Decision Matrix: What It Is and How to Use It

                                   
Imagine that your boss has put you in charge of taking on a new outsourced IT supplier. You've already identified several different suppliers, and you now need to decide which one to use.
You could decide to go with the low-cost option. But you don't want to make your decision on cost alone – factors such as contract length, underlying technology, and service levels need to be taken into consideration. So how can you make sure you make the best decision, while taking all of these different factors into account?
Decision Matrix Analysis is a useful technique to use for making a decision. It's particularly powerful where you have a number of good alternatives to choose from, and many different factors to take into account. This makes it a great technique to use in almost any important decision where there isn't a clear and obvious preferred option.
Being able to use Decision Matrix Analysis means that you can take decisions confidently and rationally, at a time when other people might be struggling to make a decision.

How to Use the Tool

Decision Matrix Analysis works by getting you to list your options as rows on a table, and the factors you need consider as columns. You then score each option/factor combination, weight this score by the relative importance of the factor, and add these scores up to give an overall score for each option.
While this sounds complex, this technique is actually quite easy to use. Here's a step-by-step guide:

Step 1

List all of your options as the row labels on the table, and list the factors that you need to consider as the column headings. For example, if you were buying a new laptop, factors to consider might be cost, dimensions, and hard disk size.

Step 2

Next, work your way down the columns of your table, scoring each option for each of the factors in your decision. Score each option from 0 (poor) to 5 (very good). Note that you do not have to have a different score for each option – if none of them are good for a particular factor in your decision, then all options should score 0.

Step 3

The next step is to work out the relative importance of the factors in your decision. Show these as numbers from, say, 0 to 5, where 0 means that the factor is absolutely unimportant in the final decision, and 5 means that it is very important. (It's perfectly acceptable to have factors with the same importance.)

Step 4

Now multiply each of your scores from step 2 by the values for relative importance of the factor that you calculated in step 3. This will give you weighted scores for each option/factor combination.

Step 5

Finally, add up these weighted scores for each of your options. The option that scores the highest wins!

Tip:

If your intuition tells you that the top scoring option isn’t the best one, then reflect on the scores and weightings that you’ve applied. This may be a sign that certain factors are more important to you than you initially thought.
Also, if an option scores very poorly for a factor, decide whether this rules it out altogether

Culled by Demian

One of the greatest skills a leader can have is the ability to make effective business decisions. Business leaders make dozens of decisions every day that influence the success of the company while also having an impact on employees, customers or the marketplace. Developing such a skill requires a combination of education, experience and intuition. - See more at: http://www.businessnewsdaily.com/71-how-to-make-effective-business-decisions.html#sthash.EyutYucL.dpuf

One of the greatest skills a leader can have is the ability to make effective business decisions. Business leaders make dozens of decisions every day that influence the success of the company while also having an impact on employees, customers or the marketplace. Developing such a skill requires a combination of education, experience and intuition.
There are many things that influence how an individual makes decisions. They include emotions, perceived personal and professional risks and rewards, preparation through experience or education, deadlines, stress and a host of others. It is important to mitigate the irrational and embrace the rational.

What goes into a business decision?

Whether decision-makers realize it or not, myriad factors must be taken into consideration before coming to a conclusion. Whether the decision-making skill is an innate gut feeling or one learned over the years, the bottom line is that being an effective decision-maker requires practice. Gayle Abbott, the president of Strategic Alignment Partners human resources consulting firm, recommends a four-point strategy to deploy whenever you must act:

• Identify the problem.
• Analyze the possible solutions.
• Evaluate the possibilities that are likely to bring you closer to your goal.
• Make the decision.

Abbott told Business News Daily that following this decision-making process does not always come naturally. Those who’ve mastered this approach usually have years of practice under their belts.
"When you see a successful person, you do not see what happened behind the scenes," Abbott said. "All of them have made mistakes on their way up, but they move on. They have struggled through failures — bad decisions — before finding a solution."
She also noted that it is important to listen to your intuition. The best leaders do this, and then gather all the facts and data to either support or reject that gut feeling, Abbott said.
- See more at: http://www.businessnewsdaily.com/71-how-to-make-effective-business-decisions.html#sthash.EyutYucL.dpuf