fbpx

Storytelling with Data: How McKinsey creates clear and insightful charts

by | Apr 18, 2021

Charts are not meant to make you look smart, they’re meant to help your audience better understand your message.

McKinsey sits firmly atop the consulting firm food chain, where it enjoys the benefits and drawbacks of being the world’s most recognized and prestigious seller of PowerPoint presentations. 

As the world’s oldest *strategy* consulting firm, they have decades worth of institutional knowledge and resources that help them deliver world-class insights to their clients. On top of that, they’re able to draw from a pool of talent that includes some of the smartest and most accomplished students, academics, and industry professionals in the world.

With this sweet (and expensive) concoction of resources and talent, McKinsey is positioned to create some of the world’s most insightful reports and presentations. As a result, they are often looked to as a north star for slide-based communication.

That’s not to say that they’re perfect. I’ve seen mistakes aplenty on McKinsey’s materials over the years. But more often than not their presentations and reports are remarkably clear, insightful, and engaging. In particular, they’ve mastered the art of data visualization. Using a set of basic tools and techniques, they’re able to represent data in a way that has attracted high-paying clients in major cities around the world for nearly 100 years.  

In this post I’m going to review and analyze five charts from a McKinsey report titled, “India’s turning point: An economic agenda to spur growth and jobs” (source). I’ll cover what each of these charts means, and what makes them so clear and effective. Plus I’ll also highlight key takeaways from each chart that you can apply to your own chart building and slide creation. 

Chart 1: Waterfall Chart

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”. 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 the column on the left, to the 2030 employment targets, both the lower and upper targets (shown on the right).

McKinsey slide

There’s a whole lot to like about this chart, starting with the chart title. Rather than just giving me a topic for the chart (e.g. Total Employment Goals), it tells me exactly what the takeaway is. This is the number one mistake I see people make when it comes to charts. For a chart like this you don’t want to just say what information is in the chart, you want to say very clearly what you want your audience to takeaway 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 going to understand what you’re saying – which is really your ultimate goal.

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 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 the important text, 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.

McKinsey slide title

And then lastly notice how they’ve included extensive footnotes and sources down at the bottom. This is something you’ll see with most 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.

Chart 2: Multiple Column Charts

This one says, “India’s GDP could expand at 8.5 percent per year, with a sharp rise in jobs and sustained productivity; the low-growth path implies negligible job creation”. And again the descriptive title is helpful in knowing what I should takeaway from the chart. There’s a lot of numbers on the chart, and this tells me the main one they’re talking about (circled in the picture).

McKinsey Multiple Column Charts

The chart type they’ve decided to go with is a basic column chart, except they’ve split it into three separate charts, which is an excellent choice. Sometimes I see people with clustered column charts that have 5 or 6 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 the two on the end, which are clearly the most important to the story. They’ve kept the columns on the left black so they don’t stick out quite as much, and the one in the middle is light grey so it sticks out even less.

Then once again there’s a great attention to detail with exhaustive sources and footnotes down at the bottom.

Chart 3: Mekko Chart

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.”

The three growth boosters they’re referring to are up at the top: Global hubs serving India and the world, Efficiency engines for India’s competitiveness, and New ways of living and working. As it says in the title, each of these will contribute an amount to the economy that totals $2.5 trillion by 2030.

McKinsey Mekko charts

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 the three growth boosters listed at the top of the chart. 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.

In the black column for example, you can get a sense for what portion of the top box (Globally competitive manufacturing hubs) makes up of the total column. But then you also get a second dimension, which is the width of the column, which represents the size of the booster ($990 billion, which is listed at the bottom).

By combining these two dimensions together, and this is the important part, you can get a sense for how much each category 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.

McKinsey Mekko charts

So in other words, the message is that through the 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 growth.

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 want to be able to distinguish between the three different growth boosters and compare the size of the categories against each other. And a Mekko chart allows them to do this very well.

Let’s say they tried to use a bar chart instead. They would 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.

McKinsey Bar charts

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.

McKinsey pie charts

With a Mekko chart they could do both: compare categories within each column, and compare them to the total. 

Chart 4: Bubble Chart?

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.” It somewhat resembles a bubble chart, but it’s not exactly a chart (more of just a simple visualization). 

McKinsey bubble charts

I don’t really have a whole lot of commentary to add with this one, except to say that I like that it’s even a visualization at all. It would be really tempting 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 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 are scaling them based on the total area of the circle, not on the radius of the circle. It’s a mistake I see far too often.

Chart 5: Stacked Column Chart

Alright now on to our fifth and final chart, which is a stacked column chart with some modifications. The title says, “Just 2 percent of India’s state-owned enterprises have the potential to yield as much as 80 percent of total value from privatization”. Again here I want to 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.

McKinsey Stacked Column Chart

Really you can split the chart into two different parts: the part represented by the 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 the first line below it explains how 400 of the state-owned enterprises could represent $140 billion in book value, yielding $540 billion in proceeds, across 10 different sectors. 

The tricky part with this line is understanding how it’s represented visually in the chart itself. In the leftmost column the 400 potentially privatized SOEs are represented by the blue section that says “21%”. But then the rest of the highlights in the top line are represented by the entire columns themselves. For example, $140 billion is supposed to be the total of the column below it (the blue section is for the bottom line). 

Then they take the same approach with the bottom line. “2% of India’s state-owned enterprises”, shown in the small box at the bottom, constitute “80% of book value in 2018”, which you can see represented by the blue section of the column, yielding 80% of potential proceeds, again shown in blue, across 6 sectors. 

McKinsey Stacked Column Chart

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.

This probably wouldn’t be my first choice for a chart. Or at the very 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.

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 with the top and bottom lines. And not only that, but they’ve spelled it out in a way that 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.

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 going to help your audience, and in turn help you and your organization.

Source Information:
McKinsey, August 2020
“India’s turning point: An economic agenda to spur growth and jobs”
https://www.mckinsey.com/featured-insights/india/indias-turning-point-an-economic-agenda-to-spur-growth-and-jobs

You can watch a video version of this article on YouTube.

Free 5-Day Course + PDF

Learn how top consulting firms around the world build world-class presentations for their clients in our free 5-day email course!

Plus get a FREE copy of our Top 50 PowerPoint Shortcuts for Consultants cheat sheet in your first email (sent immediately).

Share This