Decision making techniques tools

Decision-making techniques and tools fall into three main categories: random; Insight-based; Or analytical. Some strategies combine intuitive and analytical elements to take advantage of our cognitive abilities, though we have no complete understanding of how our mind works. This article will be discussing decision-making techniques and tools in depth. At Decision Innovation, we focus on analytics techniques that allow us to improve our decision-making skills while taking advantage of expert insights.

Different decision-making techniques can provide unique advantages for specific decisions. The following decision-making methods, techniques, and tools can be used to improve your decision-making skills. Decision Analysis of Multiple Criteria Same or Related Strategy: Grid Analysis, Kepner-Tregoe Matrix — This technique provides a good compromise between insight and analysis using a methodological framework that evaluates alternatives to a defined set of criteria for success with risk combinations.

This technique was developed by Dr. Charles H. Kepner and Dr. Benjamin b. Was made by Trego. Linear Programming LP — Usually used to optimize limited resources, linear programming is a mathematical technique where the requirements are represented by linear equations. Useful problems in operation research can be addressed using this technique. This can be helpful in predicting consumer acceptance and determining market positioning.

Affinity Diagrams Same or Related Strategy: KJ Method — Using this technique overloads address information by organizing many ideas and huge amounts of information. This technique is commonly used as part of a brainstorming exercise. Composite Comparison Analysis — Options are compared with each other to establish relative importance.

One drawback to this approach is that little or no information is released that identifies the criteria that support each option. General AHP Hierarchy Analytic Hierarchical Hierarchical Process AHP — This is an extended multiple criterion techniques that uses combined comparisons with additional mathematics to help understand an underlying decision technique and its inherent in human decision strategy.

AHP was originally published in by Dr. Thomas Sati. This strategy is usually applied to complex group decisions. Simple Impact Diagram Influence Diagram ID — The decision network in our model is a form of effect diagram where the effects are represented graphically for the decision. Impact drawing provides an alternative to decision trees that grow exponentially with more variables.

This technique is used to decide what the additional output will be if a more variable e. Margin analysis is particularly useful for alternative evaluation of the decision-making process. This is one of the important decision-making techniques and tools people use in organizations and in personal life. For complex strategic decisions where it is useful to consider the potential responses of external participants e. Game theory approaches can be considered an extension of impact drawing.

This is one of the most significant constraints that are among the simplistic assumptions needed to minimize the problem of the solvable play. Multiple voting — This strategy is used to decide the party to choose roughly among the many options. It is best used to exclude lower priority options before using a more rigorous strategy to finalize a decision on a smaller number of options. It is an accounting tool for interpreting accounting information.

Ratio defines the relationship between the two variables. You then subtract equal pros and cons for the competing decisions until you reach a clear winner. The use of the forest and trees mental model in decision-making is to switch your mindset between seeing the larger picture and the details.

Bookmark this page to visit at any time to use the tools as needed. I will be adding decision-making tools continuously. Shoukry is the founder of The Decisions Academy and a bestselling author. Close Menu About. Photo by Karolina Grabowska on Pexels. Like Loading Act and follow up — obviously, you need to act as decided and to check what is the impact of the implemented decisions. Back to top.

There are some decision-making tools and techniques which can help you to select alternatives based on their qualities without taking into consideration pure monetary impact. One of the simple methods especially if we need to fix issues and find beneficial opportunities fast. Example — we are a software company and need to decide how to improve our products.

For that reason, we make questionnaire survey with our customers. The results go into Pareto diagram. One of the best decision-making tools is called cause-and-effect diagram, also known as fishbone diagram or Ishikawa diagram. The fishbone of the diagram can vary each time. But there are some typical types of bones depending on your business. As you can see the Ishikawa diagram is great decision-making techniques in many, many business areas.

You can use control chart in order to decide if a process in within the predefined range. As you can see control chart has an upper limit, down limit and mean.

On the diagram, we have an example of a process within a range. These diagrams really help to define all the decisions which will be made in a process and their consequences.

This diagram displays relations between 2 variables. Which can really help the decision-making process. On a diagram example, you see that a little change of Variable 1 leads to a massive change to Variable 2. It can be a risk, it can be an opportunity but in any case, scatter diagram will be a useful technique for supporting decisions. There are many different options for scatter diagrams — point relationship, trends, 3D scatter chart, and etc. There are many different types of statistical sampling but most important ones are probability vs non-probability sampling.

Some of them are excluded from sampling. Monetary decision-making techniques. We all live a material world so making decisions based on their monetary impact is something normal. There are many monetary-based decision-making tools and techniques and here I will explain the most popular of them.

You simply calculate the benefits and divide them into calculated costs. You have a coefficient for each alternative and you can select the highest coefficient. First — it is not so easy to calculate correct amount for benefits and costs. Second — you do not calculate indirect benefits as customer satisfaction.

If you need to evaluate alternatives based on many criteria the best decision-making tools you can use is weighted scoring models. And when you need to defend a decision to the high management. As a downside, it is time-consuming.

One simple but powerful technique. It is a simple calculation if you choose an alternative X and invest Y amount of money when you are going to have your money back.

We all know that one dollar now is more than one dollar in the future. So Net Present value calculates what is the current value of the future income or expense. I will not go deeper into financial calculation since this is not the purpose of the article. Pugh Matrix is a diagram that is used to evaluate alternative solutions for business.

It helps you to determine which solutions are more valuable than the others. This method does not require a massive amount of quantitative data. Psychologia is a tool that provides a score for every option you have entered. This app enables you to find the highest score. It helps individuals to find the importance of specific criteria over others. Ratio analysis is a term used for comparison of items available in the financial statements of a business. It used to evaluate a number of problems with an entity, like its liquidity, efficiency of operation, and more.

Finstanon is a solution for financial analysis. It helps you to interpret profit ratio, liquid ratio, debt ratio, and more. This tool enables you to analyze more than 15 different types of metrices. Finstanon generates data in tables and diagrams. Decision Making tools are software applications that help you to map out all the possible alternatives to your decision, its cost, as well as chances of success or failure.

These applications provide a useful way to make the right choice by simplifying the decision-making process and by drawing a diagram that helps you to make a better decision. Skip to content. Here are the 7 steps of the decision-making process:. Report a Bug. Previous Prev. Next Continue.