A Bayesian network is a visual representation of Bayes rule – a statistical principle focused on conditional probability. Essentially, Bayesian networks enable understanding of the probability of an outcome given a number of factors that impact the outcome.
Incorporating Bayesian networks into strategic decision making has several benefits:
- Outputs are quantitative, enabling highly defendable strategic choices
- Predictive nature of Bayesian networks enables forward-looking analysis
- Predictive methodology is based on mathematical formalism, as opposed to “black-box” algorithms
- One intuitive, easy-to-read structure that accounts for as many inputs as necessary – compared to Excel-based models that can span multiple tabs, and whose complexity can inhibit use