- In this video I'll be doing a breakdown
of a real McKinsey report to show you exactly what they do
to build charts that are clear and insightful
and why they're considered to be
one of the most respected organizations in the world.
Plus I'll give you some tips for how you can build your own
high quality charts just like McKinsey, coming up.
(upbeat music)
Hey everyone, Paul here from the Analyst Academy
where we teach people PowerPoint
and presentation building skills,
like what you might find at a top consulting firm.
We've taught thousands of people all over the world
from a wide range of professions
including consulting and finance.
So if you're interested in courses for you or your company
make sure you check us out at theanalystacademy.com.
Be sure to also stay connected with us here on YouTube,
Instagram, and LinkedIn
for more content just like this.
I'll include links to everything in the description below.
The report I'll be reviewing today is called
India's turning point: An economic agenda
to spur growth and jobs,
which you can find on McKinsey's website
and we're also linked to it below.
I'll be focusing mostly on the charts
in the report for this video,
but if you're interested in the topic
the report itself is actually a really great read
so be sure to check that out.
All right, the first chart in the report
is a waterfall chart and the title says,
India needs to create at least
90 million more nonfarm jobs by 2030.
Now the purpose of a waterfall chart
is usually to show how you get from one value to another.
In this case, they're showing how to go
from total employment in 2020,
represented by this column on the left,
to the 2030 employment targets,
both the lower and upper targets.
There's a growth in labor force due to demographic changes
and a transition from farm jobs to nonfarm jobs
which is represented by both of these.
Then to get to the upper target
there's the potential additional
female labor-force participation.
Now there's a whole lot to like about this chart.
The first thing is the chart title,
rather than just giving a topic for the chart
it tells me exactly what the takeaway is.
And this is the number one mistake I see people make
when it comes to charts.
For a chart like this
you don't wanna just say what information is in the chart,
you wanna say very clearly
what you want your audience to take away from the chart.
Charts are complex,
and there's a lot of interpretations that can be made.
So by telling the audience exactly what they should know,
you make it more likely
that they're gonna understand what you're saying,
which is really your ultimate goal.
Now you might have noticed
that they've included some descriptive detail right here
where they say employment in farm and nonfarm occupations.
That of course is also important
but it shouldn't be your most prominent title.
That's just there for informational purposes.
What you really want your audience to focus on
is the main takeaway which they've listed here
in big bold letters.
Another great thing about this chart is how clear it is,
from the simplicity of the colors
to the consistent and simple labeling.
Notice how they don't just use a legend
to distinguish farm and nonfarm jobs.
Legends can sometimes be tricky
because you force the reader to look back and forth
between the chart and the legend
to really understand the data.
It's not that big of a deal here with only two colors
but little things like this still make a difference.
I also like how they've decided
to bold this text right up here,
which is supposed to connect
with the information in the title.
It helps me cut through the noise a bit
to understand what I should be looking at.
And then lastly,
notice how they've included extensive footnotes and sources
down at the bottom.
This is something you'll see with most big consulting firms
because it gives them support for claims
that they're making to executives.
It's important to not only provide sources
for all the information in your charts
but also to explain each aspect of the chart in detail
wherever you think it would be helpful.
All right, chart number two.
This one says India's GDP could expand at 8.5% per year
with a sharp rise in jobs and sustained productivity;
the low growth path implies a negligible job creation.
And again, the descriptive title is helpful
in knowing what I should take away from the chart.
There's a lot of numbers on the chart
and this tells me that the main one they're talking about
is the one down here.
So taking a step back real quick
let's talk about their choice of chart here.
It's basically a regular column chart
except they've split it into three separate charts,
which I think is a great thing to do
when you have a lot of columns.
Sometimes I see people with clustered column charts
that have five or six columns in each cluster
which is just confusing most of the time.
By separating them out like this
you can really focus on each individual chart.
But the other benefit here
is that it allows them to show the relationships
between each section.
In other words, it's a lot easier to see that net employment
plus productivity equals GDP.
This one also does a good job of using color
to help focus my attention.
Notice how the only columns they've colorized
are these two on the end
which are clearly the most important to the story.
They've kept these columns on the left black
so they don't stick out quite as much
and this one in the middle is light gray
so it sticks out even less.
Then once again there's great attention to detail
with exhaustive sources and footnotes down at the bottom.
Chart number three is a Mekko chart
which in my experience
is a chart consultants just love to use.
The title says,
three growth boosters spanning 43 high-productivity
business opportunities, can contribute $2.5 trillion
to the economy by 2030.
And the three growth boosters they're referring to
are up here at the top,
global hubs serving India and the world,
efficiency engines for India's competitiveness,
and new ways of living and working.
And as it says in the title,
each of these will contribute an amount to the economy
that totals $2.5 trillion by 2030.
Mekko charts can be confusing to some people,
but really they're just column charts
that show an additional dimension of data.
In this case they show the breakdown
of each of these three growth boosters.
So you can almost think of them just like stacked columns
but then they can also show the total size
of each booster as well,
which is represented by the width of each column.
So for example, for this first column
you can get a sense for what portion of the total
globally competitive manufacturing hubs
makes up of this specific growth booster.
But then you also get a second dimension
which is the width of the column,
which represents the size of the booster, $990 billion.
So by combining these two dimensions together
and this is the important part,
you get a sense for how much each opportunity
makes up of the total chart.
It's clearly the biggest opportunity
by area in the entire chart,
so it's expected to contribute most to the total.
So in other words, the message is that
through these three growth boosting areas,
India can contribute $2.5 trillion to the economy.
And the chart shows very clearly
how each business opportunity contributes to that total.
This is really the main lesson
to be learned from this chart,
which is the importance of choosing the right chart
to fit the message.
McKinsey wants to be able to show
how much each individual opportunity
contributes to the total.
But they also wanna be able to distinguish
between the three different growth boosters
and compare the size of each opportunity against each other.
And the Mekko chart allows them to do this very well.
Let's say they try to use a bar chart instead.
They'd be able to see
how the opportunities contributed relative to each other,
but how much they contributed to the total
is not quite as clear.
Or they could have used a pie chart
this would have shown the size of each opportunity
relative to the total,
but comparing them against each other
would have been a lot more difficult.
Chart number four is the most unique chart in the report,
but in some ways it's also the most simple.
The title says India has only about one-half to two-thirds
as many midsize and large firms
compared to other outperformer emerging economies
per $1 trillion of GDP.
So really it's just referring to these two graphics,
where it shows there are 1.6 times as many large firms
and 1.9 times as many mid-size firms.
I don't really have a lot of commentary to add on this one
except to say that I like
that it's even a visualization at all.
It'd be really tempting here
to just leave this in a table
because it has so few numbers.
But instead they've decided to make it easy on our brains
and give us a visual sense for how much greater
other economies are in each category.
Arguably, a bar chart or a column chart
could have worked better here
because it would have been easier
to compare the total number of firms within each category,
but the circles are a little more interesting to look at.
Plus it helps that they've included these numbers
on the circles themselves
which helps me understand the relative scale more quickly.
One quick word of caution,
if you're going to use circles like this
to show the relative size of something,
make sure that you're scaling them
based on the total area of the circle,
not on the radius of the circle.
It's a mistake I see way too often.
All right, now onto our fifth and final chart.
And this one looks a bit confusing at first glance.
The title says, just 2% of India's state-owned enterprises
have the potential to yield as much as 80%
of total value from privatization.
Again here, I wanna emphasize the importance
of having the takeaway clearly spelled out in the title.
It's especially important for a chart like this
with lots of numbers and lines
because it helps you know what to look for.
So let's break it down.
Really you can split the chart into two different parts.
The part represented by this top line of data,
and the part represented by the bottom line.
At the very top it says,
India has about 1,900 state-owned enterprises,
of which, and then this first line says,
about 400 could be privatized,
which you can see in this blue section where it says 21%,
that's the 400.
Then it says those have a book value of $140 billion
which is represented by this entire column.
And they also generate $540 billion in potential proceeds,
again, represented by this column.
And they generate these proceeds across 10 sectors
as shown in the last column.
Then they take the same approach with this bottom line.
2% of India's state-owned enterprises
shown in this small box at the bottom,
constitute 80% of book value in 2018,
which you can see represented by this blue section,
yielding 80% of potential proceeds.
Again, shown in blue on this column,
across six sectors which are listed here.
So the whole point of the chart is to show you
what kind of impact comes from just 2%
of all state-owned enterprises
that would potentially be privatized.
And of course you can see this reflected in the title.
Now this probably wouldn't be my first choice for a chart
or at least I would try to simplify it a little bit
because I think it's kind of confusing.
But McKinsey has done a few things here
that are really really smart.
The first is that they've drawn attention
to the important parts of the chart.
Notice how the numbers are extra big,
and the blue section of the chart
represents what comes from that 2%
of state-owned enterprises that could potentially privatize.
But then the second thing they've done
is they've set up the chart
in a way that guides the audience along
and really helps them understand the key takeaway.
That's what they're doing here
with these top and bottom lines.
And not only that but they've spelled it out
in a way that just kind of flows from one point to the next
kind of like a story.
It's almost like the chart is secondary to the text.
It's just there to give you a little visual boost
as you read the data points.
And this really connects
with the major takeaway from this report,
which is that charts are there to help your audience
more clearly understand your main message.
They're not there to make you look smart,
they're not there to show off your design skills.
They're there to make your information more readable.
So anything you can do to accomplish that goal,
whether it's including a descriptive title,
providing full footnotes and sources,
choosing the correct chart
or drawing attention to the important parts of your chart,
is gonna help your audience and in turn
gonna help you and your organization.
All right, that's gonna do it for this video.
If you or your team are interested
in learning how to build high quality,
consulting style slides and charts,
with clear and insightful takeaways,
make sure you check out our courses
at theanalystacademy.com.
Thanks for watching.
(soft music)