When we get together to work in a group, it looks like this: At the front end of our conference room is a white projection wall approximately six feet high and ten feet wide. Every company has something similar. Onto this area, we project the screen of a laptop, which we use to record the fruits of our labors. Thanks to the LCD projector, everyone has these results constantly before their eyes.

This monitor wall delivers a 24x higher resolution on the same area that a standard LCD projector normally uses. Source: DeltaMaster Gate.

In other words, the front end of our conference room displays 1024 x 768 pixels on a good 5 square meters of wall area. In most meetings, we work, show, see, think, and decide with this resolution. Handouts on the table easily increase the resolution. In most cases, however, people tend to be satisfied with a succession of PowerPoint slides and have, at best, the same slides and an agenda in front of them on paper.

At the back of our conference room, we have set up a monitor wall comprising nine 46-inch monitors. Together, they also represent an area of a good 5 square meters but deliver 19 million pixels, which is about 24 times the resolution. On the monitor wall, we see what we want to talk about. Since we have so much space, we see things next to each other and at the same time instead of in isolation and one at a time.

Sometimes, this is the only way to get the overall picture. We once showed an architect the way we work. He immediately understood the principle. He still discusses most of his projects on paper because a screen simply doesn’t provide enough space. The screen either shrinks everything beyond recognition or the zoomed-in view doesn’t show enough context.

Hard to believe but true: The bright rectangle in the middle represents 1024 x 768 pixels. That is what an LCD projector normally shows – it needs an area equivalent to that of nine 46-inch monitors to achieve the same degree of legibility. Source: DeltaMaster Gate.

The same principle applies with maps. With a resolution of 19 megapixels, you see the entire city of Nuremberg. With an LCD projector, you don’t even get outside of the old city walls. Incidentally, the 1920 x 1080 pixels offered by HD LCD projectors don’t change anything: They are wider and therefore primarily for watching movies. In the business world, they are awkward because most of the screens on laptops and desks have a different resolution and changing the format takes time and effort.

With the aid of our monitor wall, we work, show, see, think, and decide with 24 times more information than available the conventional way. When we ponder over our Web site, entire sections of it fit completely onto the wall and are still legible. When we discuss sales, we see a large number of our customers and not just a few, select ones. When we edit an article for business journals, we take in all the sections, pictures, and attachments without having to scroll. When we plan events, we have the venues, guests and topics before us all in one go. That does us good. We’re clicking less, seeing a lot, and thinking more. Admittedly, it helped that we were able to write the software for our wall – “DeltaMaster Gate” – ourselves.

You could also look at it this way: We have increased the productivity of our conference room by a factor of 24. Just imagine if some other technology had been able to achieve such a boost in performance from one generation to the next.

We believe that you should work the way we do.

At the end of October, we took part in “Push, Pop, Press: Interactive Infographics in the Focus of Research”, a symposium hosted by Stuttgart Media University and organized and moderated by three of its professors – Michael Burmester, Ralph Tille, and Wibke Weber. Among the participants were graphic designers, a cartographer, researchers on the topic of interactive infographics as well as representatives from dpa, Spiegel online, ZDF, and Springer.

Jan Schwochow created this A3-sized infographic based on our two posts on the lopsided scale in a Spiegel chart. Source: IN GRAPHICS Vol. 3, Berlin 2011, pp. 26–27.

We explained what had bothered us about the Spiegel chart showing the U.S. federal debt and why we think that people should draw logarithmic charts and not linear ones. Jan Schwochow liked our arguments and invited us to recap them in his bilingual magazine IN GRAPHICS. We, of course, know his magazine and were shocked. We immediately thought of our recent post that mentions Wolf Schneider, who hosts writing-improvement seminars and warns his audience that they are writing “about moderately interesting topics for moderately interested readers”. That, of course, doesn’t apply to us. In financial controlling, we write for managers who anxiously await our latest reports. In an IN GRAPHICS article, however, we would be speaking to infographic designers by means of an infographic, and about a topic that we would normally discuss in our blog– sometimes at length, sometimes with a lot of text, and ideally with lots of links.

We graciously turned down his offer and asked Jan Schwochow what kind of story he would make out of our two posts on the topic. A few days later, he sent us a first draft that left us speechless. We made a few edits and debated if and how we wanted to explain how a logarithmic scale works. We did – like this:

“Logarithmic scales are labeled e.g. 2, 20, 200 or 5, 50, 500. Drawn, however, their logarithms are – 0.3, 1.3, 2.3 and 0.7, 1.7, 2.7. Look at the decimal places. They are identical for 2, 20, 200 etc. So are the geometric distances between e.g. 20 and 30 or 200 and 300.”

A few more days later, we sat together to review the final results. Take a closer look yourself. It contains wonderful graphical finesses. Tapering and broadening strips illustrate just how randomly linear lines are squashed and stretched (upper part of the double page).

By extracting different sections of the line, you can see the dynamics of different time periods. These sections are graphically normalized, they all start from the same base line.

As a refreshing change, the normalized time series are also placed one after another – and not simply on top of each other as is common practice.

We will have to take a closer look to see if these finesses are practical in management reporting. For the time being, however, we can say for the record that the media are becoming more logarithmic. And if you still don’t think you can use logarithms in your company, simply place a copy of IN GRAPHICS – strategically opened to page 26, of course – on the desks of your executives.

My splendid colleague Gerald Butterwegge heads up our corporate communication, issues our “clicks!” and “deltas!” newsletters and is responsible for finding the right words in this blog. The others come from me. He recently attended a seminar hosted by Wolf Schneider, an influential teacher of journalism in Germany. Gerald has been a fan of his for quite some time. Now, I am, too. Just as we defend the number and its integrity, Schneider has been doing the same for the German language – just much longer and better.

Formulating a message consisting of numbers and text is not always as simple as this.

As we have already mentioned a number of times in the past, language and numbers belong together. Today, we thought we would be yet a little more practical and pass on a few recommendations that we have cribbed from Wolf Schneider*, partly adapted for English and translated for financial reporting standards.

1. We don’t meet in room four.
   An old English grammar rule says “eight, nine, 10 except for decimals (e.g. 3.6)”. But that doesn’t always hold true – in real life or in financial reporting. It is better not to write that our report is from “January first”, our P&L is on “page four”, or that the press conference for our annual results will take place in “room eight”. The calendar, the report, and the room door display the numerals 1, 4, and 8 respectively.
2. We do not have several 100 employees.
   In reports, we generally have precise figures and can write 348. If we don’t know exactly, however, “several hundred” reflects this uncertainty better than “several 100”. Pure psychology.
3. Our ROI didn’t increase from nine to 13 percent.
   And our market share didn’t drop from six percent to 4.8 either. Whenever we compare something, we should write the same things the same way and different things differently – preferably in numerals.
4. We don’t visit four of our 19 subsidiaries in 18 months.
   Watch out with crossed series. Things that belong together should be written the same way (e.g. 19 and 4 subsidiaries). Things that don’t belong together are allowed to be written differently (e.g. eighteen months). Besides using them for the longer numbers in our crossed series, we also use numerals when there are actual numbers on the things that we are talking about. For example: “Today, we sold twenty tires in the 300 to 400 price range; yesterday, we only sold fifteen.”
5. Our company has three managing directors.
   We haven’t kept much from the original grammar rule, have we? Only that we should spell out in words any small quantities that we don’t want to compare.
6. Fürth is five miles from here.
   If we don’t want to make a comparison, we can do what many publishing houses do. They write as many numbers as possible in words. Someone wrote sixteen books on the topic of leadership culture. Fürth is five miles from here. Berlin has three million inhabitants. The next workshop is in forty days’ time. We like to write numbers with just a few syllables as words. Most times in financial controlling, however, we want to make comparisons – even when the number that we are comparing is unknown and cannot be given in the same sentence.
7. Occasionally you can state a record even without a number.
   In the limited space of a headline, we sometimes don’t write the actual value as a word or a numeral at all. Instead, we pack data-rich details into the language. Our favorite example is “Australian dollar reaches a 28-year high.” In this case, the current (and highest) exchange rate was just as irrelevant as the lowest one – and all of those in between.
8. A number is clearer than clear.
   We’ve saved the most important rule till last. If we have numbers, we don’t hide them behind ambiguous terms such as significant, considerable, substantial, or clear.

Wolf Schneider opened his seminar by saying “You write about moderately interesting topics for moderately interested readers.” That, too, we can translate: We have a much better time in management reporting.

* Wolf Schneider, Deutsch fürs Leben, 19th edition, Rowohlt Verlag,
Reinbek 2010, here pp. 144–147.

From 1993 until 1995, I worked as a research assistant for Professor Peter Mertens, the pioneer in the field of information systems. As is common prac­tice, we gave joint lectures at that time (and later as well). Our topic was how computers can support managers in their work. Each of our lectures included the following quote from the Nobel Prize winner Herbert A. Simon: “Informa­tion is not scarce. Scarce is manager’s time to attend to all the information that is available.” That basically says it all.

Controlling by hearing: Each new registration for our Executive Forum in Berlin entered my perception as an audio signal – no matter when or where.

A manager’s information absorption capacity is limited. Simon already said that in 1973. Back then, management information consisted of endless stacks of green-and-white-striped paper covered with numbers. Dialog systems and OLAP databases are wonderful, but they don’t change a manager’s capacity to absorb information.

What we can do is still the same. First: A computer can help filter the exist­ing information. Although that is a good idea and we have made some real progress, it is still full of pitfalls. The gauges, traffic lights, and dash­boards that we regularly criticize in this blog show how you can easily get carried away with filters. Second: We reduce wasted capacity caused by enigmat­ic charts, embellishments, and anorexically thin reporting. High-integrity, data-dense reporting, among our favorite topics, helps greatly. The potential to increase the information throughput in this way is immense – and that is our focus. Third (and particularly fascinating): We simply increase the capacity. How? Here is an example from our own company.

Project controlling: Executive Forum, Berlin, in 2011

Every two years, we host an Executive Forum where we discuss the future of Business Intelligence with managers. The event’s framework and objectives are ambitious, and a lot of effort goes into the preparations. As the hosts, we of course want to have a full house. Our staff work very hard on this but shouldn’t make compromises with regards to the target group. Last time, the mountaineer Reinhold Messner was our guest speaker. I wanted to show that we could apply certain lessons from the master of intuitive risk manage­ment to business management as well. That is definitely of interest to execu­tives, supervisory board members, managing directors, and LOB managers who can take their minds off their daily business long enough to reflect on topics that could develop in the long term.

Since I planned the framework and moderated the event, I was interested and motivated to learn about the ongoing registration status in the long weeks prior to the event. I got a buzz with every new registration.

Notification through ring tones

We set up our company’s own controlling system so that it regularly checked the number of registrations and sent a notification to my smartphone each time there was a change. No matter where I was, a special tone (or several of them) told me in virtual real time if there had been one or more additional registrations.

Small change, huge difference: E-mail header with key information in the subject line

First experiences from a personal experiment

I was thrilled at how effective this simple concept was. I personally felt that my ears understood things faster than my eyes. I processed the information “two tones = 2 new registrations” in a way as if the sounds had been wired directly to my brain. And I received the information without having to waste precious management capacity. I didn’t have to think about retrieving a re­port or taking the time to read it. The information was positive and important for me – and it was able to kindle its motivating effect as early as possible. I have my smartphone constantly in my hand anyway, so reading off the addi­tional written status on the total number of people who had registered didn’t require any additional effort.

Seeing is understanding

In fact, I was so motivated that I searched for other possibilities to increase the capacity. Part of our controlling concept includes reports that are sent as e-mails at set times. At first, the subject line merely stated the content of the report. To learn more, I had to open the e-mail, which was like taking a de­tour. Now, all of our e-mail reports list one or more selectable measures in the subject line. The effort required to process “You’ve got mail” and “Or­ders received today: 347,000” are thus identical. Once again, I have the feel­ing that there is a wired connection between the information and my brain as well as my perception and understanding.

I can tell you one thing: Financial controlling can be really nice.

It all started with a simple request from Gerhard Wöhrl, a well-known German textiles entrepreneuer. He attended our Executive Forum in Berlin back in November 2007. Rolf Hichert was one of our speakers, and presented his ideas for notation standards in reporting. One of his famous lines is that things that are the same should look the same, and things that are different should look different. Gerhard Wöhrl decided that his members of the board and store managers should hear these ideas as well, and asked if Bissantz and Hichert could condense the content of the Berlin event into a short briefing for his company. When it comes to report design, we share many convictions with Rolf Hichert. We preach against the same sins, and quarrel lightheartedly only over the details. Therefore, we both agreed, and invited other companies as well to our debut event in Nuremberg. That is the story behind our first, joint notation seminar. Since then, we call it our Advanced Seminar on Industrial Reporting.

With Rolf Hichert on the red couch at the Carlton in Nuremberg after our Advanced Seminar on Industrial Reporting on 6 October 2011.

Industrial Reporting – Unify, Condense, Simplify

Supplying senior-level managers and other decision-makers with information and creating reports is a production process. After all, cycle times, quality, capacity, and costs are important benchmarks in reporting as well. Reporting also benefits from the blessings of automation and standards – that is, if we use report formats that can be easily automated and don’t require manual fine tuning. That’s the task of Graphical Tables.

We can see a good example in the following report using “Small Multiples”. This report illustrates many of the advantages that automation and notation can provide.

A sample sales analysis report: What are the top five selling products in each sales region? The computer determines the proper notation, scale, and layout automatically. Source: DeltaMaster. Click to enlarge.

You don’t have to worry about formatting or layouts. The format is stan­dard­ized, and the computer automatically determines the layout based on the amount of space available. The content is data driven and iteratively nests two rankings in one another. That alone is a significant amount of calculation work – but the user doesn’t notice a thing.

Three important components of Hichert’s SUCCESS concept are “Unify” (stan­dard­ize content), “Condense” (concentrate information) and “Simplify” (avoid complication). Our example above illustrates these concepts in dif­fer­ent ways. As you know by now, we feel that when it comes to infor­ma­tion den­si­ty, you can’t have too much of a good thing, which is why sparklines are practically standard in all of our reports. Our color standard has proven its worth for even longer, and uses blue for figures that have a positive effect on the KPI in business scenarios. This deviates from the color that is normally used, which is green. Although we support green as a standard, it is not the default color. Our admittedly thin-skinned interpretation of the signal effect of the color green supports this solution: A weak positive value is not exactly something to cheer about.

Our “Bauhaus” reporting style skimps on every pixel and couldn’t be more minimalistic. But this is just one aspect of what “Simplify” means. Our sample report uses a comparable scale. The same gaps between the dots stand for the same relative differences among values. The scale is calculated by default so the user doesn’t have to deal with that. That, too, is a form of simplification.

Enable

“Enable” is another component of the SUCCESS concept. This means that the company must first put a notation system into practice. In other words, it’s not only important to consider how you can optimize visualization in reports. You also need to embed these concepts throughout the organization. As a soft­ware manufacturer, we sometimes view this as a challenge, other times as an advantage. For quite a while now, we have provided formats that deliver high-quality reports without user intervention. So far, we haven’t prevented extra bells and whistles, but it takes time and effort for users to add them. We can set standards by using rules or default values.

Say

Rolf Hichert stresses how important the message is, which is illustrated in the point “Say”. He’s right. Clear messages are absolutely crucial in staff de­part­ments, ad hoc or special analyses, quarterly or annual reports, when com­mu­ni­cat­ing with shareholders and analysts, taking strategic decisions on in­vest­ments, divestments, and on the like. But reports can’t always have a cus­tom­ized message – for example, when you need to produce masses of standard reports for hundreds of recipients. The computer, of course, can at least gen­er­ate simple messages by itself here as well, but these don’t come anywhere close to the level of an experienced controller. We do both. Software can help save and distribute the message. In addition, we allow the computer to automatically interpret things when appropriate.

Check

Rolf Hichert hates manipulated charts just as much as I do. We both collect examples of bad charts and will never tire of getting annoyed at them. Bella’s blog, which is dedicated to identifying and avoiding manipulation, is heading into its sixth year. Our office dog has already posted well over 130 articles, and hasn’t run out of material yet. In the “SUCCESS” concept, this is covered in the point “Check”. Reports shouldn’t just be important; they should also be correct. We are talking about report integrity. Standard formats usually ensure this integrity. In more complicated cases, however, we need al­go­rithms that dynamically suggest the right options based on the data at hand. Very recently, we brought ourselves to be even more consistent with regards to scaling, and will define certain defaults more dogmatically. Rolf and I will certainly have many new topics to quarrel over in that respect.

Before that, I will send a bottle of champagne on its way as my part of our wager. For the past ten seminars, Rolf always complained that our LCD pro­jec­tors were no good and that he was now going to set up his own one. Each time, I argued that wasn’t possible, the projector was expensive, the latest model, etc. This time, he was right. We should have replaced the light bulb. That makes it 1 : 0 to Rolf. We’ll face off again in May with a new light bulb.

Last week, a group of colleagues and I discussed what return on investment (ROI) people can expect from Business Intelligence (BI). Our conclusion was a multi-level scheme. Later, I did a little research on the Internet to see what other people had to day. I was shocked at what I read and my brain just shut down. Here are my modest, opposing views; the wild party is next door.

1. Thinking instead of tinkering

   Financial controllers often have to go to great lengths to turn their numbers into reports. Sometimes, they spend 80 % of their workday doing just that. With the help of reporting and analysis software (a.k.a. BI suite), financial controllers can reverse that and have more time to think because creating reports becomes simpler. Even if they can just scream “Stop!” every once and a while when a decision has to be made because something doesn’t fit with the numbers, that already counts as an initial ROI because less time spent tinkering means lower costs. After all, no one hires a financial controller as a graphic designer.

   
   Business Intelligence myths are running so wild that their critics are starting to spread even more mysterious anti-myths. This really impressive, interactive photo collage from the NYT is “True BI for the masses” according to Information Week. Objection! That is our Wall – then and now.
2. Eliminating uncertainty

   Uncertainty paralyzes. Almost everyone in a company wants to have at least a general idea of how the business is doing. When employees don’t even know that, they speculate about it – on company time. Companies can save this wasted time by filling the information gap with simple re­ports on the status quo. I generously estimate that unproductive ponder­ing amounts to roughly 5 % to 10 % of personnel costs for approximate­ly 80 % of employees. That would be the ROI on this level. But I don’t yet consider that to be “BI for the masses”. After all, if bosses inform their employees and how they do it are organizational issues.

   
   Information Week also calls this NYT animation “True BI for the masses”. After a bit of cumbersome clicking around, we see that individual values are different than averages.
3. Knowing what not to do

   Yes, that is the idea: BI should show limits and opportunities. People who know their actuals well also know the limits. In this case, the computer can play out its full superiority, and we can rack our brains over charts full of integrity, consistent formatting, real-time reports, mobile formats, filter algorithms, automated workflows, smooth planning processes, clever variance resolution and so on and take action without running out of work or having to sacrifice progress or respectability. But we didn’t really need a new name for it. “Business data analysis” or “reporting” would have been – and still are – good enough. Oh, yes…and the ROI? That’s hard to measure in numbers but is as irrelevant as the costs for buying a windshield and rear-view mirror for your car.

4. Knowing what to do

   That is the promise of salvation given by BI, and where BI has the chance to show off what it really can do. You already have the data. Now you just need to analyze it for hints on the most promising customer segmentation based on a combination of cross-selling potential and the hidden correlations among weather, preferred tie pattern, age group, and purchase decision in order to slaughter your competition. Wrong. We have not subdued the world. People and companies are not deterministic buying robots. Entrepreneurial success is the success of man and not of machines. First people decide and then they take action. This produces data that they analyze. Then they draw conclusions and make new de­cisions. Data provides clues, pointers, and suspicions. But it does not capture reality as a whole. But we have to deal with reality as a whole. A BI system is thus a tool that should lie nicely in your hand. You will use it to examine questions of a magnitude that makes the sum of a BI invest­ment look puny in contrast. We could just as easily ask what ROI a ham­mer has when you are building a house.

5. The needle in the haystack

   Although it is not impossible, it is rare that data analysis leads you to an amazing idea that is so obvious that there is data on it – but we are the first to see that. Mid-range outliers such as an out-of-control cost center, accounting errors, or structural but unnecessary cost differences in dif­ferent business units are more common. In this case, the ROI is not sys­tematic and, therefore, can’t be budgeted for – but it can be substantial.

At any rate, those were the general thoughts from our small group. We see that it works even without myths. That’s no wonder, because Lady BI’s maid­en name is: financial controlling, reporting, and data analysis.

We still can’t get the recent news – and charts – of the U.S. national debt off our minds. Last time, we argued that you shouldn’t display the development of absolute values on a linear scale – at least not when large differences in the values are involved. Otherwise, it inevitably leads to distortions, exaggerations, and misinterpretations.

Spendthrifts or economic growth drivers? George Bush Sr., Barack Obama, George W. Bush, Bill Clinton and Jimmy Carter in the Oval Office.

The fact that the U.S. national debt is approximately as high as the annual U.S. gross domestic product (GDP) is a complicated issue on which even economists fail to see eye to eye. Instead of warning us about what might occur, however, sensationalizing the issue with panic charts is in our opinion more likely to make the dreaded scenarios come true.

Back to visualization: Last time, we established that you can never go wrong with logarithmic scales and rarely do something right with linear ones. We showed that based on the absolute increase of the U.S. debt over the years. Now we want to verify if this also applies to percentage values. We can investigate that by looking at how the U.S. debt has developed in comparison to GDP. So, let’s enter the debt as a percentage of GDP.

The U.S. debt as a percentage of GDP from 1940 to 2016 (estimated for 2011 to 2016) – linear scale on the left, logarithmic scale on the right.

As you can see, linear scales also distort percentage values. The degree of distortion, however, depends on the range of the values and has nothing to do with absolute or percentage values. And this range can also be large enough in the case of percentage values to make a chart misleading. In the case above, I think that the extent of the distortion is tolerable, since it hardly changes the fundamental interpretation of the development.

With regards to content, however, we are still missing the comparison to the GDP development. Those who favor deficit spending say that federal investments financed with debt increase GDP – and what matters is how wise these investments are, not the size of the debt. They say, as long as GDP growth is higher than debt growth, incurring new debt is good for the economy. Okay, so let’s take a look at debt and GDP combined.

The U.S. national debt (red) compared to U.S. GDP (blue) from 1940 to 2016 (estimated from 2011 to 2016) – top chart with a linear scale, bottom chart with a logarithmic one. Click to enlarge.

Since the selected 75-year time frame is impressively long, we should take some time to examine this wealth of information more closely. Take a good look at the chart with the linear scale, then the chart with the logarithmic one, and see for yourself:

1. You can’t get much information on the first 25 years from the linear scale. The large values at the end of the series dominate the small values at the beginning. You think you are seeing the development of the data when in reality you aren’t. Your look at the historical data does not achieve the desired result, and collecting the data was a waste of time. And worst of all, you have a completely wrong impression.
2. The logarithmic scale shows that the sharpest rise in debt in the past took place in the 1940s. From 1944 through 1948, the debt was larger than the GDP. From 1948 on, GDP growth was always clearly larger than that of the national debt.
3. If you look at the linear scale between 1965 and 1983, you think you are seeing the “good old days”. GDP growth was apparently much faster than that of the national debt. The logarithmic scale, however, straightens out the story. It shows a development that is almost parallel and, in fact, it is. The GDP and national debt grew by 400 and 326 percent respectively in this period.
4. The period from 1983 to 1993 is also deceptive but in the opposite way. Although the gap between the data actually decreased, the linear scale shows a seemingly parallel development. While the GDP rose by 90 %, the overall debt on the other hand tripled in this period. This is the reality – and this is what the logarithmic scale shows.

We wanted to prove that you don’t have to know logarithms in order to understand logarithmic data. However, you need to know the pitfalls of linear scales if you don’t want to misinterpret linear data. In our example, you would have to see the pattern of the logarithmic scale in the linear chart to still be a skeptic regarding logarithms. You would have to be able to identify and interpret all the distortions of the linear chart just by looking at it. My eyes couldn’t do that – could yours?

The amount of debt accumulated by the USA concerns us, too. Or rather the charts about it that are in circulation. We say they are wrong, and in a very fundamental way. Because they are not adjusted for inflation, because they do not show economic growth in comparison, because presidents are inserted as explanatory variables in a manner that simplifies and distorts – and because they have a linear scale. All of this makes them “panic charts” that add fuel to the flames and cause damage instead of leading to a much needed levelheaded debate. But slow down.

Incidentally: The Spiegel online chart resembles the very first chart on national debt down to the last detail. The latter is over 200 years old and was created by William Playfair (1759–1823).

Linearly scaled: Development of borrowing by the USA since 1940 and term in office of the US presidents since Ronald Reagan. Source: Spiegel online, 2011–08–08. Click to enlarge.

Same speed, same slope
First of all: When we look at developments, what do we want to know? A development can stagnate. It can go up and down. That in turn can happen more quickly or more slowly, and take longer or not so long. The fascinating thing about a line chart is that it shows the entire sequence of ups and downs, as well as the speed of the movements. Line charts are speed charts. But not if the Y-axis is linearly scaled. Then it depends on the absolute height of the values as to whether or not the same speed is also shown the same way.

Logarithmically scaled: The data from the graphic from above. Source: Bissantz & Company GmbH, data: White House/Office of Management and Budget, Table 7.1: Federal Debt at the End of Year: 1940–2016.

We’ve already had that a few times, and it can’t be said often enough: In order to see differences in speed, the Y-axis must be logarithmically scaled. An identical line slope then indicates an identical relative change and identical speed. Comparing these two charts reveals these differences in a striking manner. We may not be able to save the world this way either, but the fact that German companies present potentially record-breaking half-yearly figures and the DAX index then crashes also has to do with how we see the future and how it is presented to us.

It depends. Really?
Sometimes objections are raised to logarithmic scales by claiming that it depends on what you want to show. After all, a logarithmic Y-axis does not readily indicate whether the absolute change at various times was identical. True. But when do we want to know that anyway? When do we want to see the rate of the absolute change?

Although the development of the debt in the USA in absolute terms certainly is a dizzying eye-catcher, it is meaningless if there is no relationship to the gross domestic product. Garnishing the chart with the presidents suggests that the debt problem is primarily linked to who was in office at the time and has only more recently taken a dynamic turn for the worse. Our second redesign shows how misleading it is to superimpose the presidents.

Normalized: Change in level of debt during the term in office, first year (Jahr 1) of each legislation period = 100.

What is the correct way to scale?
In general, showing the development of dimensions in absolute terms with linear scales quickly becomes a problem when dimensions with a large range are involved. Even if the key reference dimension is familiar to all the readers and it remains constant over the period under consideration. Let’s assume, for simplification purposes, that the Earth’s resources are finite and that we don’t have many more ideas in the future. Population growth will then hit a constant denominator. However, since we can only guess at the absolute upper limit of humans that the planet is capable of supporting, the denominator is not as constant as it initially appeared. Therefore, the rate of change in growth also interests us here again, independently of the absolute level.

Long, linear, and constant: A guaranteed panic chart
Anyone who thinks up a dimension whose development in absolute terms needs to be shown without being compared to another dimension should note the following: In the case of long periods, low initial values, and constant growth, a panic chart will always result that is flat for a long time at the start, and then becomes steeper and steeper until it is virtually vertical and goes through the roof. Our eyes will barely be able to avoid seeing this steepening as anything other than the reaching of a critical limit.

Then two absolute dimensions side by side
Very well, proponents of linear scaling might argue, then we’ll show the US debts and the gross domestic product in the same chart so that we have our comparison. That’s not much good either, as we have seen before with US figures. Since both dimensions start at different levels, what appears to be a parallel development would be equally misleading.

As I simply cannot come up with an absolute dimension for business purposes where the development of the absolute growth would be enlightening, I will proceed as follows:

1. If I have two or more dimensions for comparison, I use our little lie-chart detector to check whether a linear scale would lead to distortions and I therefore need to use a logarithmic scale.
2. If I have just one dimension, I take two contrasting segments from the development and can likewise use the lie-chart detector.

Pretty tricky. Therefore, it’s never wrong with logarithmic scales, and rarely right with linear ones. We will have a look at whether that also applies to percentage values in the near future.

Continued: Simply wrong is downright difficult

The USA regularly sent vessels of the Space Shuttle type into space starting in 1981. A total of 135 times including the final lift-off. Two missions ended tragically: On 28 January 1986, the Challenger exploded seconds after the launch; 17 years later on 1 March 2003, the Columbia was destroyed while re-entering the earth’s atmosphere.

Projectors and PowerPoint usually suffice for projecting photos, quotes, and advertisements – but rarely for context, correlations, and causality.

Only ostensibly did the Challenger catastrophe have a technical cause: low temperatures the night before and on the morning of the launch had reduced the elasticity of the O-ring seal. Hot gases exceeding 1,000°C escaped and damaged an attachment strut connected to the external fuel tanks. The tanks hit the solid rocket boosters, ripped open, and exploded.

The Presidential Commission on the Space Shuttle Challenger Accident examined the disaster carefully and “[…] concluded that there was a serious flaw in the decision making process […] Had these matters been clearly stated […] it seems likely that the launch of 51-L might not have occurred when it did.” (1)

On the night before the launch, the engineers of the shuttle manufacturer Morton Thiokol had warned of potential problems with the O-ring seal. In the past, this seal had often been damaged when external temperatures fell below 19°C. The forecast for the launch indicated frost. The engineers summarized their arguments in 13 slides. NASA and the Thiokol management discussed them until midnight. As history has shown, the engineers drew the right conclusions. The way they presented their arguments, however, didn’t convince NASA. Even the management at Thiokol finally gave up their original resistance. The launch was cleared. The Challenger exploded.

Edward Tufte later examined these slides in his book “Visual Explanations”. Although they contained the information that should have prevented the launch, the slides were very confusing and provided many blatant opportunities to question the engineers’ arguments.

Seventeen years later on 1 February 2003, the Space Shuttle Columbia exploded while re-entering the earth’s atmosphere. During the launch, part of the insulation of the external tank had become detached. The debris had hit a wing and damaged the thermal shield. NASA’s Mission Control Center registered the incident and discussed the possible implications while the Columbia completed its mission in space. NASA assessed the incident as noncritical and gave the go-ahead for the Space Shuttle’s return. The Columbia disintegrated.

As in the case of the Challenger, the decision-making documents submitted to management were subjected to scrutiny. Here, too, the official investigating commission found a correlation between the presentation and the wrong decision. This time, the blame was also pinned on PowerPoint, the computer program that was used to display the presentation slides. Or rather the blame was attached to the information culture of slide stacks. NASA had switched to PowerPoint presentations for risk evaluations instead of detailed technical reports that could be understood even without an accompanying presentation. The software’s display requirements, however, dictated simplification and choppy sentences in font size 18. These had lost the rest of their meaning on their way through the organizational hierarchy. Again, NASA’s management wasn’t able to evaluate the existing risk correctly due to an unsuitable presentation.

In the meantime, more and more people elsewhere are also challenging the use of PowerPoint. James N. Mattis, a Marine Corps General, stated “PowerPoint makes us stupid.” The Brigadier General H. R. McMaster prohibited the use of PowerPoint during his missions in Iraq on principle: “It’s dangerous because it can create the illusion of understanding and the illusion of control. Some problems in the world are not bullet-izable.” (2)

Then there is the well-known story of Lou Gerstner, the long-time CEO at IBM, who once turned off the projector on a presenter and said, “Let’s just talk about your business!”

Despite all this, PowerPoint still persists as the presentation standard for business reporting. This has consequences: a report created in PowerPoint has a resolution of 1024 x 768 pixels, the smallest resolution commonly used in companies. Since you cannot scroll through PowerPoint during a slide show, since screens and projections are intended to be viewed horizontally rather than vertically, and since most reporting systems cannot handle lists containing multiple columns, there are severe limits on what you can report in the first place. You can generally reproduce the equivalent of 1024 x 768 pixels on one fourth of a standard-sized sheet of paper with ease. That means a PowerPoint slide show is no better than taking peeks through a keyhole.

Remember: The Challenger exploded due to poor slides that were shown on the wall using an overhead projector. The slides were static because they were made of polyester. PowerPoint slides are made of pixels but they are still static despite using a computer. And their resolution is actually much worse. If you want to show photos, rough sketches, simple organizational charts, and snappy quotes, that isn’t a problem. For the complex reality of decisions, however, it is.

What are the alternatives? These, for example:

• Take a stance without slides. Long ago, Cato was able to state his position in a very convincing way and, in the end, Carthage was destroyed.
• Distribute reports as hard copies. Although this common practice from the past isn’t interactive, it often suffices because you can pack so much information into them.
• Furnish conference rooms with large-format screens. They are still expensive but have a high resolution and are interactive, which makes them worth the expense.
• Use software that can scroll and zoom.

Easter. While the sun was shining in Germany, it was raining in Southern France – a day for going to a museum. I had wanted to visit the Musée National Fernand Léger in Biot for some time but Léger’s somewhat dreary style of Cubism and the part you could see from the outside had kept me from doing it. Now was the time.

Fernand Léger, Les disques dans la ville (1920): The international Esperanto of traffic lights and signs is a relatively new invention. They came with the railroad and automobiles. And the only place where they work so safely that the reduction they provide is justified is with traffic.

Inside, I stared in awe. Léger and many of his contemporaries were inspired by traffic lights and signals. Their works show faith in progress and the aesthetics of signals in a world on the verge of industrialization and motorization. Wonderful … in a museum.

A short time after my return, someone told me the latest news on the situation at BayernLB, where the debate continues as to whether someone can or should be held responsible for its disastrous dealings. Günther Beckstein already gave his opinion on the situation back in January. Beckstein is from Nuremberg, so we aren’t going to mock him here. But his comments in an interview with the German magazine “Der Spiegel” are probably symptomatic – and simply too good not to use for our purposes. This is because, according to “Der Spiegel”, Beckstein had a “Risk Office” that prepared the decisions for him:

“The Minister of the Interior had ordered his people to use a traffic light system to categorize submissions. Green meant ‘okay’, yellow meant ‘attention’, and red meant ‘problems’. ‘There couldn’t have been a better way to organize it,’ said Beckstein resentfully.”
Source (translation by us): Der Spiegel, 2011–01–03, p. 28, or on Spiegel Online.

Furthermore:

“730 people in the Risk Office at the bank said that there was no noticeable risk. The Federal Financial Supervisory Authority (BaFin) didn’t express any concerns, the Deutsche Bundesbank didn’t, no one did. But a few politicians are supposed to have psychic powers.”

Der Spiegel then asks:

“But is it okay for bank regulators to delegate their legally stipulated personal responsibilities to the bureaucracy of their ministry? Commercial lawyers point out that at privately owned banks, a member of the supervisory board can be charged with negligence for as little as being absent from a meeting.”

A few days ago, the bank filed a lawsuit for damages against its former executive board. The Public Attorney’s Office is also investigating regarding charges of fraud.

Meanwhile, the debate in Germany continues as to whether we should label groceries and investment products with traffic lights. Berlin already prohibited this type of labeling for groceries. In the case of financial products, the prevailing opinion is that the government should keep its fingers off ratings. Targobank sees no reason to change its current approach:

“The bank uses a green-to-red color scale to symbolize financial indicators such as duration, risk, and returns,” said Franz Josef Nick, CEO of Targobank. “In the future, its customers can see even better which financial product is best suited for which investment goal.”
Source: Targobank press release dated 2010–04–13 (translation by us).

Targobank product information from 31 March 2011
Source: targobank.de.

As of 1 July 2011, German regulations came into force stipulating that consumers must receive a short, easy-to-understand and advertisement-free information sheet about the product as part of investment advisory services. Among other things, this sheet should clearly state that the investor assumes an entrepreneurial risk up to and including a total loss. This document very clearly says the following, for example:

“There is a possibility that poor management performance can result in small or even large losses in the price of individual shares or the stock market as a whole. Through the indirect purchase of shares through the funds, investors subject themselves to an entrepreneurial risk as far as the individual stock companies are concerned up to and including a total loss. Investors can reduce this risk by spreading the investment among multiple stocks.”
Source (translation by us): The German Federal Ministry of Food, Agriculture and Consumer Protection, sample product information sheet for equity funds.

How is this all related? Signals don’t only fascinate artists. Presenting information in the most concise manner possible is a virtue that we also highly value. For example, we regularly try to show the benefits of maximizing data density. Responsibility, however, should stay where it belongs – on the level of decision-makers. Otherwise, we merely make them executive figureheads, or ‘breakfast directors’ as we call them in Germany. That’s where people seem to misunderstand things. You cannot delegate responsibility. Managers cannot ask how risky something is. Instead, they need to ask which risks they are taking. Beckstein’s Risk Office needed to describe the risks, and management needed to assess them.

On my way home, just before my driveway, I often have to wait for a red light – even late at night when there is only oncoming traffic every few minutes. You think that you have a complete view of the street from there but, during the day, the post of an underground walkway obstructs the critical meters. Good thing that I don’t have to think about that.