When you looked at each sample chart in the last section, you
probably wondered exactly what type of chart you were seeing. It
looked something like a column chart, but not like any you’d find
in the chart libraries of Excel™, Freelance™, or any of the other
popular computer graphics packages. The chart may have looked
strange, but I’ll bet you didn’t have a lot of trouble understanding
it. It’s called a waterfall chart, and McKinsey-ites use it all the time,
although it’s rarely found anywhere else.
When I asked former McKinsey-ites what lessons they learned
about charts, one thing they all mentioned was waterfall charts.
They loved them, and sometimes used them in their own work,
but seldom saw them elsewhere. In my modest ambition to make
the world a better place, I herewith offer the secret of the waterfall
chart.
The waterfall chart is an excellent method of illustrating how
you get from number A to number B. The charts in Figures 11-1
and 11-2 depict a simplified income statement, starting with sales
on the left and ending with net income on the right, and show the
various items that lead from one to the other. The starting point
(sales in the example) is always a column that begins at zero. Positive
items such as interest income are depicted as columns that
start at the high point of the preceding column and reach upward.
Negative items such as operating expenses are columns that start at
the high point of the preceding column and extend downward. The
 
When you looked at each sample chart in the last section, you
probably wondered exactly what type of chart you were seeing. It
looked something like a column chart, but not like any you’d find
in the chart libraries of Excel™, Freelance™, or any of the other
popular computer graphics packages. The chart may have looked
strange, but I’ll bet you didn’t have a lot of trouble understanding
it. It’s called a waterfall chart, and McKinsey-ites use it all the time,
although it’s rarely found anywhere else.
When I asked former McKinsey-ites what lessons they learned
about charts, one thing they all mentioned was waterfall charts.
They loved them, and sometimes used them in their own work,
but seldom saw them elsewhere. In my modest ambition to make
the world a better place, I herewith offer the secret of the waterfall
chart.
The waterfall chart is an excellent method of illustrating how
you get from number A to number B. The charts in Figures 11-1
and 11-2 depict a simplified income statement, starting with sales
on the left and ending with net income on the right, and show the
various items that lead from one to the other. The starting point
(sales in the example) is always a column that begins at zero. Positive
items such as interest income are depicted as columns that
start at the high point of the preceding column and reach upward.
Negative items such as operating expenses are columns that start at
the high point of the preceding column and extend downward. The
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