Many businesses use decision trees to break down potential decisions in a logical, structured format. By using the tree, anyone can take a problem or decision and break down the possibilities. You can also use the format to analyze each possible outcome, assess the risk and reward of a decision, and determine the best course of action.

Understanding the Tree

Before starting a decision tree, there are three parts you must understand. The condition is the problem or issue that you're trying to solve. This is where the tree begins. The possible variables for the problem are called the branches. Branches are usually lines that start from the condition. Finally, the possible solutions to the issue are at the end of each branch. Those are called actions. Knowing that, you can build any decision tree based on your personal preference.

How To Start

Take a problem that you're trying to solve and mark it down on a piece of paper. Leave yourself plenty of room to build your tree. From the problem, draw branches for each of the possible actions. Now consider each of those actions. If there are more questions to answer, build new branches from those actions--as many as necessary. As you do this, consider each action and determine if even more branches are necessary. More branches create more possibilities.

Use Notes

To keep track of what your lines mean, you'll need to note them in some way. One way is to create a box at the end of each line with the information. Another way is to jot down the information alongside the branch. For instance, if you're trying to determine if you want beer or wine to go with your dinner, you would write "beer" along one line and "wine" along the other, both of which are coming out of the problem.

Growing The Tree

There is no limit to the size of the decision tree. It is only limited by the simplicity or the complexity of the problem that must be solved. You can put as many actions as you like at the end of each branch. You can also build the tree vertically or horizontally, whichever works better for you.

Evaluation

Once the tree is complete, you should have all of the information in front of you to take an action that will solve the condition. The tree gives you the opportunity to scrutinize all of your options, analyze consequences of each action, assign values to outcomes and predict if a goal is attainable.