Posts Tagged ‘tradeoff’

How to: Completing a tradeoff analysis

Friday, July 8th, 2011


You Are What You Decide asked: “So, how do you decide? Based on your gut intuition, a formal analysis of trade-offs, your core beliefs, multiple criteria, the alignment to your vision for a preferred future? Or something else?” There are many approaches to completing a formal analysis of trade-offs. This post will summarize two.

Important decisions include multiple, sometimes competing factors. A trade-off is the giving up of one thing in return for another. Just about every complex decision requires that you accept having less of one thing in order to get more of something else.

Ben Franklin’s trade-off tool


Ben Franklin’s trade-off tool provides a simple, intuitive way to weigh trade-offs. Create two vertical columns, one labeled “Pros” and one “Cons.” Brainstorm the two lists. Then pair an item or items from each list with an item or items of equal weight from the other list. These similarly weighted combinations of pros and cons cancel each other out. In the sample graphic, the pros outweigh the cons in the tradeoff “algebra.” No need for a more sophisticated tool to make the decision. The methodology could be taught to a young child.

Visualizing trades in a decision matrix


The beauty of a decision matrix is that you can easily manage the tradeoff analysis because you can see where the trade-offs are.

A previous three-part post described how to complete a multi-criteria analysis. Part 3 illustrated how to construct a decision matrix using the example of the college selection process.

The matrix above displays the final results of assessing three colleges against a set of weighted criteria. The cells with the red border represent the highest score on each criterion. The “Total Benefit” is the sum of the weighted scores. As you can see, the matrix helps to clarify the decision’s specific trade-offs by individual criterion.

These results might lead a family to decide to select Syracuse because it has the highest Total Benefit score and scores highest on three criteria: Distance, Clubs and Food. However, the trade-offs are also clear. Delaware is superior on two criteria: Social Life and Facilities. Temple, on one: Major. The decision framework creates clarity: by selecting Syracuse, the family achieves the greatest Total Benefit but gives up on superior Facilities, Social Life and Major.

The challenge of any complex decision is how to clarify, manage and evaluate the trade offs. Ben Franklin’s trade-off tool and a decision matrix each complete the task in different ways. How do you manage trades in your decision-making?

Tags: , , , ,
Posted in All blog posts, How do you decide | Comments Off

How to: Multi-criteria Analysis – Part 3

Thursday, May 19th, 2011


A multi-criteria analysis is a formal decision process you might use when making a weighty decision. This is the final of a three-part post that walks you through the process, step-by-step.

Part 1:

  • Step 1: Complete your research
  • Step 2: Generate and weight criteria (i.e., define your desired outcome)

Part 2:

  • Step 3: Identify and/or create options, alternatives or solutions
  • Step 4: Complete a side-by-side comparison

Part 3:

  • Step 5: Objectively assess each option against each weighted criterion
  • Step 6: Make your decision


Step 5: Assess each option against each weighted criterion

Having completed your research, articulated a set of weighted criteria, converged on a rich set of options, and completed your side-by-side comparison, you now need to objectively assess each option against each weighted criterion. Let’s continue with the example of the Elmsford facilities task force.

First, task force members reviewed their completed side-by-side comparison and used a 1 to 9 scale to score the three facilities options against the 11 criteria on a worksheet. Then, in subgroups, they shared their worksheets and began to converge on reasonable, evidence-based scoring for each cell. Finally, the whole group used Prism’s group decision support system to vote all the cells in the decision matrix. After all 33 cells were complete, the system automatically calculated the weighted scores in each cell and the total benefit (i.e., the sum of the weighted scores) for each option. See chart below.



Returning to the example of college selection: if you do not have access to sophisticated decision support technology, you can complete your decision matrix using a chart and calculator or a spreadsheet. For your convenience, you can download a working spreadsheet.

Simply follow the directions on the spreadsheet to enter your

  • Decision criteria across the top row of the matrix (completed in Step 2)
  • Criteria weights (completed in Step 2)
  • Options down the first column (completed in Step 3)

While referring closely to your side-by-side comparison, score each option against each criterion in the appropriate cell. You can use a 1-9 scale or you can limit your scale to the total number of options (e.g., if you had four options, the scale would be 1-4). By the way, the download does all the matrix calculations automatically. See sample completed matrix below.


Step 6: Make your decision

With your decision matrix complete, you should now be prepared to make a confident, sound decision. You can

  • Compare the total benefit of each option against the set of weighted criteria
  • Examine the specific trade-offs
  • Create scenarios by changing the decision criteria weights

Regarding trade-offs: a trade-off is the giving up of one thing in return for another. Just about every complex decision requires that you accept having less of one thing in order to get more of something else. The beauty of a decision matrix is that you can easily manage the tradeoff analysis because you can see where the trade-offs are.

In the college selection example, a family might decide to select Syracuse because it has the highest Total Benefit score and scores highest on three criteria: Distance, Clubs and Food. However, the trade-offs are also clear. Delaware is superior on two criteria: Social Life and Facilities. Temple, on one: Major. The decision framework creates clarity: by selecting Syracuse, the family achieves the greatest Total Benefit but gives up on superior Facilities, Social Life and Major. (See annotated chart below, highlighting the trades.)


Of course, the matrix above begs a powerful question: Is Syracuse University, a private institution, worth the more than 40% premium it charges in tuition, room and board and fees over public institutions such as Temple and Delaware? Put in quantitative terms, is it worth spending a 40% premium to attend Syracuse instead of Delaware if Syracuse only provides an 18% additional Total Benefit (236 points versus 200 points)?

Returning to our other example, the Elmsford facilities task force could not make a decision based solely on their multiple criteria matrix. They needed to take one more step and complete a cost-benefit analysis. A family looking to maximize its return on their college investment may want to do the same.

A future post will describe how to complete a cost-benefit analysis.



“Decide” image credit mattw1ls0n

Tags: , , , , ,
Posted in All blog posts, How do you decide | Comments Off

You Are What You Decide

Thursday, March 24th, 2011


Everyday, we make — or avoid — decisions. Everyday our choices make us. We are what we decide.

Sheena Iyengar reports in The Art of Choosing that the “desire to choose is so innate that we act on it even before we can express it.” She continues:

In a study of infants as young as four months, researchers attached strings to the infants’ hands and let them learn that by tugging the string, they could cause pleasant music to play. When researchers later broke the association with the string, making the music play at random intervals instead, the children became sad and angry, even though the experiment was designed so that they heard the same amount of music as when they had activated the music themselves. These children didn’t only want to hear music; they craved the power to choose it.

Amazing. From our first months as infants, we are hard-wired to want to choose. So, why do we so often struggle with decision-making?

I have observed people spend more time deciding what color drapes to put in a living room than they spent deciding which house to buy in the first place. Others, whom I have seen anguish over the final packing list for their child’s first year in college, put little effort into the decision regarding which college the child should actually attend.

It is an interesting phenomenon. Consequential choices are often made hastily. Why? I think the answer is simple. Most of us have never been taught formal decision-making processes beyond: list the pros and the cons. At least that’s what my mom always told me to do! Without a tool set to draw on, a person can become overwhelmed by weighty decisions.

So, how do you decide? Based on your gut intuition, a formal analysis of trade-offs, your core beliefs, multiple criteria, the alignment to your vision for a preferred future? Or something else?

In the coming weeks and months, this blog will feature a series of posts describing approaches to decision-making including

Of course, if your curiosity is whetted, you do not have to wait! Feel free to peruse the posts below, each addressing some aspect of decision-making:


Tags: , , , , ,
Posted in All blog posts, How do you decide | Comments Off

Channel Your Inner Crayfish Brain

Monday, June 28th, 2010


When making decisions, do you struggle with cost-benefit anaylses? Well, here is motivation for you to improve that skill: According to ScienceDaily, “Crayfish make surprisingly complex, cost-benefit calculations.” The findings are from a University of Maryland study.

A crayfish has two defense mechanisms against predators: to freeze and hope the predator does not recognize it as a food source or to escape quickly by flipping its tail and swimming backwards. The Maryland study offered the crayfish “stark decisions — a choice between finding their next meal and becoming a meal for an apparent predator.” The crayfish could freeze and “remain close to a food source while at risk of being eaten by the predator” or it could flip its tail and escape the predator but put “critical distance” between it and its next meal.

How did the crayfish do when confronted with this clear cost-benefit dilemma?

The study concluded that crayfish are decisive decision-makers and adept at making trade-offs. “They carefully weighed the risk of attack against the expected reward” and took action “in a matter of milliseconds.” Their risk-benefit calculus was clear: when a predator was “moving too rapidly for escape,” the crayfish would not tail flip but freeze in order to remain close to the food source. On the other hand, when a threatening predator moved more slowly, the crayfish would tail flip to escape while sacrificing proximity to the food source.

Hey, if a crustacean can do it, we can do it! How do you calculate costs and benefits when making a decision? What is your decision calculus? Here’s a formula for you to consider:

Value = (Benefit – Cost)

When making decisions, you should always seek the highest value solution — that is, the solution that delivers the greatest benefit for its cost. Put simply, a good solution is worth more than it costs, and a bad solution costs more than it is worth. For example, let’s say you have three solutions to a challenge or opportunity:

- Solution A provides the greatest benefit at a cost of $X.
- Solution B provides 93% of the benefit but at 60% of the cost of Solution A.
- Solution C provides 60% of the benefit at 55% of the cost of Solution A.

What would you do? In this simple example, Solution B is the highest value option:

- Solution B provides 93% of the benefit but at 60% of the cost of Solution A.
- Solution B provides significantly greater benefit than Solution C at about the same cost.

Easy in concept; harder in execution. I know.

A future blog post will discuss the value formula above in greater detail. In the meantime, please see two current posts, Ben Franklin’s Trade-off Tool and The Matrix, for additional information on managing trade-offs and making cost-benefit decisions.

Tags: , , ,
Posted in All blog posts, Decision-making | Comments Off

Ben Franklin’s Tradeoff Tool

Monday, April 19th, 2010


Let’s face it. When faced with an important decision, we are often prone to procrastination. Indeed, the more consequential the decision, the more time we may spend avoiding it. We let inertia reign, maybe even succumb to status quo bias. Our procrastination has multiple causes—some psychological and some cognitive. One clear cause is that most of us are ill equipped to manage decision tradeoffs.

Important decisions include multiple, sometimes competing factors. A tradeoff requires that we sacrifice one factor to achieve another. Consider the challenge of buying a house. A typical home buyer has many criteria—the number of bedrooms, the size of the yard, the condition of the kitchen, the neighborhood, proximity to a good school, among others. Rarely will the buyer find a home that meets all criteria perfectly.


One morning a home buyer wakes up thinking about the wonder of a modern kitchen and decides she should buy House A. The next morning, thinking about the joys of a magnificent back yard, she decides to buy House B. This is the essence of a tradeoff dilemma: we have to sacrifice one criterion in order to achieve another and we struggle to do so. Of course, the real world decision is far more complex, involving perhaps a dozen criteria in the tradeoff “calculus.”

In a 1772 letter to Joseph Priestly, Ben Franklin, always resourceful, provides a simple tool for calculating tradeoffs. Franklin explains: “…my Way is to divide half a Sheet of Paper by a Line into two Columns, writing over the one Pro, and over the other Con. Then during three or four Days Consideration I put down under the different Heads short Hints of the different Motives that at different Times occur to me for or against the Measure. When I have thus got them all together in one View, I endeavour to estimate their respective Weights; and where I find two, one on each side, that seem equal, I strike them both out: If I find a Reason pro equal to some two Reasons con, I strike out the three. If I judge some two Reasons con equal to some three Reasons pro, I strike out the five; and thus proceeding I find at length where the Balance lies…”

The graphic above left illustrates the simple genius of Franklin’s approach. Similarly weighted combinations of pros and cons cancel each other out, in this case the pros outweighing the cons in the tradeoff “algebra.” No need for a decision matrix or other more sophisticated tool to make the decision. The methodology could be taught to a young child.

As Franklin concludes, “tho’ the Weight of Reasons cannot be taken with the Precision of Algebraic Quantities, yet when each is thus considered separately and comparatively, and the whole lies before me, I think I can judge better, and am less likely to make a rash Step; and in fact I have found great Advantage from this kind of Equation.”

Tags: , ,
Posted in All blog posts, Decision-making | Comments Off

The Matrix

Thursday, February 11th, 2010


Struggling with a tough decision? Wavering back and forth, unable to make up your mind? Very likely your frustration results from thinking about a complex problem—like buying a house—one factor at a time. To attack a complex problem and keep track of its multiple factors, create a decision matrix:

  • Down the left side, enter your options. Across the top, list your decision criteria. A criterion is an objective test upon which a judgment can be made.
  • Assign a weight to each criterion to indicate its importance to a good decision. The weight is usually a number between 0.0 and 1.0 with the sum of the weights equaling 1.0.
  • Then, one column at a time, ask: “To what degree does option 1..2..3 contribute to criterion A..B..C?” Use a simple scale where 5 = Highest Contribution and 1 = Lowest Contribution.
  • Multiply the score in each cell by the criterion’s weight.
  • Then add across the rows to determine a total, weighted score for each option.

You should now have a deeper understanding of the relative value of each option. Hey, maybe you’ll even be able to make the decision!

Use the illustration below to build your decision matrix. For a comprehensive explanation, see our three-part post on multi-criteria decision-making. Alternatively, visit “Let Simon Decide,” a pretty effective online tool for matrix decision-making.


Tags: , , ,
Posted in All blog posts, Decision-making | Comments Off