Decision Making Tool: The Decision Tree
Effective decision making is vital for organizations and individuals alike (Howard, 2001). Good decision making is an essential skill but one that often does not come easy. Decision making involves identifying situations where decisions are necessary, recognizing values "implicit" within a situation, identifying alternative courses of action, securing factual information, predicting possible consequences and making decisions based on those potential consequences (Howard, 2002).
A visual representation of the alternatives available is a tool that has been widely used to help facilitate decision making (Howard, 2002). This graphic or visual representation is often referred to as a 'decision tree' and has been used in organizations and educational facilities for years to help individuals formulate the "pros and cons of alternate decisions," create a decision making grid and evaluate the best alternatives for a particularly situation (Howard, 220).
Decision Tress are primary tools that enable decision between multiple courses of action (Mind Tool, 2005). A decision tree provides a graphical reference an individual can use to create a balanced picture of the risks associated with choices and the different rewards associated with making a decision one way or another (Mind Tool, 2005). To create a decision tree, you must first start with a decision, represented by a small square on a piece of paper. From here you can extend lines toward the right of the box that include solutions for the decision at hand. At the end of each line results are listed; when the results of a decision aren't certain a small circles is placed representing another decision that needs to be made (Mind Tool, 2005). This graphical representation can be extended to portray as many lines and potential or plausible solutions and future questions as reasonable.
Evaluating the graphical...
Here the individual can look at the alternatives available and decide which holds the best value or most potential for a positive outcome (Mind Tool, 2005). You can use decision trees to calculate the value uncertain outcomes have to offer, including the value for example of new products or services (Mind Tool, 205). Placing numbers to ideas and concepts will help create valuation and make projecting the best course of action easier. As part of this process the individual using the decision tree should also consider writing the cost of each choice available along decisions lines and also the benefits (Mind Tool, 2005).
The key points of a decision tree including (1) clearly defining a problem, (2) exploring all possible outcomes and challenging those outcomes, (3) analyzing the full consequences of any decisions taken, (4) providing a clear framework from which one can quantify the potential outcomes in any given situation and (5) enabling decision making that is based on formal analysis and bet guessing (Mind Tool, 2005; Buckley & Dudley, 2004).
Companies large and small have used decision trees to make strategic business decisions. Management must often deal with uncomfortable decisions where the alternatives are quite clear but the outcomes are often clouded (Buckley & Dudley, 2004). Fortunately decision tree analysis can help in this situation. A simply graphical diagram consisting of "nodes and branches" a decision tree enables a decision maker to select one alternative from many by providing visual representation of the benefits, costs and problems associated with varying outcomes (Buckley & Dudley, 2004). Using a tree, managers should have a goal in mind of obtaining the probabilities of what the chances are each consequence will occur (Buckley & Dudley, 2004). Often when using a decision tree individuals have…
