Using the Decision Matrix for Better Decisions

Making Better Decisions – Using the Decision Matrix

by  Andrew Cooke, Growth & Profit Solutions

Decisions are made in a subjective and varied way, creating poor decisions and contributing to poor outcomes.  See how a simple tool can help you make better decisions – whether at business or home.

When making business decision we often find that we are reinventing the decision-process every time, and consistently allowing subjectivity to sway our decisions.  This is especially true in team or group environments where a person’s perceived position, authority or their ability to dominate the conversation can mean that their personal viewpoint carries disproportionate weight and effect.

So how can we reduce this subjectivity, yet maintain the debate and dialogue necessary to make a robust decision.  There is a simple, yet effective, tool – the Decision Matrix.

What is the Decision Matrix?

The Decision Matrix is a tool which reduces the subjectivity in decision-making by creating a series of selection filters.  The real value of the Decision Matrix lies in the conversation and discussion it engenders in the group when working through the process.  As such, it is this conversation which opens up the dialogue, creating a richer set of options to choose from, and a clear and consistent process when selecting with which option(s) to proceed.  In doing this the Decision Matrix enables the group or team to identify, agree on, weight and importantly take ownership of a set of factors that are seen by all as influencing that decision,

How the Decision Matrix Works – Step by Step

Having determined what the decision to be made is about you:

Step 1: Generate a list of the issues/options/alternatives that require a decision to be made.

As a group, having already determined what the decision is that is to be made, create a list of all the relevant issues, options or alternatives.

Step 2: Get your group or team to brainstorm the critical factors

This are the critical factors that would influence the selection of the issues/options/alternatives identified in Step 1.

Notes:

  • Criteria are both personal and business-focused, as such criteria have aspects that are both logical and emotional;
  • Don’t have too many criteria – this weakens the process and the choices made are more likely to be made on outlying factors – we would suggest no more than 10.

Step 3: Create Weightings for the Criteria/Factors

Having chosen the selection Criteria/Factors, you now need to weigh them individually to jointly total 100.  By doing this you are making it clear that not all criteria are equal – some have greater significance than others.  The more important the criteria the higher the weighting or score. The discussion in this area between the group or team members helps them to understand each other’s perspective, and to create a commonly agreed and shared understanding of how to evaluate the alternatives, and why in that way.

Step 3: Input the information from the above steps by:

  • Across the top of the chart create columns for each issue/option/alternative listed.  Label  the first column as “Weightings” and the second column as the “Do Nothing” choice.  For all subsequent columns put in each of the issues/options/alternatives.
  • Down the side of the chart create rows for each Criteria/Factor.
  • For each factor put the relevant weighting in its “Weighting” column.
  • For the “Do Nothing” column put a score in each factor at 50% of the weighting for the factor.  For example, if a factor had a weighting of 10 then the “Do Nothing” column for that factor would be scored as 5.  The total of all the factors for the “Do Nothing” column should add up to 50.

Step 4: Score Each Factor for All the Issues/Options/Alternatives Listed Across the Top

  • It is important to focus on one factor/criteria at a time and, in doing so, complete the grid row by row.
  • When scoring a factor note that you cannot score more than that factor’s weighting – for example, if a factor has a weighting of 12 then it cannot score 13 or more, the highest score it can be given is 12 – but it can always score less
  • When scoring start with the first factor, work your way across the row, and then repeat this with the next factor. This helps you to compare that factor against all the alternatives.

Step 5: Total the Scores for Each Issue/Option/Alternative

  • This will give you a score for each and the means by which to prioritise them, with the highest score being your first choice.

Notes for when using the Decision Matrix

Remember, this is a tool.  You may not agree with the result that you generate with this, in that case open up the discussion as to why and get others’ input.  Simply because this tool says that one alternative is your top priority does not mean that it should be so.

Decision Matrix – Worked Example:

In the example below the question is:

“Which of my main customers should I concentrate on to grow my business?”

  1. I have identified my 5 clients (Step 1).
  2. I have identified, with my group, the key criteria (Step 2) by which to evaluate my criteria.
  3. I have completed the decision matrix scores (Steps 3 – 5).
Decision Matrix

From this we can see the following:

  • The customer I should concentrate on growing my business is Customer 2.
  • However, Customer 4 is a close 2nd – being only 3 points behind.

Further Uses of the Decision Matrix

I may want to use this to decide that I want to focus only on customers who score more than 70 points.  Again, Customer 2 is the only one to achieve this (with 71 points).

However, I can use the Decision Matrix to ask the question of Customer 4, which is marginal with a score of 68 – “Which factors for Customer 4 can I increase their score so that the total is above 70?”.

For example, if you could raise their score on Prompt Payment to an 8 then Customer 4 would then score 70 points and would be focused on as a result.

This then raises the question of “How do I improve Customer 4’s ability to pay promptly?”  This could involve, for example, getting the customer to pre-pay future orders or to reduce their arrears with your company.

As such the Decision Matrix not only helps you to prioritise, but to drive actions to help you realise the outcomes you are looking for.

However, making a good decision does not mean that you will get a good outcome.  To learn more on this read “Leadership & Decision-Making”.

How will you use this tool?  What decisions can this help you with?

Share your ideas, insights and experience.  Share the knowledge, share the wealth!

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Click here to find out more about Andrew Cooke and Growth & Profit Solutions.

How to Become More Objective

How to build your ability to be objective.

A common mistake made by managers is to equate what they think with what they know. But there is a world of difference, let me explain.

At the core of this is being able to differentiate between the objective and the subjective perspective of the matter to hand. Take the phrase, “This happened and it is bad”.  This consists of two impressions. The first – “This happened” – is objective; the second – “it is bad” – is subjective.

The difference between the two is what you see (objective) and what you perceive (subjective). The former is simply is what is there, the latter is how you interpret it. The former is strong in helping you address the problems or opportunities, the latter is weak.

As managers and leaders we need first to understand the reality of the situation as it is. Not as we think it might be. You cannot get to grips with what you need to do, or how you are going to deal with a situation, if you cannot understand it properly. So be objective, this requires you to remove the “you” – the subjective part – from the process of consideration. This is not hard to do – just think of a time when you have given advice to a friend or colleague. When you do this the problem is clear and the solution is obvious as we are not encumbered with all the ‘baggage’ that our friend or colleague has when looking at it.  It is case of being able to see the wood for the trees, and only then do you start to think about possible solutions.

Four Steps for Being Objective

There are four steps you can take and use with any problem or opportunity you need to consider or evaluate. These are:

1. Look at the problem/opportunity and pretend it is not happening to you. Ask yourself, “If this was happening to my friend, what would I tell him/her?”

2. Assume the problem/opportunity is not important.  This makes it easier for you to know what to do.

3. Think of the ways that someone (not you) could solve this problem/opportunity.  This is about gaining clarity (e.g. “What would Richard Branson do?”)

4. Repeat the process.  Doing this will help you to develop your “objectivity muscle” and to help you see things for what they are.

Doing this on a regular basis helps you to develop your objective vision and make it strong, rather than depending on your myopic subjective vision.

So what are you waiting for to get started?  Try this for yourself. Don’t forget, if you find this hard, then you can always phone a friend and ask them – they will be objective for you!

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Share your thoughts and ideas here, or email me at andrew.cooke@business-gps.com.au

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Click here to find out more about Andrew Cooke and Growth & Profit Solutions.