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Try 'Grid Analysis' for Your Next Complex Decision Who knew that a couple of lines on paper, or an Excel spreadsheet, could help you decide that upcoming crucial move?

By Doug and Polly White

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Got a tough business decision to make? Consider using the tool we frequently use with clients: grid analysis. This tool is especially helpful when you have several possible options and a variety of factors to weigh in your decision. We used this technique ourselves, when we were deciding whether to open our consulting firm!

Related: The 7 Styles of Decision Making

We'll explain how it works below. But, first, we suggest starting the process with an Excel spreadsheet -- although you could accomplish the same thing with paper, pencil and calculator.

Head the left-most vertical column of your spreadsheet "Options." Leave a couple of horizontal blank rows beneath the heading. Then, below the blank rows in the "Options" vertical column, list on separate horizontal rows, all of the options you could decide to pursue. Say you initially list three choices, but are there more? Is there a hybrid option comprised of portions of one or more of the three options you have already identified that might work?

Is there a completely new solution/option that you haven't explored yet? Have you considered the "do nothing" option? Our point in asking these questions is to push your thinking. Make sure that you have considered all reasonable options.

When we were determining our future, some of our options included: Start a consulting business together, pursue corporate jobs or buy a business. These were all good choices, but we were having trouble deciding which would be best for our personal and professional goals. Here's what our own grid began to look like:

Options

Start a consulting business

Buy a business

Get corporate jobs

Your next step is to head the vertical columns to the right of the "Options" column with the factors or variables you will weigh in your decision. Variables are the things that should be most important to you. Again, push yourself to think of everything that matters.

In our case, we wanted work that was fulfilling. We wanted to work with smart people, to make a difference, to spend time together and to stay in our hometown, Richmond. There were several more, but . . . you get the idea.

Related: 7 Keys to Making the Right Decision the First Time and Every Time

Next, score each of your "Options" on how well it delivers on each "variable." We use a scale of 1 to 5 (5 being the best, and 1 the worst score). You could obviously use a different scale. Place the scores under the appropriate heading in the row of the option you are scoring.

Options

Variables

Fulfilling work

Smart People

Make a Difference

Work together

Stay in Richmond

Weighting

Start a consulting business

5

4

5

5

5

Buy a business

3

4

3

5

4

Get corporate jobs

2

2

2

1

2

Not all of our variables were of equal importance, of course, though staying in Richmond -- to give one example -- was one of the most important variables for us. We rated that variable a five. Through our discussions, we determined a weighting to each of the other variables.

Now, use one of the rows that you left blank under the row containing the column headings. In the "Options" column, label the row "Weighting." In this row, under each of the columns headed with the "variables," place a number that reflects the relative importance of each. We again use a scale of 1 to 5 (with 5 being the most important and 1 being the least important). And, again, feel free to use a different scale if you like.

Options

Variables

Fulfilling work

Smart People

Make a Difference

Work together

Stay in Richmond

Weighting

4

4

5

3

5

Start a consulting business

5

4

5

5

5

Buy a business

3

4

3

5

4

Get corporate jobs

2

2

2

1

2

Note, regardless of the scale you use, that it is important that the high end of the score scale to indicate the "options" that perform best on this "variable." In the same way, the high end of the "Weighting" scale must indicate the "Objectives" that are the most important. If you get one of these backward, that error can lead to an incorrect result.

Head the first empty column to the right of the objectives, "Score." You'll have to build a formula that can be long, but is quite straightforward. In the cell that is under the column headed "Score," in the row that contains the first "Option," insert the following formula: (Variable #1 Score * Variable #1 Weight) + (Variable #2 Score * Variable #2 Weight) + (Variable #3 Score * Variable #3 Weight) . . .

Continue this formula until you have multiplied the score of each objective in the row in which you are working by its weight, and added all of the products together. Obviously, with a pencil and paper, you'll do this calculation by hand. Repeat this process for each objective.

Options

Variables

Fulfilling work

Smart People

Make a Difference

Work together

Stay in Richmond

Weighting

4

4

5

3

5

Score

Start a consulting business

5

4

5

5

5

101

Buy a business

3

4

3

5

4

78

Get corporate jobs

2

2

2

1

2

41

In theory, the "Option" with the highest score is the best choice. We say "in theory," because no analytic technique will spit out a guaranteed correct answer to your problem. Instead, what this technique will do is to help you focus on the components of your decision that are the most important. Play around with the sensitivities. If you had scored something like a "4" rather than a "3," would the answer change? Suppose the "Weighting" on one of the "Variables" was a bit higher or a bit lower; would it matter?

Understanding the components of your decision that will have the most effect on the result will help you focus your thinking on the things that are important. After giving more thought about those things to which the result is sensitive, you may change your assessment. Also, refine the scores and weights.

Obviously, when we did the math for our decsion, we decided that the winning option was to start our consulting firm. However, we didn't jump into this life-changing decision without further thought.

Related: 3 Decision-Making Tools to Help You Draw the Right Conclusions as Your Business Evolves

Instead, we played with the variables, discussed them and slept on it for a day or two before deciding what was the right step for us. Grid Analysis was a helpful technique for us, and one that just might work for you, too.

Doug and Polly White

Entrepreneurs, Small Business Experts, Consultants, Speakers

Doug and Polly White are small business experts, speakers and consultants who work with entrepreneurs through Whitestone Partners. They are also co-authors of the book Let Go to GROW, which focuses on growing your business.

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