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Making Decisions

Wednesday, March 7th, 2007

My stepdaughter sometimes comes to me with a question: should she choose this DVD to watch, or this other one?  Should she eat a chocolate chip cookie or ice cream?  Usually what I do is flip a coin after she chooses heads or tails.  When it lands, I ask her how she feels about the result: if she likes it, then go for that; if she doesn’t like how the coin has landed, then I encourage her to do the opposite.  A simple intuitive tool.

A more sophisicated decision-making tool that integrates the logic than many of us (like me) like so much, with intuition, is the Decision Matrix.  It works like this:

  • on a squared piece of paper (or a spreadsheet), list the options in columns across the top
  • on the rows below, and off to the left, list the different parameters and factors that might affect  your decision
  • weight each of these factors with an aribrary relative number
  • score each of the parameters for each of the options, then multiple each by the weight
  • add the totals

Look at the example below, a new vehicle buying decision.  Factors are colour, price, fuel efficiency, etc. etc., which I’ve weighted.  Four options are considered: Honda, Chev, Smart Car, and motorbike.  I’ve weighted price as 20, colour not nearly as important at 5, etc.  Then for each of these considerations rated each vehicle.  So far this is a purely logical tool, right?  This is where the fun comes in.  After the first time you fill in the numbers, note how you feel about the result.  See where you are increasing weightings or adjust ratings to bias towards a certain choice.  That bias may reflect what you really want.  After this pass for example, I might be tempted to greatly increase the weighting for fuel efficiency.  So the Chev Malibu may not be my final choice.

You can download an Excel spreadsheet to help you with this.  The spreadsheet include a blank work area, the example above, and a pretty graph of the result you can show your mother.  The default print will show your numbers and the graph.

Categories: Business, Learning