that relies on hard data and statistical analysis to develop action plans that boost profits through greater efficiencies. That’s Six Sigma, a set of quality-control tools based in fact and driven by data.
The methodology uses data to produce quantifiable business outcomes. The Six Sigma matrix defines specific operational goals, measures results and analyzes what isn’t working; these steps inform action plans for improvement and the controls the team must implement to maintain alignment with stated goals and what the customer needs. These tools are applied to many industries to:
- Improve business processes – for example, by developing better workflow and aligned goals across departments and employees
- Increase profitability – based on new insights into revenues
- Enhance operations – by eliminating role redundancies and improving quality controls
- Boost efficiency – having the right people in the right roles to support optimal workflow
Six Sigma also expects alignment within the whole organization of strategy and goals, tactics and processes, and corporate vision to achieve desired results. With Six Sigma, the team supports a strategy by implementing the principles and processes to execute it efficiently to align with and support the vision and customer needs. This generates a cycle of continual process improvement, greater efficiency and more profits.
As a result, the practice drives higher customer satisfaction, employee productivity and profits. And who wouldn’t want that for their business?
Six Sigma in Accounting
Analyzing data through the Six Sigma lens transforms a corporation or accounting firm into a high-performing, efficient machine that enables business leaders to compete more effectively. CFOs and CPAs who use Six Sigma practices can provide greater value to their companies and clients through the positive power of data-driven decisions that affect processes and the bottom line. It is the ultimate number-crunching, performance-enhancing tool.
Visualized Data Works Best
Qualitative and quantitative data directly related to performance and goals must be gathered and evaluated to determine if leaders are meeting the marks set out by the aligned strategy and vision. When that data is presented in an accessible, understandable fashion, all stakeholders can see trends, understand the company’s present position and plan for a more efficient, profitable future.
Data visualization is essential for quickly identifying data trends across many data sets. By reducing the tedium associated with reams of financial reports, visualized data is transforming how CFOs and CPAs are guiding better business decisions and helping corporate leaders make sense of data analytics.
Bryce Kinderman served in the Air Force for 10 years and is passionate about Six Sigma and Lean principles.
Cheryl L. Mucha
Cheryl L. Mucha, CPA, is the owner of CFO Your Way LLC, which creates pathways to profitability for growing local businesses with its outsourced accounting services.