How to Use the Payoff Matrix to Prioritize Solutions
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In this article, I’m going to show you how to use a simple tool to prioritize the improvements generated from the Improve phase of your Lean Six Sigma project. The tool is called a Payoff Matrix and it helps prioritize your improvements according to their benefit if implemented and the resources needed to implement.
Below is an example of a completed Payoff Matrix:
Before we can prioritize improvements …
Before we can prioritize the improvements, we must make a comprehensive list of the improvements. These improvements must be actionable items that mitigate the root causes that you uncovered in the analyze phase. Actionable items are problems that we can implement a tangible fix.
Below is an example of an improvement list written on a flip chart during a Lean Six Sigma Performs the process improvement tasks. meeting:
Setting the Stage for Improvement Prioritization
Before we can prioritize the improvements, we need to draw the the Payoff Matrix. I like to draw the Payoff Matrix on a flip chart to get engagement from the whole team.
Let me take you through the steps to drawing the Payoff Matrix:
Step #1, With a blue marker draw cross-hairs in the middle of the flip chart (like the one pictured below)
Step #2, With a red marker, draw cross-hairs in each of the four sections (like the one pictured below)
Step #3, Along the X axis draw the Low to High Resource line. Along the Y axis draw the Low to High Benefit line (like the one pictured below)
Now that the Stage is Set we can start Prioritizing Improvements
Now that we have drawn the Payoff Matrix, we can start populating and prioritizing improvements. Use your teams list of improvements. Start with improvement #1. Place the #1 on the payoff matrix according to the benefit of implementing the improvement and the amount of resource to implement. Move on improvement #2, #3, etc.
What is the Meaning of the Four Quadrants?
- “Quick Win” Quadrant: These are improvements that are easy to implement and have a relatively high benefit. This is the quadrant that should be the priority when implementing Lean Six Sigma project improvements.
- “Filler” Improvements: The improvements in this quadrant will individually have less The change in the average value of the output caused by a ch... but cumulatively could have a large effect.
- Do we have the Time and Money?: The improvements in this quadrant are costly in time and/or expense. These improvements are were we have to evaluate the risk of giving up the resources and the reward gained.
- “Kill It”: The improvements in this quadrant have little effect and are costly. These improvements are either tabled or we can decide they are not worth pursuing.
Below is an example of a Payoff Matrix on a flip chart:
What did you think? Did this article help you and your team to effectively prioritize your solutions? Please share your thoughts in the comments below.