FlowProofsGlossary
Driver tree
A driver tree breaks one result, such as profit, into the inputs that produce it, joined by arithmetic, so you can see which input moved the result.
The result sits at one end of the tree. The drivers branch off it: the numbers that, multiplied or added together, give the result exactly. Not things that influence it, but things that make it up.
Because every branch is arithmetic, a change at the top can always be traced to a change somewhere below. That is what makes a driver tree useful in a meeting: the question "why did profit fall?" has an answer you can point at.
Worked example: a shop's revenue
A shop sold 4,000 units at an average price of $50. Revenue is price times units: $50 × 4,000 = $200,000.
Next month the price rises to $53 and units fall to 3,800. Revenue is now $201,400. Without the tree you see a $1,400 rise. With it you see the two drivers pulling in opposite directions: the higher price added about $11,700, and the lost units took about $10,300 back.
Try it in FlowProofs: play with a driver tree in the live demo
Related terms
- Variance analysis: Variance analysis compares an actual number with a reference (the budget, last month, last year) and splits the difference into the drivers that caused it.
- What-if analysis: What-if analysis changes one or more inputs of a model to see what happens to the result, before anything is changed in real life.
- Bridge chart (waterfall chart): A bridge chart, also called a waterfall chart, starts at one total, adds and subtracts a floating bar for each cause, and ends at the new total.