There was an old Star Trek episode, "The Trouble with Tribbles". Without going into all of the details of the plot, suffice it to say that tribbles, which are adorable, cuddly creatures, when brought on board Captain Kirk's vessel, reproduce far too often and threaten to consume all of the supplies on the starship Enterprise. So it is with PowerPoint. It's a (relatively) easy program to use and enables almost anyone to become a designer of graphic presentations. In fact, graphic designs proliferate to the point of threatening to consume all of the useful information in investor relations presentations.
I’ve spent some time lately poking around on the web looking at various companies’ investor relations presentations. I have not been impressed. Just about every presentation I looked at had something in it that bothered me. The combination of PowerPoint bullet point formats with bad graphics can be really deadly to good communications. It’s clear to me that investor relations practitioners are better at verbal communication than visual communication, so I thought that I would share some of my thoughts on the subject.
Let me start out by saying that I have a bias when it comes to presentations – the presentation should enhance and clarify the data, not distract from it. To understand how good presentations can work and what constitutes bad display of data, every person that has to make or prepare a presentation should read Edward Tufte’s book, “The Visual Display of Quantitative Information”. It is the seminal work in this area and it sets out with much greater authority and detail than I can the elements of good data presentation.
Having said that, here are some of the chief complaints I have about the presentations I’ve reviewed:
1. Cheesy backgrounds – just because PowerPoint gives you all sorts of ugly templates to choose from doesn’t mean that you have to use them. All they do is distract from the message you are trying to deliver. My advice is to hire a professional design group to help you set a template, which ties into your corporate design or this year’s annual report.
2. Runaway fonts – it is not unusual to see five or six different fonts and type sizes on the same slide. This is sloppy and distracting. This is a particularly egregious sin of PowerPoint, which will automatically resize type on slides unless you take out a whip and chair and tame it.
3. Use of acronyms and abbreviations – Corporate America loves TLAs (three letter acronyms). Unfortunately, while they may be a handy shorthand for those in the know, when encountered later, on a slide on the company’s investor relations website without accompanying commentary, they merely serve to obscure things.
The foregoing, while distracting, are design errors, and can be forgiven as simply in bad taste. In the parlance of my religious upbringing, they are venial sins, as they don’t really bring into question the integrity of the presenting company. However, some of the things I’m going to talk about now are issues where the visual information is manipulated to make data appear more favorable than it really is, which is something no self respecting investor relations practitioner should stand for.
4. Using objects that grow in volume to show linear growth. Unfortunately, we’ve all seen this one far too many times. Using pictures to show the growth of say, revenue, introduces a distorting factor as the volume of the object depicted grows much faster than the growth of a linear object such as money. If you have to jazz up your charts with cute pictures or expanding objects, you probably don’t have enough data for a chart.
5. Conveniently changing scales on charts to make data appear to fit your point. Not all charts and graphs need be zero based, but you need to be careful about the scale you use. It is far too easy to manipulate the visual impact of change by zooming in on a scale, which makes a single percentage point change seem huge. A corollary to this is changing scales on two adjacent charts to make it appear as if everything is moving in the same magnitude and direction simultaneously.
6. Omitting inconvenient data. I find it hard to believe that companies would do this, but I’ve seen it with my own eyes. If a particular year doesn’t fit the fact pattern that companies wish to talk about, they simply omit the data from the chart. I guess they think that no one will notice the year missing from the bar chart. A different take on this is to put the inconvenient data on the chart but then assert in words that something different and more favorable is going on. My favorite example of this is a chart that shows a large dip in earnings in a recent year with an arrow going right past it stating “Continuous growth”. Last time I looked, continuous meant without interruption, which clearly wasn’t the case for the earnings growth shown on the slide.
There are more examples of bad and misleading graphics out there, but I think I’ve made my point. Besides, I have to prepare some slides for a speech I’m giving at the NIRI Southwest Regional Conference next month and if I can just get the dancing 3-D graphics to work, it could be a real triumph of form over substance.