How to make decisions like Apple, Sony - Pareto analysis, fishbone diagram explained

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How do you better organize your priorities to make stronger decisions backed up by data? In this video, you’ll learn how to use the top decision-making tools like decision matrix and Pareto analysis, Fishbone and Kano diagrams, Eisenhower, Action priority, and Rapid matrices, OODA loops, DMAIC model and Delphi Method which you can download and customize to your needs.

When you make decisions, emotions, ego, and bias often get in the way. With these tools, you can be more organized with your decision process to better dissect a complex problem or turn a brainstorm session into a digestible dataset. Learn how to make decisions you can back up with a chart, a graph, a matrix, or a weighted table alongside how companies like Apple, Ford, Sony and Microsoft make decisions. Plus, stay to the end to learn about the toughest decision General Dwight Eisenhower had to make during World War 2 and how you can use his mental model for your own important decisions.

So you have a tough decision to make with a lot of competing factors. How do you make the right call without relying on gut instinct?

Over the last 20 years, Sony’s Playstation and Microsoft’s Xbox have been neck and neck for the top selling game console with each new generation. But both companies made decisions they had to walk back this year: Xbox decided to raise the cost and charge gamers the same price they would pay for a whole year of its Xbox Live Gold service, only now they would only get six months. Playstation also angered fans when it decided to shut down the legacy Playstation network stores, also ultimately deciding to walk back the decision.

To avoid a decision that seems smart based on cost analysis but could cost you a lot more in brand equity, use a decision matrix analysis to use an analytical approach to your decision options.

A simple decision matrix on the left lists the criteria to make a decision alongside a score for each potential solution.

A weighted matrix on the right lets you value different criteria based on their level of importance. For example, if cost isn’t as important as service or vice versa, each can be weighted lower or higher as needed. If the cost scores high on a decision but the rest of the criteria is weighted lower, it will bring the entire score down, which could lead to a different decision depending on what’s most important.

Once all these weighted scores are tallied up, you can use a graph visualization to see how they all stack up.

So you know how to make an informed decision. But how do you decide which decision will have the most impact on your company?

In 2018, 93% of all EV sales came from just 12 models, of which the Tesla model 3 sold 4x as many units as its next closest competitor. Tesla not only led the electrification of the industry, but changed its peers’ business models. In addition to going electric, Ford announced earlier this year it will permanently reduce the range of vehicles carried on dealership lots and transition to a build-to-order model. Ford is taking the Pareto principle to heart and will spend less on promotions, reduce manufacturing costs and complexity, and invest more in the models buyers really want.

Pareto analysis is a simple decision-making technique to assess competing problems and measure their impact. In this case, the 80-20% rule can be translated into decision making as it forces you to look at what causes what and the impact of those causes.

In a table or survey format, you can identify and list a series of problems that contribute to a particular outcome. You then score the problems based on their frequency of occurrence, percentage of the whole, and level of impact.

During your Pareto analysis, you may find it important to identify the root cause of each problem that you identify.

For example, a new report from accounting firm Grant Thornton identified nearly one million job vacancies in the UK. Half of these jobs were in the food and drink sector, industries that typically rely on an immigrant workforce from the EU. This labor shortage has created a supply chain crisis where the government blames the pandemic and businesses blame Brexit, which left many holes in the British labor market without the workers to fill them. So which of these is the root cause?

To identify root causes, you can use a fishbone diagram, also called a root cause and effect diagram. A fishbone diagram begins with a problem statement that is written on the right, or the head of the fish.

Then, contributing causes are added to the bones of the fish, with smaller bones that branch off from the larger issues that add additional context. Once all the contributing factors are listed, this root cause discovery analysis can be used to compile the results and weight them according to their relative importance with another decision making tool like Pareto...