Six Key Decision Making Techniques
Do you struggle to make decisions from time to time? It’s nothing to be ashamed of – everyone gets to a point where they are stuck on an issue and just can’t seem to make a choice. This is especially true for a business owner or manager who is forced to make many different decisions every single day. The task of trying to make the right call in all situations can be overwhelming, especially when the decisions have serious consequences.
For assistance in making some of your important business decisions, you may want to turn to one of the six decision making techniques we have listed below. Each of these techniques has a lot to offer in the right situation, so it will be up to you to learn how to use them so you can deploy them at just the right time. Let’s take a closer look at each of these six useful options.
The Kepner-Tregoe Matrix
Given the importance of decisions in business, it only makes sense to use tools like the Kepner-Tregoe Matrix to assist in the process. When you use this matrix to guide your thinking when facing a particularly important decision, you will be able to frame the question at hand in a number of important ways. Rather than just ‘going with your gut’, this tool helps you to sort out all of the important factors before making your final choice. No tool can guarantee that you will make the right decision every time – no one makes the right choice every time – but being familiar with tools such as this is a big step in the right direction.
To use the Kepner-Tregoe Matrix, you are going to work through a four-step process. We have quickly outlined the four steps below.
- Situational Analysis. This is the high level of the decision, where you weigh everything that is involved in the choice which needs to be made. You aren’t going to get into the specifics at this point. Rather, you’ll be thinking of the decision in broad terms, trying to decide what you want to accomplish and what success will look like.
- Problem Analysis. The details of the decision start to come into focus during this step. Deep analysis of a problem is a step that is often skipped, but that would be a mistake if you want to be confident in the final decision you reach.
- Decision Analysis. Here you are going to actually make your choice. Present yourself – or your decision making group – with the various options on the table at this time. Not only should the potential benefits of each decision be weighed, but the potential risks need to be considered as well.
- Potential Problem Analysis. With your decision made, you are now going to imagine that you have put the decision into action – before you have actually done so. Do you see any potential problems coming up as a result of this choice? What could you do to mitigate those issues?
When important business decisions need to be made in your company, the Kepner-Tregoe Matrix is a great tool to have on hand.
Decision Matrix Analysis
As you are probably aware, the best way to make an important decision is to work through the various options at hand one by one, weighing each based on a number of factors before coming to a conclusion. That style of decision making is commonly used in business, and it is represented in the Decision Matrix Analysis model. Rather than using a pre-designed matrix – which may or may not be appropriate for your needs – you are going to create your own matrix when using this model. That way, the matrix will be completely customized to your needs, and it will be certain to help you land on a successful conclusion. The process might sound like a lot of work upfront, but it is actually relatively quick and easy to perform. Once you have a little bit of practice in building this kind of matrix, you will likely return to it time and time again in order to make your big decisions.
To create your decision making matrix, you’ll need to collect the various options in play for the decision. You need to be open-minded at first, keeping all options on the table – even if you don’t think they will be the winner in the end. List the options that you have for this decision down the left side of your matrix, and list the influencing factors across the top. Within the matrix, rate each combination of option and factor on a scale of 1-5. Once you have filled in each square on the matrix, add up the scores and see which option comes out on top. You might not necessarily go with the highest scoring option if there are other issues to consider, but this matrix will be a great way to get started listing your options in order of viability.
The Analytic Hierarchy Process
The Analytic Hierarchy Process applies a mathematic approach to any decision that needs to be made. By using math at its core, this model is able to help you make an unbiased, logical decision based completely on the factors that have been determined to be important in the selection process. What this system lacks in simplicity it does make up in accuracy and conviction – the numbers don’t lie, and the best available option will be identified when AHP is used properly.
The details of the math used to complete this process are beyond the scope of this article, but you will find that this is a particularly powerful decision making machine when you are faced with a complex issue. By starting the process by identifying the goal for the decision, you can then use the mathematical process proposed in this system to make an analytical choice that will take your organization in the right direction.
Pareto Analysis is based on the famous Pareto Principle, which states that 20% of the work you do will generate 80% of the results you are looking for. In other words, there is not a direct 1:1 relationship between the work you do and the results you get. If you pick out the right work to do, you can achieve most of your desired results without doing anywhere close to all of the work. Obviously the 20% – 80% relationship is not an exact measurement, but it does highlight the lopsided nature of the connection between work and results.
This relates to decision making because each day you have to decide how time is going to be spent – either your own time, or the time of the members of your team. Efficiency directly correlates to the bottom line, as the way you spend time each day is going to dictate how productive the organization is as a whole. To use Pareto Analysis effectively, you are going to follow the steps below.
- Find your problems. Make a complete list of the problems you would like to solve in your organization.
- Match up root causes. For each of those problems, do your best to identify and highlight a root cause.
- Give the problems a score. Not all problems are created equal – rate the problems you would like to solve, with the highest scores going to the most important issues.
- Create groups. Take some time to group your problems into like categories so you can attempt to solve more than one problem at the same time.
- Score the groups. The problem groups which have the highest total score are those which should be addressed first. This simple process will help you to make sure your time and attention are being spent on problems which are affecting the business in the most significant way.
The Futures Wheel
This is a tool which was created in the early ‘70s and remains very much relevant today. Before you make your next big decision, consider putting together a Futures Wheel to decide if you are heading in the right direction. The whole reason to think about how the future is going to be affected is the fact that you are considering a change of some kind. Maybe this is a change that is being forced upon you by market factors or other conditions, or maybe it is a change that you are initiating as a way to improve your organization.
Using this model starts by writing a proposed change in the middle of a sheet of paper – this will become the hub of your wheel. From there, you are going to move out to write down lower-level changes that would need to occur in order to achieve the main change that is the focus on this process. The idea here is to move into deeper and deeper levels of change, one step at a time. You are building a wheel gradually, with the spokes getter longer as you think of more changes that could be made to support the main change in the middle.
Force Field Analysis
In business, it is often the simple tools that are the most effective. That is certainly true in this case, as Force Field Analysis has been around for many decades and yet it remains a powerful tool to this day. When you are faced with making a decision that is going to impact the way your business moves forward, you might want to consider preparing a Force Field Analysis in order to determine whether or not you should continue with your plan. Doing this type of analysis is a great way to see both sides of a potential change, which is key in deciding how effective the change is going to be. Mistakes are made when only one side of a decision is considered, but that won’t happen when Force Field Analysis is used properly.
To get started using a Force Field Analysis, the first thing you are going to do is write down your plan in the center of a sheet of paper. You should have clearly defined this plan before even getting started, as having an ambiguous plan from the beginning is going to make it extremely difficult – if not impossible – to make an accurate assessment of the forces at play. Any business decision making tool is only going to be as good as its inputs, so take the time to make a clear and well-defined plan before getting started on this process
Now that the plan is in place, you are going to create your Force Field Analysis by forming a simple chart with two columns – one with items working in favor of the plan, and one with items working against. You are going to list down on this chart all of the relevant ‘forces’ at play here, both for and against your idea. Once you have completed the lists, you are going to assign a value to each of these forces, based on its power. Add up all of those scores to get the final tally in the ‘for’ and ‘against’ columns. If you find that the ‘for’ column receives a significantly higher score, it may be wise to pursue this plan. If the ‘against’ column wins out, however, you might want to table the concept for now.
Each of the decision making techniques we have included in this article has the potential to lead your business in the right direction. Of course, you will have to know when to use the right one at the right time, and when you need to use one at all. For instance, you probably don’t need to use a complicated technique for a decision that you make several times a day – doing so would be overwhelming and unnecessary. Rather, these kinds of techniques should be saved for those choices which are going to have a meaningful and long-lasting impact on your business. When those types of decisions roll around, pick out your favorite of these valuable techniques and get to work making the best possible choice.
Six Key Decision Making Techniques eBook (43 Pages)
This free eBook describes six key decision making techniques that bring structure to the decision making process. These techniques can be used in isolation or can be combined in order to make decisions in a rational way that can be justified later if this is necessary.