Vareto Finance Glossary

Value Driver Tree


A value driver tree defines the relationship between a company's financials and its major value driver areas through a graphical representation. It helps management easily identify the items that have the most impact on the company's overall value. It also allows them to easily track how any changes in those items can impact the company's value. It can also be used to identify a company's potential risks and opportunities.


A value driver tree can give an organization an improved understanding and encourage better alignmentby ensuring teams focus on the right areas.

Why it matters

While creating and using a value driver tree often takes time and effort, it can be one of the most effective business tools to get a holistic understanding of business functioning. This can further help in establishing effective product teams that are driven by value creation and not just delivery. Value driver trees can also ensure effective and channelized communication to help companies build better alignment across departments and stakeholders.