Decisions matter especially when it involves risk and requires a rational and a logical approach. This decision tool can help to increase clarity and objectivity while reducing decision fatigue and subjectivity in decisions.
This tool is called a decision matrix , is a series of values in columns and rows that allows you to visually compare possible solutions by weighing their variables based on importance. The beauty of this decision matrix is the ability to customize with the differential aspects of decisions that may vary from industry to industry.
How do you get started on a decision matrix?
1. Create the matrix table
The first step is to create your matrix. As noted earlier, the table will be organized into rows of options and
columns of criteria. Fill out the rows with the various options you are considering. For this example, your options might be:
Purchase new equipment
Hire experts to solve problems
Reduce headcount
Invest in digital technology
2. Next, you will identify the criteria you will use to evaluate them.
Brainstorm criteria
With your table and options outlined, you can now brainstorm what factors or criteria you will use. Common criteria for business decisions include:
Cost
Return on investment
Buy-in (from team or customers)
Impact on other systems
Needed resources (time, money, people)
Ease of implementation
Value to customer
Potential problems or negative consequences
Urgency of the problem
If applicable, involve customers or other stakeholders to help you narrow the list of evaluative criteria to only the most important.As you deliberate, identify which attributes the final decision must have. This will help you eliminate choices early on that don’t fit your requirements.
3. Evaluate and rank criteria
Now you will evaluate your decision making criteria against the options. In other words, you will score how well each criterion is met under each option. There are a few ways to do this:
Method 1: Rate criteria on a scale (typically 1-3 or 1-5). The higher the number, the better that criterion matches the option.
Method 2: Rank-order the options across the criteria. For each criterion, rank your options based on how well they each meet the requirement (1 being low or least desirable).
Method 3: Use the Pugh matrix method and compare your options against a baseline. Your baseline can either be one of the options under consideration or it can be the existing solution your team or company is using and planning to replace. For each criterion, rate the option against the baseline as worse (-1), same (0), or better (+1).To apply the Pugh matrix method to the restaurant example, let’s say the rankings break down something like this:
4. Weigh the criteria
Although you have your options ranked by criteria, not all criteria will have the same level of priority. For example, if you have a strict budget constraint, cost may be more important than other criteria on the table. To measure this difference in priority, you will need to weigh the requirements from least to most important. It’s easiest to use the same scale as you did to rank the options.
5. Score your options
Finally, it’s time to score your options to identify which decision to make. To calculate each option’s final score, simply multiply each option’s rank by each criterion’s weight. For instance, if you had Cost as a criterion weighted at 5 and Option A had a rank of 2 for that criterion, you would multiply 5 times 2 to get 10. You repeat this process for each option across every criterion. Once each box has a score, you tally up each row for a final rank of each option.