VIDEO: The Founder’s Minute: Part 3 – Pairwise Comparison

Transcript
{ 0:07 }

My name is Sherif Farghal. I’m the founder and CEO of Allovance. Today, I want to talk to you about ways to compare criteria for decision-making.

Throughout our professional careers, we’ve been faced with this problem over and over again. You have 5 or 6 criteria that you have to compare, and you have to get the relative weights for. And so, what you do is, like, criteria number 1, you score it 8 out of 10. Criteria number 2, you score it 4 out of 10. Criteria number 3, you score it 6 out of 10.

And then, what you do is you add all these numbers and divide, and then you get the relative weights. But is this the right way to do it?

If you think criteria number 1 scores 8 out of 10, and criteria number 2 scores 4 out of 10, did you really mean that criteria number 1 is twice as important as criteria number 2?

{ 0:58 }

So, today, I want to talk to you about another way of doing comparisons. It’s called pairwise comparison.

The cool thing about pairwise comparison is it allows you to look at each pair of criteria together and compare it to each other and do this for all the other pairs until you find the relative weights.

So, for example, if you want to buy a car and you have 3 criteria to buy a car: one of them is price, the other one is reliability, and the other one, let’s say, is style. And then you say to yourself, “Well, how do I put relative weights on these three criteria?”

So then you say, “Okay, I will compare price to style.” And if you don’t have a lot of money, then you will say, “Well, price is more important to me than style.” And then you do the same thing between price and reliability. And then between reliability and style.

{ 1:58 }

And by doing this, I don’t want to get you involved in all the math behind this, but there is a lot of formulas that then takes these comparisons that you just made and not only gives you the relative weight among those criteria, but also gives you what we call “inconsistency ratio.”

So, if you have a bunch of criteria that you want to compare, use pairwise comparison instead because it’s the true way of understanding how each criteria is relative to the others. 

At Allovance, we’ve built our methodology around scientific principles such as pairwise comparison and others to help organizations make smarter and faster decisions.