What is a Decision Tree and How to Make One [Templates + Examples]

By Rachel Cravit, Aug 13, 2019

What is a decision tree and how to make one [examples]

Question: when was the last time you really agonized over a decision? I’m not talking about an Uber Eats level decision, but a nerve-wracking, hair-pulling decision that could have a massive impact on your business.

What did you do? Decide to sleep on it? Sound off to your colleagues? Call your mom? Trust your gut and hope for the best? Or did you make a cringe-y pro/con list like Ross Geller on Friends?

Unfortunately, none of these methods enable you to really examine your decisions in a methodical way, like determining potential outcomes, assessing various risks and ultimately predicting your chances for success.

That’s where the decision tree comes in—a handy diagram to improve your decision making abilities and help prevent undesirable outcomes.

In this step-by-step little guide, we’ll explain what a decision tree is and how you can visualize your decision-making process effectively using one.

Example of a decision tree template by Venngage

 

But first thing’s first…

What is a decision tree?

A decision tree is a specific type of flow chart used to visualize the decision making process by mapping out different courses of action, as well as their potential outcomes.

Decision trees typically consist of three different elements:

Root Node:

This top-level node represents the ultimate objective, or big decision you’re trying to make.

Branches:

Branches, which stem from the root, represent different options—or courses of action—that are available when making a particular decision. They are most commonly indicated with an arrow line and often include associated costs, as well as the likelihood to occur.

Leaf Node:

The leaf nodes—which are attached at the end of the branches—represent possible outcomes for each action. There are typically two types of leaf nodes: square leaf nodes, which indicate another decision to be made, and circle leaf nodes, which indicate a chance event or unknown outcome.

Decision tree example

When formed together, these elements loosely resemble a tree, which is where the diagram gets its name.

Decision tree example template by Venngage


 

Grandmother Willow

Although you can certainly make a case for Grandmother Willow’s age old advice to “let your spirits guide you”, sometimes, a more formalized and calculated approach is necessary. This is why decision trees are so effective.

Why should you make a decision tree?

Now that you know exactly what a decision tree is, it’s time to consider why this methodology is so effective. Decision trees have several perks:

Decision trees are flexible

Decision trees are non-linear, which means there’s a lot more flexibility to explore, plan and predict several possible outcomes to your decisions, regardless of when they actually occur.

For example, if you’re an HR professional, you can choose decision trees to help employees determine their ideal growth path based on skills, interests and traits, rather than timeline. You can also help assess whether or not a particular team member is ready to manage other people.

Decision tree example—HR template by Venngage

 

Using a tool like Venngage’s drag-and-drop decision tree maker makes it easy to go back and edit your decision tree as new possibilities are explored.

HOT TIP: With Venngage’s decision tree maker, you can use multiple colors to represent different types of decisions and possible outcomes.

Decision trees effectively communicates complex processes

Decision trees visually demonstrate cause-and-effect relationships, providing a simplified view of a potentially complicated process. Decision trees are also straightforward and easy to understand, even if you’ve never created one before.

Simple decision tree example

[SOURCE]

HOT TIP: If you’d like to present your decision tree to others who may be involved in the process, a professionally designed template can go a long way.

Venngage offers a selection of decision tree templates to choose from, and we’re always adding more to our templates library.

Decision tree example templates by Venngage

Decision trees are focused on probability and data, not emotions and bias

Although it can certainly be helpful to consult with others when making an important decision, relying too much on the opinions of your colleagues, friends or family can be risky. For starters, they may not have the entire picture. Their advice to you may also be influenced by their own personal biases, rather than concrete facts or probability.

Decision trees, on the contrary, provide a balanced view of the decision making process, while calculating both risk and reward.

If you’re a real estate agent, decision trees could make a great addition to your real estate marketing efforts, especially since your clients are likely evaluating some major decisions.

A decision tree to help someone determine whether they should rent or buy, for example, would be a welcomed piece of content on your blog. You could also create a custom decision tree to help your clients determine which property is best for them.

Decision tree example - real estate


Decision trees clarify choices, risks, objectives and gains

One big advantage of decision trees is their predictive framework, which enables you to map out different possibilities and ultimately determine which course of action has the highest likelihood of success. This, in turn, helps to safeguard your decisions against unnecessary risks or undesirable outcomes.

Decision trees also prompt a more creative approach to the decision making process. Caroline Forsey writes in HubSpot:

By visualizing different paths you might take, you might find a course of action you hadn’t considered before, or decide to merge paths to optimize your results.

Visualizing your decision making process can also alleviate uncertainties and help you clarify your position.

Decision tree example - Friends


Decision trees enable you to flesh out your ideas fully before sinking in valuable time and resources

Decision trees force you to apply a methodical and strategic approach to your decisions, rather than going with your gut or acting on impulse.

Arrested Development

Decision trees can also fit in nicely with your growth strategy, since they enable you to quickly validate ideas for experiments.

How do you create a decision tree?

1. Start with your overarching objective/“big decision” at the top (root)

The overarching objective or decision you’re trying to make should be identified at the very top of your decision tree. This is the “root” of the entire diagram.

Hot Tip: With Venngage, you can make a decision tree by quickly adding in different shapes and lines without having to draw them from scratch.

Lines and shapes in Venngage's decision tree maker

2. Draw your arrows

Draw arrow lines for every possible course of action, stemming from the root. Include any costs associated with each action, as well as the likelihood for success.

3. Attach leaf nodes at the end of your branches

What are the results of each course of action? If it’s another decision to be made, draw a square leaf node. If the outcome is uncertain, draw a circular leaf node.

4. Determine the odds of success of each decision point

When creating your decision tree, it’s important to do research, so you can accurately predict the likelihood for success. This research may involve examining industry data or assessing previous projects.

5. Evaluate risk vs reward

Calculating the expected value of each decision in tree helps you minimize risk and increase the likelihood of reaching a favorable outcome.

Take a look at this decision tree example by HubSpot, which evaluates whether to invest in a Facebook ad or Instagram sponsorship:

Decision tree example

The decision tree is simple but includes all the information needed to effectively evaluate each option in this particular marketing campaign:

  • The cost of a paid ad campaign on Facebook vs an Instagram sponsorship
  • The predicted success and failure rates of both
  • The expected value of both

Here’s the exact formula HubSpot developed to determine the value of each decision:

(Predicted Success Rate * Potential Amount of Money Earned) + (Potential Chance of Failure Rate * Amount of Money Lost) = Expected Value

Decision tree example yellow template by Venngage


Decision tree best practices

1. Keep it simple

Don’t overload your decision tree with text—otherwise it will be cluttered and difficult to understand. Use clear, concise language to label your decision points.

2. Use data to predict the outcomes

When you’re making your decision tree, you’re going to have to do some guesswork. It’s fine to be uncertain—no one expects you to bust out a crystal ball. That being said, your decision tree will be much more useful if it considers actual data when determining possible outcomes.

3. Use a professionally designed decision tree template

Using a professionally designed template can make your decision tree more appealing to clients, team members and stakeholders in your project. Venngage offers a Brand Kit feature, which makes it easy to incorporate your logo, colors and typography into your decision tree design.

Brand kit by Venngage

Back to you

Decision trees can dramatically increase your decision making capabilities. The process of identifying your big decision (“root”), possible courses of action (“branches”) and potential outcomes (“leafs”)—as well as evaluating the risks, rewards and likelihood of success—will leave you with a birds eye view of the decision making process.

You can get started by simply grabbing a pen and paper, or better yet, using an effective tool like Venngage to make a diagram.