How to Use a Decision Matrix to Make Tough Choices | Lucidchart Blog
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As a business analyst, you have to make a lot of important decisions. From strategic planning to policy evaluation to process modeling, your choices are often complex and have a direct impact on the business.

With so much at stake (and so many factors to consider), how can you know if you’re making the best choice?

A decision matrix can help.

Weighted Decision Matrix Example
Weighted Decision Matrix Example (Click on image to modify online)

What is a decision matrix?

A decision matrix is a tool that helps business analysts and other stakeholders evaluate their options with greater clarity and objectivity. A decision matrix (or grid) can:

  • Reduce decision fatigue.
  • Reduce subjectivity in decision making.
  • Clarify and prioritize options.

Decision-making grids outline the criteria for making a decision and rank them based on the most important factors. These grids provide analysts with a measurable method for evaluating their options systematically.

The decision matrix is also known by other names, including:

  • Pugh matrix
  • Decision grid
  • Opportunity analysis
  • Multi-attribute utility theory
  • Grid analysis
  • Problem selection matrix
  • Criteria rating form
  • Problem selection matrix

Another type of decision-making matrix is the Eisenhower matrix, but it focuses on identifying and ranking personal priorities, rather than major business decisions. Although some basic calculations are involved, the concept and application are fairly simple and straightforward.

Eisenhower matrix diagram example
Eisenhower Matrix Diagram Example (Click on image to modify online)

When to use a decision matrix

The nice thing about the decision matrix is that it can apply to many different types of decisions. However, it is most effective when you or your team is comparing multiple options or criteria that need to be narrowed down to one final choice.

It’s a common solution for business analysts as well as project managers, business leaders, designers, and other stakeholders who have to juggle multiple opportunities with complex criteria and requirements.

How to make a decision matrix

The beauty of the decision matrix is how simple it is to create. You can create a decision matrix by hand on a piece of paper, a whiteboard, or on a spreadsheet. There are also online template solutions available.

Lucidchart’s ready-made decision matrix template can help you get started right away. With rich features like data linking and conditional formatting, you can customize your templates to help you identify the best solution faster.

The decision matrix is organized into a table of rows and columns. The rows list out the potential options and the columns outline the various factors or decision making criteria to consider.

Decision Matrix Example
Decision Matrix Example (Click on image to modify online)

Conducting a step-by-step decision making analysis

We’ll use a simple decision to illustrate how a basic decision matrix works. Let’s say you want to take your team out to a restaurant to celebrate a victory. A decision matrix can help you choose where to go.

1. Create the matrix table

The first step is to create your matrix. As noted earlier, the table will be organized into rows of options and columns of criteria. Fill out the rows with the various options you are considering. For this example, your options might be:

  • Fancy New York steakhouse
  • Elegant Italian cuisine
  • Funky Mexican eatery
  • Interactive Japanese restaurant

Next, you will identify the criteria you will use to evaluate them.

2. Brainstorm criteria

With your table and options outlined, you can now brainstorm what factors or criteria you will use. Common criteria for business decisions include:

  • Cost
  • Return on investment
  • Buy-in (from team or customers)
  • Impact on other systems
  • Needed resources (time, money, people)
  • Ease of implementation
  • Value to customer
  • Potential problems or negative consequences
  • Urgency of the problem

If applicable, involve customers or other stakeholders to help you narrow the list of evaluative criteria to only the most important.

As you deliberate, identify which attributes the final decision must have. This will help you eliminate choices early on that don’t fit your requirements.

For our example, you might consider the following criteria or requirements:

  • Food allergy accommodations
  • Cost
  • Entertainment
  • Team preferences
  • Distance from office

3. Evaluate and rank criteria

Now you will evaluate your decision making criteria against the options. In other words, you will score how well each criterion is met under each option. There are a few ways to do this:

Method 1: Rate criteria on a scale (typically 1-3 or 1-5). The higher the number, the better that criterion matches the option.

Method 2: Rank-order the options across the criteria. For each criterion, rank your options based on how well they each meet the requirement (1 being low or least desirable).

Method 3: Use the Pugh matrix method and compare your options against a baseline. Your baseline can either be one of the options under consideration or it can be the existing solution your team or company is using and planning to replace. For each criterion, rate the option against the baseline as worse (-1), same (0), or better (+1).

To apply the Pugh matrix method to the restaurant example, let’s say the rankings break down something like this:

decision matrix restaurant example 1

4. Weight the criteria

Although you have your options ranked by criteria, not all criteria will have the same level of priority. For example, if you have a strict budget constraint, cost may be more important than other criteria on the table.

To measure this difference in priority, you will need to weigh the requirements from least to most important. It’s easiest to use the same scale as you did to rank the options.

decision matrix restaurant example 2

5. Score your options

Finally, it’s time to score your options to identify which decision to make.

To calculate each option’s final score, simply multiply each option’s rank by each criterion’s weight. For instance, if you had Cost as a criterion weighted at 5 and Option A had a rank of 2 for that criterion, you would multiply 5 times 2 to get 10.

You repeat this process for each option across every criterion. Once each box has a score, you tally up each row for a final rank of each option.

decision matrix restaurant example 3

In our example, after multiplying each option against the weights of your criterion, the winning score is the Japanese restaurant.

Of course, this is an example of a simple decision, but decision matrices work just as well for more complex problems and solutions.

Next time you’re faced with a mental quagmire, pull out your decision grid and start calculating. With careful consideration and basic math skills, you can find the clarity and confidence you need to move forward on decisions big and small.