Decision trees help people identify the pros and cons of business choices.
A decision tree is a visual tool used to help business professionals weigh the pros, cons and various approaches to major tasks or decisions. A decision tree can help executives break down the elements of a decision-making process and consider input from a range of participants. This type of approach is highly effective when used in brainstorming sessions and strategic planning meetings.
An individual decision tree should be used for each decision that must be made. Create the core or “trunk” for the tree using a whiteboard or large paper flipchart that is easy to write on and is visible to all participants. In the center of the core, briefly summarize the decision to be made. For example, if you are thinking about diversifying your product offerings, you would write “New product development?” in the core.
From the core of your tree, draw two main “branches” or lines that represent the pros and cons of the decision. Using the example of a new product introduction, pros might include increased earnings, entry into new markets and portfolio diversification. Cons could include financial risk and the necessary investment in new machinery and employees.
Continue to expand your decision tree by drawing potential “outcome” lines from each of your individual pros and cons. Following the same example, outcomes for increased earnings could include business stability, increased market share and the ability to expand the size of the business. Outcomes for financial risk could include business debt, job loss and company dissolution.
The more complex the decision to be made, the more significant and complex the decision tree can become. You may opt to continue adding different line categories that allow you to go into greater detail about the processes to be considered as part of the decision-making approach. You could include financial projections, steps to be taken during each stage of the process, timelines for implementation and allocation of staff and resources.
When the decision tree is fully branched out, weigh the outcomes of the two main “pro” and “con” branches. This will help you talk through the information that is on the tree in front of you. Ideally, when the tree is complete, the group should have a firm idea of the best way to proceed. A note-taker may opt to supplement the tree with a written summary of the findings for further consideration and analysis.
McQuerrey, Lisa. "Simple Example of a Decision Tree." Small Business - Chron.com, http://smallbusiness.chron.com/simple-example-decision-tree-58613.html. Accessed 25 April 2019.