** MOB 2 : Paired Comparison Analysis

Paired Comparison Analysis:
Working Out the Relative Importance of Different Options

Paired Comparison Analysis helps you to work out the importance of a number of options relative to each other. It is particularly useful where you do not have objective data to base this on.

This makes it easy to choose the most important problem to solve, or select the solution that will give you the greatest advantage. Paired Comparison Analysis helps you to set priorities where there are conflicting demands on your resources.

How to use tool:

To use the technique, first of all list your options. Then draw up a grid with each option as both a row and a column header.

Use this grid to compare each option with each other option, one-by-one. For each comparison, decide which of the two options is most important, and then assign a score to show how much more important it is.

You can then consolidate these comparisons so that each option is given a percentage importance.

Follow these steps to use the technique:

• List the options you will compare. Assign a letter to each option.

• Set up a table with these options as row and column headings.

• Block out cells on the table where you will be comparing an option with itself - there will never be a difference in these cells! These will normally be on the diagonal running from the top left to the bottom right.

• Also block out cells on the table where you will be duplicating a comparison. Normally these will be the cells below the diagonal.

• Within the remaining cells compare the option in the row with the one in the column. For each cell, decide which of the two options is more important. Write down the letter of the more important option in the cell, and score the difference in importance from 0 (no difference) to 3 (major difference).

• Finally, consolidate the results by adding up the total of all the values for each of the options. You may want to convert these values into a percentage of the total score.

Example:

As a simple example, an entrepreneur is looking at ways in which she can expand her business. She has limited resources, but also has the options she lists below:

* Expand into overseas markets
* Expand in home markets
* Improve customer service
* Improve quality

Firstly she draws up the Paired Comparison Analysis table in Figure 1:


Figure 1: Example Paired Comparison Analysis Table (not filled in):

http://mindtools.com/pages/article/newTED_02.htm

Then she compares options, writes down the letter of the most important option, and scores their difference in importance. An example of how she might do this is shown in figure 2:

Figure 2: Example Paired Comparison Analysis Table (filled in):

http://mindtools.com/pages/articles/newTED_02.htm

Finally she adds up the A, B, C and D values, and converts each into a percentage of the total. This gives these totals:

* A = 3 (37.5%)
* B = 1 (12.5%)
* C = 4 (50%)
* D = 0.

Here it is most important to improve customer service (C) and then to tackle export markets (A). Quality is not a high priority - perhaps it is good already.

Key points:

Paired Comparison Analysis is a good way of weighing up the relative importance of different courses of action. It is useful where priorities are not clear, or are competing in importance.

The tool provides a framework for comparing each course of action against all others, and helps to show the difference in importance between factors.