The Decision Tree Diagram is a flowchart that lets you consider possible outcomes of a situation.

The tree represents the base of the problem, while each branch means each choice you can go for. And depending on how you develop the decision tree, you can scale it up to build a cause-and-effect tree diagram that will showcase the outcomes of going in one direction.

The Decision Tree Diagram works with leaf nodes. This represents a possible outcome that leads to an additional leaf node, getting the treelike shape.

Each outcome gives individuals or organizations actions they can prepare against a node, which will drive discussions about costs, probabilities, and benefits.

Decision makers then double-check the possible consequences for potential paths and choose the safest one. This process takes hours or days depending on the alternatives, the risk you identify, and your company's resources.

The Decision Tree diagram helps you identify issues that otherwise bring more complex problems to your business. The decision-making process becomes far easier by exploring possible paths throughout more branches and selecting the most likely outcomes with fewer repercussions.

This flowchart allows you to compare data and present a solution by logic and probability. It is also a great tool to fill gaps in your business model.

Businesses and organizations – no matter the size – that want to visualize possibilities will find Decision Tree diagrams helpful. Not only because you can outline and evaluate issues but also because you can begin to trace an answer to the problem.

You can also present it to stakeholders and the project team to consider risks and generate brainstorming.

Decision Trees are one of the easiest charts you can understand that manage data. Yet, you should know the components you will find. They are:

• Root Node: The root node is the principal component of creating a decision tree diagram. This is the central question or theme of where all branches come from.
• Leaf Node: The leaf nodes are the potential outcomes of your decisions. There can be as many as your decision tree template allows you to. And depending on the structure, the leaf node can be a chance, a probability, or an end node.
• Branch: They connect nodes that lead to the best decision.

When you explore flowcharts to analyze or improve the decision-making process, you will notice that they all have benefits and drawbacks.

The Decision Tree Diagram is not an exception.

You can craft your own Decision Tree Diagram in less than six steps.

Here’s how you do it:

1. Decide which one will be the central question or Root Node. This will be the beginning of your tree and will condition the choices you see as you go deep into the branches.

2. Include branches to align the root with possible options. Draw a node and connect it with a branch. Repeat if necessary.

3. Include “leaves” to point out a direction. Label them with text boxes to help you know the tree’s direction. 

4. Keep creating branches and adding leaves as needed to define the details of the main question. Customize them with the proper labeling, or choose one color to identify them.

5. Evaluate your options and decide the branch you want to proceed with. This means you’ll establish an action plan based on your decision.

6. Check your decision with stakeholders. You make a decision tree to define a solution to a problem. You must then consult with the people involved and discuss if it’s the right approach.

Once you take a path, you can start developing the strategy. Here’s a decision tree example of how this diagram would be applied to a business process:

Let’s say that a tech company is looking to start a marketing campaign to reach a better audience. They’ve had low conversion rates for the past two months, and they want to solve this issue before they lose money with their marketing efforts.

What can they do to solve this?

The business analyst or PM can develop a Decision Tree to establish a line of thought about the correct marketing strategy.

The employee must look at the entire scenery, make branches to prepare options, and then go with the one that fits the most.

If, after this, you think it’s hard to create a Decision Tree format, then you can use templates.

These will help you save time, style customization, and effort. Here you can find some templates that will indeed work for you.

Template #1

To create a Decision Tree template, you need a reliable productivity tool to draw and share it with your team.

Microsoft Office is a program suite used by businesses and individuals to create different types of charts, from decision tree diagrams to other more complex tables for business purposes.

With a Microsoft Office 2021 suite license, you can share graphics and use the Microsoft 365 interface to work alongside your teammates in a real-time environment. This way, you can prepare accurate Decision Trees and receive instant feedback.

You can create these flowcharts using PowerPoint or Excel. And if you use decision trees often, you can prepare a template to save time in customizations.

Identifying issues that could result in danger for your business is easy. What’s difficult is preparing a plan that will fix the current and future problems related to it.

That’s why the Decision Tree Diagram is a great management tool. Its features allow you to quickly develop a line of thought and discover the root cause of a problem. They are also strong resources when preparing business presentations. 

This means you can use them in meetings to show potential solutions or outcomes to an audience and set up a common ground for further discussion.

Still, Decision Trees also have further complexity issues when applied in extension, which is why we recommend you use them only for specific topics.