Decision matrix: types, possible risks, analysis and consequences

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Every second faced the problem of choice, the difficulty of making a decision. Often we do not know how best to act. Thinking takes up a lot of our time. Probably, each of us would like to learn how to quickly find the right, most profitable and correct solution. The best minds in the world have developed a wonderful method of decision making - decision matrices.

What is this?

The management decision matrix is one of the simple and effective decision making methods. It is necessary to select the key criteria of the situation and understand what level of significance is appropriate for each of them.

This method helps to put the decision on the shelves in such a way as not to load the head with many different details. In addition, thanks to the matrix, you can understand at what stage of development the situation is, and what is the overall picture of what is happening.

There are different situations in production. Often an experienced managereasily solves typical tasks, problems, because once he has already encountered similar ones. However, the world is changing very quickly: new laws, technologies, companies appear, an inflationary surge may occur, a crisis may ensue. Non-standard tasks are difficult to solve, and even more so in a short time.

In any business, it is important not to miss the details, because sometimes they can help solve the problem in the best way.

This is why managers often resort to decision matrices. They allow you to make a management decision rather quickly, most correctly and not to miss the smallest details.

It is important to note that there is no perfect matrix. For each specific case or problem, you need your own, unique matrix that will solve exactly your questions and will be directed to your enterprise.

How to build a management decision matrix?

Take a blank sheet of paper or use the capabilities of your computer. The first thing we need to do is draw a table. The rows represent your options for solving the problem, and the columns are the factors that influence your choice.

After you have written down absolutely all the solutions and important factors, you need to evaluate the importance of each factor written out, that is, how important it is, in your opinion, of course. As an assessment, you can use a point scale, for example, from one to five, where one point is a small factor, and 5 points (the highest score) means verysignificant factor.

After the process of evaluating the factors is completed, it is necessary to calculate the total number of points for each option separately. After that, you need to find the option that scored the maximum number of points - it becomes the best.

Payment matrix - a method of making managerial decisions

When making a decision, we need to choose exactly the one that would be best in a particular situation. One of the methods for making such a decision is the payoff matrix.

The payoff matrix is a method related to the statistical theory of decisions. This method will help the manager to choose exactly the solution that is needed in this situation. Usually this method is used when it is necessary to choose a strategy that is most suitable for achieving the goal.

Payment refers to a monetary reward or utility that will be obtained as a result of combining a specific strategy with a specific situation (that is, the situation in which it would be appropriate to use this solution)

Payments can be represented as a matrix. The payment depends on the events that actually happen. If the event does not occur, then the payment will be completely different.

Dignity of the method

The decision matrix has a huge range of benefits, the main ones are:

• Substantiation and clarity. The matrix is visual, that is, if you share your analysis with another person or group of people, and whenIf you clearly substantiate the data obtained, then you will make it easier to convince the interlocutor of the correctness of the decision.
• Saving time.
• Choosing the optimal solution.
• Availability of spare options. It may happen that the most impressive decision-making option cannot be implemented. In this case, you do not need to re-analyze, because you will already have a whole set of fallback options. The only thing left is to choose the most suitable one.
• Objectivity. Often we choose a solution based on our personal motives, forgetting to separate our own "I" and work. The Decision Matrix helps keep judgment to a minimum.

Disadvantages of the method

But this method has its drawbacks:

• Some matrices are statistical. They can show the current state of the enterprise, but they will not help to assess the dynamics of strategic processes.
• Some matrices offer alternative strategies. Unfortunately, this sometimes complicates the process of forming the necessary strategy for the matrix due to the ambiguity of choosing a strategy.
• Building some matrices requires a lot of mental investment.
• Matrices do not give a specific, most appropriate solution.

Types of matrices

After using the first decision matrices, scientists began to develop more and more new types of matrices. New methods helped to solve a number of complex problems. These include: the choice of strategy, actions to develop the product, whichproduct develop and so on.

Examples of decision matrices are given below:

• Eisenhower matrix (importance/urgency).



• Matrix of the Boston Consulting Group (indicators are growth rate, production productivity).



• McKinsey Matrix (indicators: the competitive position of the enterprise and the attractiveness of the market).
• Matrix - portfolio analysis (assessment of the economic activity of the enterprise).
• Igor Ansoff's matrix (description of possible business strategies in a growing market).
• Steiner Matrix (market classification and product classification on existing; new but related to existing; brand new).



• Abel Matrix (selection of a draft strategy based on customer groups served, needs and technology used).

Application of method

An example of using a decision matrix is choosing a purchase: a laptop or a tablet.

In the selection lines, you respectively write: laptop / tablet.

Write down all the factors in the columns (for example, price, weight, functionality, warranty period, availability of specific necessary programs, value).

After that, you give points to the laptop and tablet for each criterion. The product with the most points should be purchased.

Thanks to the decision matrix, we can easily, by spendingminimum effort, get the most profitable solution. This method is intended not only to select a product, but also to solve more serious, global problems.