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

By Rachel Cravit, Aug 03, 2021

What is a Decision Tree and How to Make One Blog Header

If you’ve ever wondered how to examine your decisions in a methodical way that helps you determine potential outcomes, assess various risks and ultimately predict your chances for success, wonder no more.

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

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

 

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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.

Take a look at this decision tree example. There are a few key sections that help the reader get to the final decision.

Example of a decision tree template by Venngage

 

Decision trees typically consist of three different elements:

Root Node:

The 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. This gradient decision tree example shows you how it works.

Decision tree example template by Venngage


 

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.

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

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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:

1. 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. Use this decision tree example for HR inspiration.

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.

2. Decision trees effectively communicate 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

Design tip: If you’d like to present your decision tree to others who may be involved in the process, a professionally designed Smart 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

 

3. 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 welcome piece of content on a real estate blog. You could also create a custom decision tree to help your clients determine which property is best for them, like the example below.

Decision tree example - real estate


4. 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, like in this decision tree example below.

COVID-19 Testing Flow Chart Template

5. 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.

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

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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.

The decision tree example below includes numerous branches and leaves for each decision. This makes the process easier for the staff to understand and follow.

Simple Customer Ordering Process Flowchart Template


 

With Venngage for Business, you can access automatic template resizing, as well as 24/7 priority support, so your decision tree reflects your brand purpose.

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

Sales Prioritization Pipeline Flow Chart Template

 

You now know what a decision tree is and how to make one. You can get started by grabbing a pen and paper, or better yet, using an effective tool like Venngage to make a diagram.

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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.

A simple action plan flow chart like the decision tree example below will make it easier to come to the right decisions using data.

Simple Action Plan Flow Chart Template

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.

Add your website when prompted and our editor will automatically extract your logo, colors, and fonts so you can apply them across your decision trees and other designs.

Autobrand

Along with the My Brand Kit feature, Venngage for Business offers brands a variety of convenient solutions including live team collaboration.

 

Make better business decisions by using decision trees

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.