What is the difference between a novelist and a Lehman Brothers accountant? Both deal in fiction, work in solitude much of the time, and deal in the creation of art. The writer can paint a picture with words that others might observe, understand and appreciate. The Lehman Brothers accountant painted a picture of reduced liabilities that others observed, but misunderstood and in hindsight didn’t appreciate.
I have a history with numbers and visualization. As a kid, I would practice counting–by ones, twos, threes, fours (my favorite), etc. It must have seemed odd to neighbors when I delivered newspapers while reciting my numbers up to 1,000. Then I progressed to multiplication tables memorized through 20×20, fractions memorized through fifteenths, and mental arithmetic (medium length number addition, subtraction, multiplication). As a result of all this, I can communicate in numbers. And more than that, endorphins flood my body when I pick up paper filled with numbers .
In my first accounting classes I discovered others like me–people who can read and understand numbers. We like numbers and charts. A few of my favorites are supply & demand (which I had figured out by kindergarten), breakeven, and curvilinear costs:
Upon picking up a document willed with numbers, my eyes search for the patterns I know have to be there. Once I have identified the patterns, trend lines fill my mind, lines that are living and vibrant organisms that I can look and marvel at from several different perspectives. What? You can’t do that?
When I became an accounting professor, I would layout a few columns of numbers on the board, and encourage students to identify the patterns by rearranging them and adding percentages. Here’s an example from one of my lectures:
Students are instructed to recast single step income statements (a corporate favorite) into a classified (multiple step) format, then convert to percentages based on yearly sales. Can you spot the patterns that caused profits to suffer after 2006?
After 30 years in the collegiate accounting classroom, I’ve come to realize that understanding the above chart remains difficult for most students (even undergrad accounting students). Perhaps it is time for a change.
Some good work is being done with data visualization. I’m presenting two YouTube videos that might start you thinking of different methods present data.
The first video presented here is a TEDTalks featuring journalist David McCandless in “The Beauty of Data Visualization.” Everything he does is based on the principle that using our eyes more will make it possible “… to see the patterns and connections that really matter.” Besides, “… visualizing information is really cool.” He says that “We can use [data visualization] to alter our perspective or change our views.” And this leads to a change in behavior.
Swedish professor Hans Rosling studies the science of health. Using self-developed software (previously profiled here on The Summa), works on dispelling myths. He says, “The problem is not knowledge, but preconceived ideas.” This TEDTalks video is well worth the time to view.
Isn’t it time for accountants moved into the 21st century and developed some Hans Rosling showmanship? Just think how much better the world would be if more investors understood that patterns crying for release from oceans of financial data.
Debit and credit – - David Albrecht