How the Decision Tree Can Help Make Better Business and Government Decisions

The world is complex and as this complexity increases businesses must make choices between multiple options. These options can either improve a company's position or it can limit their future option. In many ways, the business of business is decision making. Decisions over resources, strategies, time, location, products and more all work out to success or failure. When competitors win its because they were able to make better decisions within the market in which they function when compared to other businesses. To avoid this problem executives (decision makers) would want to consider the benefits of a decision making tree to help round out their business "hunches". 

It is important to note that decision making trees can be simple or they can be complex. There is a solid description in the article In What Ways Can Decision Trees Be Used for Business Decisions?.  The article provides a fairly simple explanation of how they might work. Typically they might be more complex for larger businesses where more money is involved and less complex for smaller businesses where choices are localized and risks are limited (Small business has lots of risks but one wouldn't put together a 150 page study for a corner store. The tree would be very simple.)

 We can see when we look at these trees that they are applied in business to help companies make decisions that are the most likely to end in benefit to the organization. They also can help companies determine options and what resources they have available. When done well it can also project potential revenue and/or loss (We must always keep in mind potential because even the best projections can be wrong and derailed by unexpected phenomenon.) 

How is a Decision Tree Used: Decision trees are used in science, business, investing, psychological-sociological fields, government and much more. They can even be used for your personal decision making to help you think beyond current pressures and environmental factors to better see how one choice leads to the opening and closing of multiple doors. You are balancing the use of logic, research, and common sense to come up with well thought out risks of choice.

You can review a study to see how a decision trees function in the field of psychiatry (I probably should have found a business example but this came up first in my search and you can see how this works in detailed research.). Research the Shanghai Archives of Psychiatry entitled 'Decision tree methods: applications for classification and prediction' discusses multiple decision tree models:

Variable Selection: Select most relevant input variables.

Importance of Variables: Select the most important variables.

Handling Missing Values: Dealing with missing information.

Data Collection: Using past data to predict future actions.

Data Manipulation: How to create logically consistent categories.

Pure Michigan Example:

I completed a very generic version in Pure Michigan Funding Decision.  This isn't the best example as I didn't go into great depth, and there is more I could have done, however it does provide a simplified practical view. In order to make basic decisions you will often have to study the situation to grasp the potential outcomes. Even situation there are more outcomes than listed but these were the political-practical outcomes that were most likely in my mind to occur. Thinking "Out of the Box" would likely lead to other conclusions that would not be accustomed within traditional government practices. Thus, decision trees can sometimes lead to whole new ways of looking at things (and even post sequences of outcomes.) Creativity mixed with scientific logic can often be a dynamite combination that challenges root assumptions. Its good for science, companies, and governments.

Concluding Remarks:

The decision tree opens up the possibility of seeing arguments form a logical standpoint where different choices can be quantified (i.e. to invest or not to invest in say a place like Escanaba or Delta County MI). The amount of data one includes is entirely up to them. Typically in business there may be time, cost, ROI, resources (financial, human capital, etc..), etc... involved in the decision making process and would be included in an analysis of the overall benefits taking one course of action over another. 

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Magee, J. (From original publish 1964) Decision Trees for Decision Making Harvard Business Review. Retrieved 03/16/2022 from https://hbr.org/1964/07/decision-trees-for-decision-making

Yan-yan, S & Lu, Y. (2015). Decision tree methods: applications for classification and prediction. Shanghai Archives of Psychiatry, 27 (2). Retrieved 03-18-2022. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4466856/