decision-grid

Decision Grid

A Decision Grid is a decision-making framework that considers various criteria, assigns importance to them, scores options, and calculates totals to make informed choices. It’s characterized by multi-criteria analysis and visual representation. Decision Grids find applications in business strategy, product development, and personal decision-making, aiding in comprehensive decision assessment.

  • The Decision Grid is a robust framework used for making informed decisions in a structured and systematic manner.
  • It is highly regarded for its ability to handle complex decision-making scenarios involving multiple criteria and options.
  • Decision Grids are versatile tools that find applications in various domains, including business, project management, product development, and personal life choices.

Characteristics of Decision Grid:

  • Multi-Criteria Analysis: One of the key characteristics of Decision Grids is their capacity to consider multiple criteria simultaneously.
  • Visual Representation: Decision Grids are often visually represented, making it easier for decision-makers to comprehend and evaluate their choices.
  • Objective Decision-Making: They promote objectivity by providing a transparent and quantifiable method for evaluating alternatives.
  • Scalability: Decision Grids can be adapted to handle simple decisions with a few criteria or complex decisions with numerous factors.

Components of Decision Grid:

  • Criteria: Decision Grids begin by identifying the criteria that are essential for the decision. These criteria can be quantitative or qualitative, depending on the context.
  • Weighting: Assigning weights to criteria is a critical step. It reflects the relative importance of each criterion in the decision.
  • Scoring: Options or alternatives are assessed against each criterion and assigned scores.
  • Calculation: The total score for each option is calculated by combining the scores according to the assigned weights.
  • Decision: Finally, a decision is made based on the total scores. The option with the highest total score is typically chosen.

Steps in Using a Decision Grid:

  • Identifying Criteria:
    • List all the relevant criteria that will impact the decision.
    • Ensure that the criteria are specific, measurable, and directly related to the decision.
  • Assigning Weights:
    • Determine the importance of each criterion by assigning weights. These weights should add up to 100%.
    • The higher the weight, the more influential the criterion is in the decision.
  • Scoring Options:
    • Evaluate each option against every criterion.
    • Assign scores based on how well each option meets the criteria.
    • Scores can be numerical (e.g., on a scale of 1 to 10) or qualitative (e.g., low, medium, high).
  • Calculating Totals:
    • Multiply the scores by the corresponding weights for each criterion.
    • Sum up these weighted scores to calculate a total score for each option.
  • Making the Decision:
    • The option with the highest total score is typically chosen as the recommended decision.
    • The transparency of the process allows for clear justification of the final choice.

Applications of Decision Grid:

  • Business Strategy: Decision Grids assist in strategic decision-making, such as market entry, product launch, and resource allocation.
  • Project Management: Project managers use Decision Grids to select vendors, prioritize tasks, and allocate resources.
  • Product Development: Evaluating design options, features, and manufacturing processes.
  • Personal Decision-Making: Individuals can apply Decision Grids to make choices about career paths, buying a house, or selecting a vacation destination.

Case Studies

Business Strategy:

  • Market Entry Strategy: A company considering entering a new market can use a Decision Grid to evaluate potential countries or regions based on criteria such as market size, competition, regulatory environment, and consumer demographics.
  • Product Portfolio Management: When deciding which products to continue, update, or discontinue, a Decision Grid can help assess factors like profitability, market demand, production costs, and brand alignment.
  • Supplier Selection: Procurement teams can use a Decision Grid to choose the best supplier by comparing factors like price, quality, lead time, and supplier reliability.

Project Management:

  • Resource Allocation: Project managers can allocate resources to different project tasks by evaluating factors like resource availability, task complexity, project priority, and skill requirements.
  • Project Risk Assessment: When identifying and prioritizing project risks, a Decision Grid can consider the likelihood of occurrence, potential impact, mitigation strategies, and cost of risk management.

Product Development:

  • Feature Prioritization: Product development teams can prioritize features for a new software release by comparing criteria such as customer demand, development effort, and potential revenue impact.
  • Material Selection: Engineers can select materials for a product design by evaluating criteria like cost, strength, durability, and environmental impact.

Personal Decision-Making:

  • Home Buying: Homebuyers can assess potential houses by considering criteria such as price, location, size, neighborhood safety, and proximity to schools or workplaces.
  • Career Change: Professionals considering a career change can use a Decision Grid to compare job offers or career paths based on salary, work-life balance, growth opportunities, and alignment with personal values.
  • College Selection: High school students choosing a college can create a Decision Grid based on factors like location, tuition, academic programs, extracurricular activities, and financial aid.

Key Highlights

  • Decision-Making Framework: Decision Grids provide a structured framework for making informed decisions by systematically evaluating and comparing multiple options.
  • Criteria-Based Evaluation: They rely on predefined criteria or factors that are essential for the decision-making process. These criteria can be tailored to suit the specific decision at hand.
  • Scalability: Decision Grids can be used for decisions of varying complexity, from personal choices like buying a car to strategic business decisions like market entry or resource allocation.
  • Transparency: They make the decision-making process transparent and easily communicable, as the criteria and their importance are explicitly defined.
  • Objective Analysis: Decision Grids encourage objective analysis by assigning weights to criteria, reducing the influence of subjective biases.
  • Quantitative and Qualitative Criteria: They accommodate both quantitative data (e.g., costs, revenue) and qualitative factors (e.g., customer satisfaction, brand reputation) in the evaluation process.
  • Prioritization: Decision Grids allow decision-makers to prioritize criteria based on their relative importance, ensuring that critical factors have a more significant impact on the final decision.
  • Flexibility: Users can modify criteria and their weights as new information becomes available or as priorities change over time.
  • Visualization: The grid format provides a visual representation of the decision, making it easier to understand and communicate to stakeholders.
  • Consistency: Decision Grids promote consistency in decision-making by applying the same criteria and weights to all options.
  • Risk Assessment: They enable the assessment of risks associated with each option, helping decision-makers anticipate potential challenges.
  • Customization: Decision Grids can be customized to suit various decision contexts, from strategic planning and project management to personal life choices.
  • Quantitative Scores: Each option is assigned a quantitative score based on the evaluation criteria, facilitating direct comparisons.
  • Informed Decision-Making: They empower individuals and organizations to make well-informed decisions by considering a comprehensive set of factors.
  • Record Keeping: Decision Grids provide a record of the decision-making process, which can be valuable for accountability and future reference.
  • Consensus Building: In group decision-making, Decision Grids can facilitate consensus by providing an objective basis for discussions and negotiations.
  • Continuous Improvement: Decision Grids can be used iteratively, allowing for continuous improvement in decision-making processes over time.

Connected Thinking Frameworks

Convergent vs. Divergent Thinking

convergent-vs-divergent-thinking
Convergent thinking occurs when the solution to a problem can be found by applying established rules and logical reasoning. Whereas divergent thinking is an unstructured problem-solving method where participants are encouraged to develop many innovative ideas or solutions to a given problem. Where convergent thinking might work for larger, mature organizations where divergent thinking is more suited for startups and innovative companies.

Critical Thinking

critical-thinking
Critical thinking involves analyzing observations, facts, evidence, and arguments to form a judgment about what someone reads, hears, says, or writes.

Biases

biases
The concept of cognitive biases was introduced and popularized by the work of Amos Tversky and Daniel Kahneman in 1972. Biases are seen as systematic errors and flaws that make humans deviate from the standards of rationality, thus making us inept at making good decisions under uncertainty.

Second-Order Thinking

second-order-thinking
Second-order thinking is a means of assessing the implications of our decisions by considering future consequences. Second-order thinking is a mental model that considers all future possibilities. It encourages individuals to think outside of the box so that they can prepare for every and eventuality. It also discourages the tendency for individuals to default to the most obvious choice.

Lateral Thinking

lateral-thinking
Lateral thinking is a business strategy that involves approaching a problem from a different direction. The strategy attempts to remove traditionally formulaic and routine approaches to problem-solving by advocating creative thinking, therefore finding unconventional ways to solve a known problem. This sort of non-linear approach to problem-solving, can at times, create a big impact.

Bounded Rationality

bounded-rationality
Bounded rationality is a concept attributed to Herbert Simon, an economist and political scientist interested in decision-making and how we make decisions in the real world. In fact, he believed that rather than optimizing (which was the mainstream view in the past decades) humans follow what he called satisficing.

Dunning-Kruger Effect

dunning-kruger-effect
The Dunning-Kruger effect describes a cognitive bias where people with low ability in a task overestimate their ability to perform that task well. Consumers or businesses that do not possess the requisite knowledge make bad decisions. What’s more, knowledge gaps prevent the person or business from seeing their mistakes.

Occam’s Razor

occams-razor
Occam’s Razor states that one should not increase (beyond reason) the number of entities required to explain anything. All things being equal, the simplest solution is often the best one. The principle is attributed to 14th-century English theologian William of Ockham.

Lindy Effect

lindy-effect
The Lindy Effect is a theory about the ageing of non-perishable things, like technology or ideas. Popularized by author Nicholas Nassim Taleb, the Lindy Effect states that non-perishable things like technology age – linearly – in reverse. Therefore, the older an idea or a technology, the same will be its life expectancy.

Antifragility

antifragility
Antifragility was first coined as a term by author, and options trader Nassim Nicholas Taleb. Antifragility is a characteristic of systems that thrive as a result of stressors, volatility, and randomness. Therefore, Antifragile is the opposite of fragile. Where a fragile thing breaks up to volatility; a robust thing resists volatility. An antifragile thing gets stronger from volatility (provided the level of stressors and randomness doesn’t pass a certain threshold).

Systems Thinking

systems-thinking
Systems thinking is a holistic means of investigating the factors and interactions that could contribute to a potential outcome. It is about thinking non-linearly, and understanding the second-order consequences of actions and input into the system.

Vertical Thinking

vertical-thinking
Vertical thinking, on the other hand, is a problem-solving approach that favors a selective, analytical, structured, and sequential mindset. The focus of vertical thinking is to arrive at a reasoned, defined solution.

Maslow’s Hammer

einstellung-effect
Maslow’s Hammer, otherwise known as the law of the instrument or the Einstellung effect, is a cognitive bias causing an over-reliance on a familiar tool. This can be expressed as the tendency to overuse a known tool (perhaps a hammer) to solve issues that might require a different tool. This problem is persistent in the business world where perhaps known tools or frameworks might be used in the wrong context (like business plans used as planning tools instead of only investors’ pitches).

Peter Principle

peter-principle
The Peter Principle was first described by Canadian sociologist Lawrence J. Peter in his 1969 book The Peter Principle. The Peter Principle states that people are continually promoted within an organization until they reach their level of incompetence.

Straw Man Fallacy

straw-man-fallacy
The straw man fallacy describes an argument that misrepresents an opponent’s stance to make rebuttal more convenient. The straw man fallacy is a type of informal logical fallacy, defined as a flaw in the structure of an argument that renders it invalid.

Streisand Effect

streisand-effect
The Streisand Effect is a paradoxical phenomenon where the act of suppressing information to reduce visibility causes it to become more visible. In 2003, Streisand attempted to suppress aerial photographs of her Californian home by suing photographer Kenneth Adelman for an invasion of privacy. Adelman, who Streisand assumed was paparazzi, was instead taking photographs to document and study coastal erosion. In her quest for more privacy, Streisand’s efforts had the opposite effect.

Heuristic

heuristic
As highlighted by German psychologist Gerd Gigerenzer in the paper “Heuristic Decision Making,” the term heuristic is of Greek origin, meaning “serving to find out or discover.” More precisely, a heuristic is a fast and accurate way to make decisions in the real world, which is driven by uncertainty.

Recognition Heuristic

recognition-heuristic
The recognition heuristic is a psychological model of judgment and decision making. It is part of a suite of simple and economical heuristics proposed by psychologists Daniel Goldstein and Gerd Gigerenzer. The recognition heuristic argues that inferences are made about an object based on whether it is recognized or not.

Representativeness Heuristic

representativeness-heuristic
The representativeness heuristic was first described by psychologists Daniel Kahneman and Amos Tversky. The representativeness heuristic judges the probability of an event according to the degree to which that event resembles a broader class. When queried, most will choose the first option because the description of John matches the stereotype we may hold for an archaeologist.

Take-The-Best Heuristic

take-the-best-heuristic
The take-the-best heuristic is a decision-making shortcut that helps an individual choose between several alternatives. The take-the-best (TTB) heuristic decides between two or more alternatives based on a single good attribute, otherwise known as a cue. In the process, less desirable attributes are ignored.

Bundling Bias

bundling-bias
The bundling bias is a cognitive bias in e-commerce where a consumer tends not to use all of the products bought as a group, or bundle. Bundling occurs when individual products or services are sold together as a bundle. Common examples are tickets and experiences. The bundling bias dictates that consumers are less likely to use each item in the bundle. This means that the value of the bundle and indeed the value of each item in the bundle is decreased.

Barnum Effect

barnum-effect
The Barnum Effect is a cognitive bias where individuals believe that generic information – which applies to most people – is specifically tailored for themselves.

First-Principles Thinking

first-principles-thinking
First-principles thinking – sometimes called reasoning from first principles – is used to reverse-engineer complex problems and encourage creativity. It involves breaking down problems into basic elements and reassembling them from the ground up. Elon Musk is among the strongest proponents of this way of thinking.

Ladder Of Inference

ladder-of-inference
The ladder of inference is a conscious or subconscious thinking process where an individual moves from a fact to a decision or action. The ladder of inference was created by academic Chris Argyris to illustrate how people form and then use mental models to make decisions.

Goodhart’s Law

goodharts-law
Goodhart’s Law is named after British monetary policy theorist and economist Charles Goodhart. Speaking at a conference in Sydney in 1975, Goodhart said that “any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.” Goodhart’s Law states that when a measure becomes a target, it ceases to be a good measure.

Six Thinking Hats Model

six-thinking-hats-model
The Six Thinking Hats model was created by psychologist Edward de Bono in 1986, who noted that personality type was a key driver of how people approached problem-solving. For example, optimists view situations differently from pessimists. Analytical individuals may generate ideas that a more emotional person would not, and vice versa.

Mandela Effect

mandela-effect
The Mandela effect is a phenomenon where a large group of people remembers an event differently from how it occurred. The Mandela effect was first described in relation to Fiona Broome, who believed that former South African President Nelson Mandela died in prison during the 1980s. While Mandela was released from prison in 1990 and died 23 years later, Broome remembered news coverage of his death in prison and even a speech from his widow. Of course, neither event occurred in reality. But Broome was later to discover that she was not the only one with the same recollection of events.

Crowding-Out Effect

crowding-out-effect
The crowding-out effect occurs when public sector spending reduces spending in the private sector.

Bandwagon Effect

bandwagon-effect
The bandwagon effect tells us that the more a belief or idea has been adopted by more people within a group, the more the individual adoption of that idea might increase within the same group. This is the psychological effect that leads to herd mentality. What in marketing can be associated with social proof.

Moore’s Law

moores-law
Moore’s law states that the number of transistors on a microchip doubles approximately every two years. This observation was made by Intel co-founder Gordon Moore in 1965 and it become a guiding principle for the semiconductor industry and has had far-reaching implications for technology as a whole.

Disruptive Innovation

disruptive-innovation
Disruptive innovation as a term was first described by Clayton M. Christensen, an American academic and business consultant whom The Economist called “the most influential management thinker of his time.” Disruptive innovation describes the process by which a product or service takes hold at the bottom of a market and eventually displaces established competitors, products, firms, or alliances.

Value Migration

value-migration
Value migration was first described by author Adrian Slywotzky in his 1996 book Value Migration – How to Think Several Moves Ahead of the Competition. Value migration is the transferal of value-creating forces from outdated business models to something better able to satisfy consumer demands.

Bye-Now Effect

bye-now-effect
The bye-now effect describes the tendency for consumers to think of the word “buy” when they read the word “bye”. In a study that tracked diners at a name-your-own-price restaurant, each diner was asked to read one of two phrases before ordering their meal. The first phrase, “so long”, resulted in diners paying an average of $32 per meal. But when diners recited the phrase “bye bye” before ordering, the average price per meal rose to $45.

Groupthink

groupthink
Groupthink occurs when well-intentioned individuals make non-optimal or irrational decisions based on a belief that dissent is impossible or on a motivation to conform. Groupthink occurs when members of a group reach a consensus without critical reasoning or evaluation of the alternatives and their consequences.

Stereotyping

stereotyping
A stereotype is a fixed and over-generalized belief about a particular group or class of people. These beliefs are based on the false assumption that certain characteristics are common to every individual residing in that group. Many stereotypes have a long and sometimes controversial history and are a direct consequence of various political, social, or economic events. Stereotyping is the process of making assumptions about a person or group of people based on various attributes, including gender, race, religion, or physical traits.

Murphy’s Law

murphys-law
Murphy’s Law states that if anything can go wrong, it will go wrong. Murphy’s Law was named after aerospace engineer Edward A. Murphy. During his time working at Edwards Air Force Base in 1949, Murphy cursed a technician who had improperly wired an electrical component and said, “If there is any way to do it wrong, he’ll find it.”

Law of Unintended Consequences

law-of-unintended-consequences
The law of unintended consequences was first mentioned by British philosopher John Locke when writing to parliament about the unintended effects of interest rate rises. However, it was popularized in 1936 by American sociologist Robert K. Merton who looked at unexpected, unanticipated, and unintended consequences and their impact on society.

Fundamental Attribution Error

fundamental-attribution-error
Fundamental attribution error is a bias people display when judging the behavior of others. The tendency is to over-emphasize personal characteristics and under-emphasize environmental and situational factors.

Outcome Bias

outcome-bias
Outcome bias describes a tendency to evaluate a decision based on its outcome and not on the process by which the decision was reached. In other words, the quality of a decision is only determined once the outcome is known. Outcome bias occurs when a decision is based on the outcome of previous events without regard for how those events developed.

Hindsight Bias

hindsight-bias
Hindsight bias is the tendency for people to perceive past events as more predictable than they actually were. The result of a presidential election, for example, seems more obvious when the winner is announced. The same can also be said for the avid sports fan who predicted the correct outcome of a match regardless of whether their team won or lost. Hindsight bias, therefore, is the tendency for an individual to convince themselves that they accurately predicted an event before it happened.

Read Next: BiasesBounded RationalityMandela EffectDunning-Kruger EffectLindy EffectCrowding Out EffectBandwagon Effect.

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