When you are planning to make a significant change in your business, SWOT diagrams can help you break down the situation into four distinct quadrants:

• Strengths: What does your company do better than its competitors? Think of both internal and external strengths that you possess.
• Weaknesses: Where can your company improve? Try to take a neutral approach and consider what factors may be hurting your business.
• Opportunities: Look at your strengths and think of how you can leverage them to create new openings for your business. Also consider how eliminating a specific weakness could open you up to a new opportunity.
• Threats: Determine what challenges stand in the way of achieving your goals. Identify the primary threats to your organization.

A SWOT Analysis can help you identify the forces that influence a strategy, action, or initiative. This information can then be used to guide you in the right direction and support your business decisions. To get the full picture, it’s essential to take multiple viewpoints into account. When you enlist the help of other team members and stakeholders, it is easier to spot trends, patterns, and connections between the quadrants. Taking a collaborative approach can also offer deeper insight into potential opportunities and threats you may not have been able to identify alone.

Decision Matrix

When you are dealing with multiple choices and variables, a decision matrix can bring clarity to the disarray. A decision matrix is similar to a pros/cons list, but it allows you to place a level of importance on each factor. That way, you can more accurately weigh the different options against each other.

How to Create a Decision Matrix:

• List your decision alternatives as rows
• List relevant factors as columns
• Establish a consistent scale to assess the value of each combination of alternatives and factors
• Determine how important each factor is towards making your final decision and assign weights accordingly
• Multiply your original ratings by the weighted rankings
• Add up the factors under each decision alternative
• The option that scores the highest wins

Decision Matrix Example:

In this example, a company is trying to make a decision about which vendor they should work with for an upcoming project. The factors they are using to evaluate each option are: capabilities, reputation, reliability, and price. They care more about the capabilities and price than the reputation and reliability of the vendor, so they weighted the importance of those factors accordingly. Based on the results from their decision matrix, they should be able to confidently decide on Vendor 2.

Pareto Analysis

The Pareto Principle helps in identifying changes that will be the most effective for your business. The principle is named after economist Vilfredo Pareto, who found that an 80/20 distribution occurs regularly in the world. In other words, 20% of factors frequently contribute to 80% of the organization’s growth.

An example of this principle applying to business management would be 80% of sales coming from 20% of your customers. A business can leverage the Pareto Principle by identifying the characteristics of the top 20% of their customers and finding more customers like them. When you can identify what small changes will make the largest impact, you are able to prioritize the decisions that have the highest level of influence. This allows managers to dedicate their energy and resources on what will actually move the needle for their business.

The Next Step: Reviewing Your Decision & Making Adjustments

Once you’ve determined which techniques best aid in your decision-making, you can’t stop there. Being able to consistently make the right decisions is too important. In fact, decision effectiveness is 95% correlated with financial performance, so it is critical for managers to keep track of the decisions they make and how they turn out. Decision-making is an on-going process, and the best way to keep up is to use data dashboards.

Dashboards allow managers and executives to get information from multiple data sources in one system, so they can see how the business is performing against their goals. Plus, company data can be accessed in real-time, so managers can make quick decisions and adjustments based on what is working and what is not. Interested in seeing how a dashboard can help you make more informed, objective decisions?

4 tools & techniques for enhanced decision-making. (2021, January 11). iDashboards. https://www.idashboards.com/blog/2019/04/10/4-tools-strategies-for-enhanced-decision-making/