Glossary
What is a driver tree?
Driver tree: A driver tree breaks a business metric into the measurable drivers that produce it, linked by arithmetic so each number can be recalculated from the ones below it.
A driver tree shows how a headline metric is built. The metric sits at the top or on the left. Below it are the factors that multiply, add or divide to produce it. Because every link is arithmetic, anyone can recompute a number from the ones below it, and anyone can see which driver to move to change the result.
A worked example
A regional parcel carrier reports quarterly revenue of €48.6m. As a driver tree:
- Revenue: €48.6m = shipments × revenue per shipment
- Shipments: 4.05m = active customers × shipments per customer
- Active customers: 2,700
- Shipments per customer: 1,500
- Revenue per shipment: €12.00 = base price + surcharges
- Base price: €10.20
- Surcharges: €1.80
- Shipments: 4.05m = active customers × shipments per customer
The tree closes: 2,700 × 1,500 = 4.05m shipments, €10.20 + €1.80 = €12.00, and 4.05m × €12.00 = €48.6m. Now it answers questions. One extra cent per shipment is worth €40,500 a quarter. One hundred more active customers are worth 100 × 1,500 × €12.00 = €1.8m.
How to build a driver tree
- Start with one metric the audience already tracks.
- Split it with a formula, not a list of ideas. Multiply when drivers scale each other (volume × price). Add when parts make up a total (regions, products).
- Use your reporting definitions, so each number matches its source.
- Stop at drivers that someone owns and can change. "Market conditions" is not a driver you can act on.
- Label each box with its current value and a comparison: the target or the change against last period.
Driver tree or issue tree?
An issue tree is a tree of questions. A driver tree is a tree of numbers. Draw the issue tree first when you do not yet know what to measure, then switch to a driver tree to put numbers on the branches.
Driver trees on slides
The tree is the analysis; the slide usually shows its result. A common form is a bridge, also called a waterfall chart, in which each bar is one driver of the change. The same logic works as a bridge for EBITDA. On the slide below EBITDA moves from €4.8m to €6.9m: 4.8 + 1.6 + 0.7 + 1.3 − 0.6 − 0.9 = 6.9.
Typical mistakes
- Drivers that overlap, so one effect is counted twice.
- A formula that does not close: the boxes below do not produce the box above.
- Stopping at drivers nobody controls.
- A tree with more levels than the audience can follow.
- Numbers without a comparison. A value of 4.05m shipments says little without last quarter or a target; see KPI.
FAQ
Frequently asked questions
What is the difference between a driver tree and an issue tree?
A driver tree is made of numbers: every box is a formula of the boxes below it, so you can calculate with it. An issue tree is made of questions and stays qualitative. Start with the issue tree when you do not know yet what to measure.
How many levels should a driver tree have?
Go down until you reach drivers that someone owns and can change, usually three or four levels. A deeper tree adds precision nobody can act on.
Are driver trees only for revenue and profit?
No. Any metric that is built from other metrics works: delivery time, customer churn, cash conversion or energy cost per unit. The test is that the boxes below produce the box above.
How do I show a driver tree in a presentation?
Show the tree itself on one slide if the audience needs to see how the metric is built. More often you show its result: a bridge chart that splits the change in the headline metric into its drivers, one bar per driver.
Keep reading
Charts and numbers
- GuideChoosing the right chart
Which chart fits which message: bars to compare, lines for trends, a waterfall for bridges. Includes when a pie works, when a table beats a chart, common traps.
- Free toolSlide contrast checker
Check the WCAG 2.2 contrast ratio of two slide colors. See AA and AAA results for text and charts, a live slide preview and the nearest colors that pass.
- GlossaryGantt chart
A Gantt chart shows a project's tasks as bars on a time axis, with milestones as markers. Definition, how to read it and how to simplify it for a slide.
- GlossaryChartjunk
Chartjunk is decoration in a chart that does not help the reader understand the data, a term from Edward Tufte. Examples, the erase test and what research says.
- GlossaryHarvey balls
Harvey balls are round pictograms that show how far a criterion is met, from empty to full in quarter steps. Meaning, symbols and how to use them on slides.
- GlossaryTwo-by-two matrix
A two-by-two matrix sorts items into four quadrants using two criteria. Definition, well-known examples such as the Eisenhower matrix, and how to build one.
Where to go next
- GuidePyramid principle
The pyramid principle by Barbara Minto: give the answer first, group the support and order it. With a worked example and an outline you can reuse for a deck.
- TemplateStrategy presentation
A strategy presentation template with 9 slides: ambition, starting point, where to play, three moves, revenue path, what stops, roadmap and the decisions.
- ProductGenerate the deck as an editable .pptx
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