In the previous post, we covered the origins of the OODA Loop concept (observe, orient, decide, act) and the fighter pilot background of the guy who invented it, Colonel John Boyd, USAF. If you like to understand the history behind ideas, then take a few minutes to read part 1. Otherwise, let’s just press ahead…
This graphic is the popularized depiction of John Boyd’s core idea. His actual OODA loop model is more complex and interesting, but this suffices for a basic understanding.
For the business world, the importance of the OODA Loop and “Boydian strategy” is the emphasis on quickly making decisions and rapidly acting on them. The other fundamental insight it provides is that the process is a continuous cycle (or loop). This is where the term “decision cycle” comes from. And in any form of competition, the side that consistently moves through decision cycles the fastest is usually the side that comes out on top.
Fighter pilots and military operators talk about defeating opponents by “getting inside” their decision cycle, meaning turning their jet tighter than the other guy, or maneuvering their force into an advantageous position (i.e. getting their “firstest with the mostest”). But how does this work in the marketplace? How does it apply to doing business?
First off, incorporating OODA Loop thinking leads to a roots-deep understanding that all businesses operate in a competitive arena. Some compete head-to-head with other companies just like them (think dueling flower shops). But all compete indirectly against other industries, sectors or activities (banks want people to save, retailers want people to spend). You may not understand who or what the competition is, but its always there.
Ralph Mroz of Customer Manufacturing Group gives a good explanation in this video on how the OODA loop fits with business management structures.
Naturally, what follows is the question of how to compete. What will give your business an edge? Pricing? Quality? Technology? Innovation? Marketing? There are innumerable factors to consider. But most business owners and managers don’t consider the efficiency of their decision-cycle as a potential competitive advantage, and don’t consciously look at how they can execute decisions faster. They should.
Deciding and acting more rapidly provides many advantages. The classic example, of course, is being first-to-market, beating the competition to the punch in offering a new and better product. In most cases, the first company that rolls out the latest-and-greatest gains a big competitive edge. Today’s technology, media and market dynamics make this even more true. Changes are unfolding faster than ever, and the pace keeps increasing.
But tightening up your OODA loop is about more than getting products to market faster. It’s really about becoming more adaptable, more agile across the whole range of business activities. It’s about improving your ability to see and capture opportunities. A faster process for deciding and acting helps a company:
- Predict and respond to market demand. Optimally, you want to be “ahead of the curve” and well positioned when your customers start moving in a new direction.
- Grow the business, or enter a new phase. Restructuring or transitioning from one business model to a new one is always bumpy. Delays and dragging things out only makes it more so. Rapid execution is needed.
- Proactively respond to crisis. When a challenge unexpectedly emerges, you need to quickly shift into high gear, let the team know what’s happening and stay flexible. A rapid decision-cycle is also key to turning crisis into opportunity.
The flip side to all this, of course, is that none of these advantages exist in a vacuum. Remember, the competition is always out there. The speed of your decision-making process is only relative to that of your rivals. The scary implication is that if your OODA Loop is too slow, you probably won’t even know it. When you fall behind in this arena, by definition your perception of the environment is outdated, inaccurate and misleading. When a competitor gets inside your decision-cycle it’s hard to even see them, much less effectively react to them.
So, spend some time thinking about the OODA Loop, and where your company can gain from John Boyd’s insights. Below are some more references on how all this relates in business.
–Ajax Trueblood
References:
3 things you need to make better, faster project decisions (J. LeRoy Ward, PMWired)
The OODA Loop & Near-Real-Time Analytics (TIBCO)
John Boyd and the OODA Loop applied in business – Dean Lenane (YouTube, 8:50)
