A Decision Tree: Why It's Important When Making Decisions In Your Business
Major Points of the Article
A decision tree is very useful when making major decisions.
It can show you probable futures for you to then decide what course of action you want to take.
Always remember to keep growing your business and if you are short on time, then outsource this work to an expert.
Throughout the day, you as the leader make many decisions, but these are small and don't appear to have a significant impact on the overall business.
So how do you make the big decisions?
With a decision tree...
What is a decision tree?
A decision tree is very useful when strategizing your company. It can help you make an educated choice when choosing between possible pathways to take as you can outline probable futures. Then among these futures, you can build a roadmap toward the probable future that has the level of risk and financial outcome you want.
Most importantly, the crucial elements of a decision tree are the choice points, which are where you will have two options leading to two different outcomes, which can then lead to more choice points, and so on.
Essentially, a decision tree does not give the answer to your problem, rather it helps you to determine which alternative at any particular choice point will yield the greatest return you are looking for... As well as reaching your desired probable future.
Decision tree example
A decision tree looks much like a flow chart reading from left (the decision) to right (probable futures), often containing many choice points along the way and typically with a financial outcome as the probable future.
Below is a typical example of what one might look like and as you can see there are many probable futures based on which decisions you make (credit HBR).
How can you use a decision tree?
Obviously, you can use it to make very large decisions in your business. In particular, which growth strategy to take such as shall we expand the product line, shall we move operations into another state, and so on... In fact, we have outlined 77 growth strategies for you to consider. If you haven't already, get a copy of our downloadable and gain access to the web series by clicking here.
Note: the key thing when making your own decision trees, is to have 1 tree per major decision. This will enable you to make easier comparisons between your options and keep your trees simple.
What if you are too busy?
A key element in business is that you should be always looking at ways to grow your revenue and your business. Which means making and acting on these major decisions. However, if you don't have time, don't let your business suffer - outsource it. That is where Paradelta Strategy can help, as they create short and long-term plans, to then assist you with its implementation. As a plus, we usually find up to 8% in savings that can be used in other areas to grow your business.
In fact, over the years, Paradelta Strategy has helped businesses across Australia to grow and expand, nationally and internationally, and grow significantly in profits. To get assistance with your business, simply email us at firstname.lastname@example.org or schedule a no-obligation discovery call here.