Recently, the board of a startup I sit on was facing an important decision. The company was raising a new round of funding, and we had the happy dilemma of choosing between four compelling offers. Everyone had a strong opinion of which was best, none of which were the same. Around the table, people were saying things like:
- Firm brand matters more than anything else. We need a well recognized name to become part of the leadership.
- The only thing that matters is how this new partner will fit into our team.
- Capital is a commodity. We should only care about a firm’s ability to help us grow and scale. What resources do they have?
- Having a partner with deep pockets for future financing is the thing that will add the most.
These are all logical assertions, but even this smart and highly functional board was having no luck using the context of the situation to come to a decision. We could not see how these different truths fit together in this instance. Instead, the group was growing increasingly frustrated as we spoke late into the night.
At that point, I remembered a decision-making framework I’ve been using personally for decades. In my family, we call it the Rehmus Matrix, after my good friend Steve Rehmus who first showed it to me when we were in college. I later learned that Ben Franklin also used this approach, but I’m sticking with Rehmus out of loyalty.*
The basic premise is that instead of looking at the problem, you should first spell out your decision-making criteria and then rank alternatives based on them. The critical step, however, is that you allocate a scarce resource (typically, 100 points) to the criteria.
To see how it works, let’s look at a simple example anyone can relate to: lunch. Imagine that you’re trying to decide if you should eat at Chipotle or Shake Shack. You settle on four decision-making criteria: 1) health 2) convenience 3) joy in the moment and 4) how you feel after the meal. Next, you allocate points to each one, with more points going to the ones that are more important to you. In your case, you decide:
- Health: 30
- Convenience: 30
- Joy in the moment: 15
- How you feel after the meal: 15
In other words, health and convenience are twice as important to you as how you feel about the meal. For you, Chipotle easily wins on both of the more important metrics, while Shake Shack wins on the less important ones. Chipotle is healthier, so long as you ditch the cheese and sour cream. It’s also more convenient, as the Shake Shack in your area always has lines around the block. While you would enjoy a Shake Shack meal more, Chipotle is the better overall choice for you.
Let’s return to our startup board, which was trying to decide between four offers. The group kept re-stating their broad declarations of what was most important. The temperature rose (if that can happen on conference call). When we seemed at a breaking point, I got the group to try the matrix. We quickly came up with five criteria and agreed to assign each points, with a total of 100 available. Our criteria were:
- The cultural and productivity fit of the lead partner, including insight into our company’s market
- The firm’s brand and brand effects. What would the name bring our company?
- The firm’s ability to help the company hire and scale (this was relevant because we planned to hire quickly)
- Other value added resources (buyer network, operating team, and so on)
- Price and terms
I put together a Google doc late that night, and by the time I woke up the next morning everyone had filled it in. As always happens (even inside my own head), we shifted around a bit as we defined terms more clearly, highlighted differences, and talked about how we came to our conclusions.
Surprisingly enough, when we were forced to allocate scarce resources, we were in broad agreement. The price and terms of the four offers were roughly equivalent, so no one thought they mattered much. All of us agreed that the lead partner and the firm’s ability to help with scaling mattered more since the company was on a strong growth trajectory. While everyone liked the idea of a partner with deep pockets, we all thought this was a nice-to-have, and no one allocated it more than 15 points. As a result, we quickly came to a decision and got back to the important work of helping the company succeed.
You can use the Rehmus Matrix as I do to come to quick decisions about everyday questions. You can also use it in more complex contexts to build consensus among competing interests. But no matter which you do, rest assured you’ll be in good company. After all, Ben Franklin used it too.
*Behavioral decision professors, Edward Russo and Paul Schoemaker, call it the Level 3: Importance Weighing approach in their book, Winning Decisions.