Did you know that roughly two-thirds of people are visual thinkers? We generally respond best to information presented using visuals that can simply illustrate the relationships between objects, differences in measures, and changes over time or other dimensions. More importantly, humans, when presented a large set of unstructured information, instinctively create narratives that piece together various data into a "story." Right or wrong, this is how humans deal with complexity of information.
These are important things for the Decision Lens Analyst to remember. The Analyst can play a highly productive role in facilitating stakeholders to reach a decision quickly by making efficient use of Decision Lens' reporting capabilities.
This does not mean that the Decision Lens Analyst should bombard stakeholders with visualizations produced in prioritization and allocation. When it comes to visuals, less is almost always more. We offer some simple guidelines for using Decision Lens visualizations to assist stakeholders without overwhelming them. While this article gives some general guidelines, other articles provide more detailed guidelines for specific use cases.
What’s in / What’s Out (WIWO)
For any type of budget allocation decision, a good (quick) starting point is the WIWO visualization to establish a “cut line” for the portfolio with recommended funding amounts. A simple screen shot works well. For larger portfolios, use alternative categories to segment the portfolio. This basic visualization should be part of any decision documentation.
Note that the WIWO visualization does not give any direct clues as to why projects are included or excluded from the funding recommendation. It largely just gives the "what", though the juxtaposition of the Priority Value score and request amount can give some indication of relative Value-ROI performance.
In discussing this visualization, the Analyst might ask stakeholders if they see any "surprises" in the outcome. This can provide a segue to discussing the outcome in greater detail using other visualizations--the "why." In general, stakeholders should not spend a lot of time on WIWO.
This visualization offers a unique perspective of the portfolio that stakeholders should readily appreciate. It helps explain the “why” behind funding recommendations under a given strategy by giving clear insights into the relative benefits and costs of each portfolio alternative, and can help stakeholders focus on a subset of trade off decisions where their judgment is most influential.
The Analyst (and entire Core Team) should be able to explain this visualization for all stakeholders in simple terms. The key points include:
- This visualization gives the benefit - cost view of the portfolio by charting the Priority Value score and Cost for each alternative.
- The light blue bar represents relative Priority Value. The dark blue bar represents cost. Note that each Priority Value and cost measure is indexed to the maximum in the portfolio (Decision Lens always expresses these relationships in relative terms).
- The orange trend line tracks the benefit-cost ratio, or "bang for the buck", of each project. A solid dot signifies funding. A hollow dot signifies not funded.
In illustrating a Fund by Value ROI strategy, be sure to display projects in order of Value-ROI (this is the default setting). This gives the "bang for buck" ranking of the portfolio, and in general it shows how projects are funded in order of decreasing Value-ROI score. A few typical observations about this visualization:
- Most portfolios will show on the left a handful of "superstar" projects that excel in terms of "bang for the buck." This is very typical (as illustrated in the example below).
- Then the orange trend line (VROI score) will show a series of "drops" and "plateaus" as you move left to right, depending on the number of alternatives. This is typical.
- At some point, the allocation starts to run out of funding, and you will see this quite clearly in the VROI trend as the dots go from solid to hollow.
- Some projects might be skipped over for funding, with lower VROI projects funded. This is the result of the Optimizer spending as much of the available budget as possible to maximize the Portfolio Value score. Think of the Optimizer putting together a jigsaw puzzle where pieces are interchangeable.
- The "margin" of the decision--and where stakeholders might focus their attention--is where funding starts to run out. At that point, the Analyst can (typically) identify a subset of projects that exhibit similar VROI scores, but differing levels of cost and value.
- The Analyst can focus on this subset of projects using the zoom feature in the Value-ROI Chart (see graphic below), and then go into Trade-off Analysis to get a very in-depth comparison of the relative sources of value among the projects at the margin of the decision.
In a Fund by Priority Value strategy, the Analyst should display projects in order of Priority Value score (illustrated below). This visualization can illustrate some implications of this funding strategy, mainly the trade-off of overall value for efficiency. A few key analysis points about this visualization:
- The VROI trendline in this visualization does not illustrate a smooth curve as the "bang for buck" performance of each project varies when sorted by benefit score (Priority Value score).
- The highest value projects will be funded until funding runs out. Costs will likely vary greatly, driving variations in VROI Index.
- Overall Portfolio Value score will almost certainly be lower than the same portfolio allocated using the Fund by Value ROI strategy.
The Bubble Chart offers the most customizable visualization in Decision Lens, and thus can be more useful in addressing special visualization challenges. Bubble Charts can be powerful because they portray three dimensions on a two-dimensional space, enabling more sophisticated stories to be told.
Here are some effective uses of Bubble Charts in Decision Lens
- A More Powerful Value-ROI Chart: Perhaps the best use of the Bubble Chart is to replace the Value-ROI chart to illustrate the relationship between project Priority Value, Cost, VROI Index (benefit-cost ration) and funding status. This is especially true for larger portfolios.
- Peer Group Analysis: A Bubble Chart that uses bubble colors to illustrate alternative categories can be very helpful in analyzing peer groups of alternatives, especially in larger portfolios.
- Metric Visualization: Unlike the Value ROI Chart, the Bubble Chart enables the visualization of metrics. Portfolios that informed more by quantitative data can thus be analyzed by stakeholders using metrics that are familiar to them, enabling a more practical and familiar view of portfolio performance.
Digging Deeper Into Portfolios
In most cases, the stakeholders will be able to conclude their budget decision relying primarily on two visualizations: WIWO and Value ROI Chart, with perhaps some help using Bubble Charts. In some cases, stakeholders might want to dig deeper into specific trade offs between projects in order to decide between competing uses of funding. In this case, Trade Off Analysis and Compare Scenario can be very helpful.