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Chapter 9: Decision Criteria

Chapter 9: Decision Criteria

Video: Alternatives That Win MECE Options + Decision Criteria That Make Your Recommendation Obvious

Once you have developed credible alternatives, you need a way to compare them. This is where decision criteria are important. Decision criteria are the standards you use to determine which alternative is best. They answer the question: “What makes one option better than another for this organisation?” Without clear criteria, teams often select the alternative they personally prefer. With strong criteria, the recommendation becomes a logical consequence of the analysis.

Criteria Should Come From the Case

Don't choose criteria simply because they sound impressive. The criteria should connect directly to the organisation's:

  • mission;

  • strategy;

  • objectives;

  • capabilities;

  • financial position;

  • stakeholders;

  • values;

  • constraints;

  • the problem you identified.

For example, if the organisation's central challenge is declining profitability, appropriate criteria might include:

  • financial impact;

  • implementation cost;

  • speed to impact;

  • risk;

  • capability requirements.

If the organisation is a not-for-profit, however, financial return may not be the dominant criterion. You might instead prioritise:

  • social impact;

  • reach;

  • stakeholder impact;

  • mission alignment;

  • sustainability;

  • funding requirements.

The criteria must reflect what matters to this organisation.

Common Decision Criteria

Depending on the case, useful criteria may include:

  • Strategic Fit: Does the alternative support the organisation's strategy and objectives?
  • Financial Impact: Does it improve revenue, profit, cash flow, value, or return?
  • Customer Impact: Will it improve customer acquisition, retention, satisfaction, experience, or lifetime value?
  • Capability Fit: Does the organisation have the necessary skills, technology, infrastructure, and resources?
  • Risk: What could go wrong, and how significant would the consequences be?
  • Implementation Speed: How quickly can the organisation execute the alternative and begin getting results?
  • Stakeholder Impact: How will employees, customers, investors, suppliers, communities, regulators, or other stakeholders be affected?
  • Flexibility: Can the organisation adapt or reverse the decision if circumstances change?
  • Sustainability: Does the alternative create long-term value without creating unacceptable environmental or social consequences?

The Decision Criteria Test

Before using a criterion, ask three questions.

  1. Why does this matter? Can you explain why this criterion is important to this organisation?
  2. Can we compare the alternatives? Can you actually assess the alternatives against the criterion?
  3. Does it connect to the problem? Does the criterion help determine whether the organisation is solving the problem identified in the case?

If the answer is no, reconsider the criterion.

Avoid the Criteria Trap

Teams sometimes create too many criteria. A comparison might contain:

  • strategic fit;

  • financial impact;

  • revenue growth;

  • profit growth;

  • ROI;

  • NPV;

  • customer satisfaction;

  • employee satisfaction;

  • brand impact;

  • sustainability;

  • risk;

  • implementation;

  • flexibility;

  • scalability;

  • feasibility;

  • innovation.

The result looks sophisticated, but it may actually make the decision less clear. Some criteria overlap. For example:

  • Financial impact
  • ROI
  • NPV
  • Profitability
  • Revenue growth

These may all be useful, but they should not automatically receive equal and independent weight. The objective is not to create the longest possible list; it's to identify the few criteria that genuinely determine the decision.

Comparing Alternatives

Once criteria have been established, compare the alternatives. For example:

Decision Criterion Alternative A Alternative B Alternative C
Strategic fit High Medium High
Financial impact High High Medium
Capability fit Medium High Low
Risk Medium Low High
Implementation speed High Medium Low
Overall Best Strong Weak

The purpose of this table is not to make the presentation look sophisticated; it's to make your decision logic visible. The judge should be able to see why this alternative wins.

Make the Criteria Matter

The best comparison tables don't simply assign ratings. They explain the reasoning behind them. For example:

  • Alternative A: High financial impact
    • Because the initiative is expected to increase annual operating profit by $8 million.
  • Alternative B: Medium capability fit
    • Because the organisation has some of the required capabilities but would need to hire additional technical expertise.
  • Alternative C: High risk
    • Because the strategy requires significant upfront investment before demand has been proven.

The rating is not the insight. The reason behind the rating is.

Weighted Criteria

Sometimes different criteria have different levels of importance. For example:

Criterion Weight
Financial impact 30%
Strategic fit 25%
Capability fit 20%
Risk 15%
Implementation speed 10%

You can then score each alternative against the criteria and calculate a weighted score. This can be useful when:

  • the decision is complex;

  • several alternatives are genuinely competitive;

  • criteria have different levels of importance;

  • and the assumptions behind the scoring can be defended.

Don't use weighted scoring simply because Excel makes it possible. A mathematical score doesn't automatically make a decision objective. The quality of the decision still depends on:

  • the criteria selected;

  • the weights assigned;

  • the evidence used;

  • and the assumptions behind the scores.

The Recommendation Should Emerge From the Comparison

A strong decision process creates a logical sequence: Problem → Objectives → Analysis → Insights → Alternatives → Decision Criteria → Evaluation → Recommendation. This is important; the recommendation should not feel like it appeared at the end of the presentation. The judges should be able to follow the logic and reach the same conclusion. That is what makes a recommendation persuasive.

Don't Force the Matrix

A decision matrix is a useful tool, but it is not always necessary. If one alternative is clearly superior based on a critical issue, a simple comparison may be enough. For example: Alternative A requires a $20 million investment and produces a negative NPV. If the organisation's objective is to create financial value and the assumptions are credible, you may not need a ten-criterion scoring model to explain why the alternative should be rejected. Again: Use the tool that improves the decision. Not the tool that makes the analysis look complicated.

The Recommendation Test

Before finalising your recommendation, ask:

  • Can we explain why this alternative wins? If not, revisit the criteria.
  • Are the criteria important to this organisation? If not, change them.
  • Are the alternatives genuinely credible? If not, improve them.
  • Is the evidence behind the comparison strong? If not, do more analysis.
  • Would the recommendation change if an important assumption changed? If yes, test the sensitivity.
  • Can the judges follow the logic? If not, simplify the comparison.

Discover Your MAD Skills Principle

The best recommendation is not the option you like most. It is the option that best satisfies the criteria that matter most to the organisation.

Decision criteria turn preference into judgment.

The Bottom Line

Decision Criteria
  • Decision criteria define what matters when choosing between alternatives.
  • Criteria should emerge from:
    • the problem;
    • organisational strategy;
    • mission and values;
    • capabilities;
    • financial objectives;
    • stakeholders;
    • constraints.
  • Possible criteria include financial return, strategic fit, risk, capability fit, speed, customer impact, employee impact, flexibility, and sustainability.
  • Avoid generic criteria that could be applied to virtually any case without explanation.
  • For every criterion, ask why this matters to this organisation in this situation?
    • Criteria should allow meaningful differentiation between alternatives.
    • Weighting criteria can be useful when some considerations matter more than others, but the weighting should be defensible.
  • A decision matrix doesn't decide for you. It makes your decision logic visible.
  • The final recommendation should remain consistent with the analysis and criteria that preceded it.

    Don't use decision criteria to justify a decision you already made. Use them to help make the decision.

    MAD Skills Drill

    Using a case you have analysed, develop three alternatives. Each must be:

    • realistic;
    • implementable;
    • meaningfully different;
    • supported by analysis.

    Then apply the Straw-Man Test. For each alternative, assign one team member to argue: "Why could this genuinely be the best choice?" They have 60 seconds. If nobody can make a credible argument for an alternative, reconsider whether it belongs.

    Now select 3–5 decision criteria. For every criterion, answer: Why does this matter to this organisation and this problem? Evaluate all three alternatives. Before calculating any overall result, have each teammate independently predict which option should win. Compare the result with the matrix.

    Finally, ask: did our analysis determine the winner, or did we design the criteria to make our favourite idea win? Your recommendation should defeat credible alternatives.

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