What do you do when you have an important decision to make? Draw up a list of pros and cons? Flip a coin? Do you postpone hoping someone else will end up making the decision for you?
- When should you use a decision matrix (and when not to)?
- What exactly is a decision matrix?
- How to create a decision matrix: 1) Clarify the problem
- How to create a decision matrix: 2) Assess decision factors
- How to create a decision matrix: 3) Add options
- How to create a decision matrix: 4) Give a weight to each decision factor
- How to create a decision matrix: 5) Add scores for each option
- How to create a decision matrix: 6) Choose the highest score
- Decision matrix: Conclusions
Certainly there are many ways to make choices, for example we have already discussed collaborative decision-making process, but when it comes to taking into account objectively all the important factors that are part of the decision, there is a method that prevails above all else: the decision matrix.
Many people are intimidated when it comes to applying the decision matrix. However, I can assure you that, once you understand the mechanisms and fundamentals, its use is actually simpler than you imagine.
When should you use a decision matrix (and when not to)?
A decision matrix can help not only to make complex decisions, but also to prioritize activities, solve problems and build reasoning to defend a decision already made.
We had already spoken about the criteria for prioritizing projects, but here we will talk about an ideal decision-making tool if we are discussing between some comparable solutions that each have multiple quantitative criteria.
The decision matrix process is best used when deciding something that is not related to an emotion, because it is a rational tool.
It is therefore preferable to use a decision matrix when it is necessary to evaluate a situation from a logical point of view and to have sufficient comparable variables to make a weighted analysis.
The matrix can be used alone, but also in combination with other decision-making tools and techniques.
What exactly is a decision matrix?
A decision matrix is a chart that helps to show a clear winner among the different options.
To create the matrix, you need to determine which criteria are important in making the final decision and then assign a weight or value to each criterion.
This allows you to prioritize factors that matter most and, as a result, to identify mathematically which of the options is the best one.
Let’s see in detail what are the key steps to use a decision matrix in the best possible way.
How to create a decision matrix: 1) Clarify the problem
The first step is to insert the decision to be made or question in the decision box. This statement must be specific and clear for everyone.
Let’s have a practical example and imagine, for example, that you have to make the choice between reconditioning an old machine or buying a new one. Formulate the correct question and put it in the decision box!
How to create a decision matrix: 2) Assess decision factors
In this step you will need to make a brainstorming about the selection criteria for the decision to be taken.
In short, the question must be answered: what are the factors that will help to make the right decision? Or, what are the critical success factors that need to be met?
In the example chosen in the previous step, the factors that would have a great impact on the decision are:
- How quickly can we get a return on our original investment? Obviously, the quicker, the better!
- Cash flow – How will each option affect cash flow at the bank?
- Timing – how much time “is lost” in each scenario?
How to create a decision matrix: 3) Add options
Now it is time to compare the different options available. These are, in other words, the solutions to the problems.
In our example we have two options:
- Revise the old car
- Buy a new car
How to create a decision matrix: 4) Give a weight to each decision factor
It is evident that in any decision, some factors will be more important than others, and for this reason, you need to create a pondered score.
Each individual decision factor is then given a score from 1 to 5 (1 is the minimum importance, 5 is the maximum).
It is absolutely important to try not to give each decision factor the same weight, otherwise the whole analysis cannot be carried out.
If you have difficulty in finding different scores, one solution is to extend the scale from 1 to 10, in order to assess each factor even more thoroughly.
How to create a decision matrix: 5) Add scores for each option
The same process that was done previously is now being done in regard to each option.
Again, you score from 1 to 5 and, if that is not enough, you can use a scale from 1 to 10.
How to create a decision matrix: 6) Choose the highest score
Once the scores have been established based on all factors and for each of the available options, the next step is to select the highest score as the winner.
Decision matrix: Conclusions
Last but not least, the decision matrix makes it possible to measure options against what is important and, above all, to do so objectively and pragmatically.
This process eliminates the complexity of analysis and decisions are much easier to make when simplifying things.
In other words, the decision matrix allows you to focus on what really matters.
It is also important to keep in mind that a decision matrix is not the only decision-making tool available. For example, sometimes even a simple list of pros and cons will work.
However, for a decision where you have more options and different characteristics to consider, a decision matrix can clarify (objectively and mathematically) the best choice.
This approach can be used not only in project management, but also in everyday life to make informed decisions, while avoiding the typical prejudices and complications in which almost all of us are guilty of falling from time to time.