Using Value Driver Tree (VDT) for decision making in Controlling

I wanted to share with you a powerful method to visualize the impacts of the different inputs (for example, revenue, costs…) on the final output (for example margin, ROI…).

In his deep dive post “Value Driver Modelling“, Reuben Kearney lists the different uses of a Value Driver Tree (VDT) and offers a template to build your own VDT.

  • identify where the biggest constraints are in an organisation’s ability to create value.
  • be used in conjunction with sensitivity analysis to show which areas are at greatest risk for failing to deliver value.
  • value a range of different investment options to find the optimal combination for creating value.
  • provide transparency at the individual employee level to see how they contribute to the creation of value.
  • allow you to benchmark operations that were previously too different to compare through traditional benchmarking methodologies.

Some Software provide a tool to create a dynamic visualization of the VDT of a company. Here is an example from SAP :

And here is a concrete example with a comparison between 2 different scenarios:

If you want to know more, consult the deep dive from Reuben Kearney:
https://reubenkearney.com/category/value-driver-modelling/

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