Value Driver Tree

What Is Value Driver Tree?

When you present a visual model to define metrics as a function/formula of other parameters – all of which are broken down further, people understand the impact of changes to various key parameters on the overall outcome. This presentation is effective due to its tree-like visual analysis and because of the way formulas are defined and broken down into individual drivers.

A Value Driver Tree is a visual representation of business logic on how a set of drivers can link and build up the metrics or formulas. Drivers are variables that impact the metric value, whereas metrics are the business outcomes that organizations intend to measure.

Value drivers are set up with each branch to serve the purpose of defining one metric, which in turn is used as input to build another branch, thus building up the complete tree. Metrics/formulas are built using basic mathematical functions on drivers as well as advanced functions for complex scenarios.

Defining rules in a value driver is much simpler than defining formulas in Excel, but the output presentation provides transparent and clear understanding to any user with minimal technical knowledge.

Once you understand the mathematical relationship between these drivers and metrics, it is easier to understand how variations in one or more drivers can impact the overall outcome.

Why Use Value Driver Tree?

• It presents the business logic flow in a user-intuitive way, like a mind map.

• Performs simple or complex logic where dependent calculations are taken care of in sequence.

• It's easier and quicker to capture business requirements by users with no technical help.

• Can handle complicated formulas with advanced functions.