Making business decisions is not an easy task. Sometimes the whole board of directors or even third-party consultants are involved in this. There are many ways to find the best solution for a particular issue. These are called methods or decision-making tools. There are a huge number of them.
You can use many decision-making tools to make informed and confident choices throughout your career. In this material, you will find information about several popular decision-making methods. Perhaps by reading about them, you can find exactly the method that will lead to the most rational solution.
Decision Matrix
Decision matrices can help you comprehensively evaluate the various options for a solution. Essentially, these tools are tables with multiple columns, including one containing each option and others having every other factor influencing the decision. Using this information, you can rank all the elements in order of importance and evaluate each opportunity to determine which one is best for your needs.
Lists for/against
Pros and cons lists, or t-charts, allow you to compare individual options’ advantages and disadvantages. Using this method, you can list all the potential consequences of a decision and weigh their significance to understand your choice better. This tool is usually best for solutions with few options.
Decision tree
Decision trees use statistical analysis and can help you better understand problems that require a multi-step decision process. This tool often takes the form of a graph or model that includes an evaluation of various options and their outcomes. Decision trees can be very helpful in decisions with some level of uncertainty.
Cost Benefit Analysis
Cost-benefit analysis is useful in making decisions that have financial implications. This method can help you estimate the various costs of an option and the benefits that may result from exercising it. To maximize profits, you can determine which solution has the highest honor and lowest price.
Multiple voting technique
Multiple voting is a technique that can be useful in making joint decisions within a stakeholder group. This exercise allows groups to narrow down their options by voting on which option best suits their individual needs. The group usually votes until they collectively reach a final decision.
Influence diagram
Influence diagrams are tools with which you can weigh all the potential variables involved in a decision. This tool mathematically considers choices, uncertainties, and goals, as well as their interrelationships. You can use these diagrams as an alternative to decision trees when inferring and evaluating options’ potential impact and outcomes.
Trial and error method
Trial and error is an active decision-making tool that allows people to test different options and evaluate their results. Trial and error involve testing different options and evaluating their benefits in real-time. This method is generally best for small, inefficient, and reversible solutions.