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Decision Making is critical for every business. Military strategists apply their training and experience to devise battle plans and make quick decisions aimed at achieving specific objectives. Military strategies, concepts, and practices have found widespread application in businesses as well as everyday life. Writings, memoirs, and experiences of famous military historians and strategists—such as Sun Tzu’s “The Art of War,” Clausewitz’s “On War,” and Liddell Hart’s “Strategy”—have been well-regarded in the business world and are being applied by business leaders across the globe to this day.
In the commercial arena, many businesses have successfully captured markets, contested with opponents, and accomplished strategic goals by applying military strategies. Unity of command, planning, effective communication, Decision Making, mutual understanding, and coordination are essential in the military as well as in business.
Colonel John R. Boyd was a US Air Force fighter pilot and a renowned military strategist, whose theories and writings have attracted widespread adoption in the military as well as the business world. Boyd served at the Pentagon and performed mathematical analysis to support the F-15 Eagle program. He, along with Thomas Christie, a mathematician, created the Energy-Maneuverability (E-M) theory of aerial combat, which became the gold standard for fighter aircraft design. He also made significant contributions to the development of a lightweight aircraft (later known as the F-16).
The OODA Loop (Observe, Orient, Decide, Act), or Boyd’s Decision Cycle, is considered Colonel Boyd’s most renowned theory. It’s a tool that military forces use to plan and execute strategic decisions.
In the business realm, the OODA Loop is a process by which an individual or an organization reacts to an event and makes timely decisions. The model constitutes a 4-step decision loop:
- Observe – entails gathering as much pertinent data as possible.
- Orient – involves analyzing the data gathered.
- Decide – entails choosing a course of action.
- Act – involves implementing the decision.
The OODA Loop delivers a number of benefits to the entities implementing it. For example, the theory:
- Makes the practitioners’ processing and reaction time agile.
- Creates harmony and reduces disagreement among the stakeholders implementing a decision.
- Enables prompt, objective decisions.
- Allows the individuals to concentrate on certain elements instead of uncertainties.
- Encourages problem solving and Innovation capabilities.
- Develops a culture of dynamism, flexibility, situational awareness, adaptability, and transparency.
- Underscores the importance of robust planning and preparation for effective Decision Making.
Ill-planning, lack of practice, and incorrect execution of the OODA Loop results in certain drawbacks:
- Erroneous, costly decisions due to a lack of thorough understanding of the concept.
- Problems and disasters arising out of a decision made without thinking through all the available data, scenarios, consequences, and possible outcomes.
- A misleading perception of credibility over the model by the individuals.
- Ignoring to use the OODA Loop in an iterative cycle in familiar circumstances results in untoward consequences.
- Failure to account for the additional response times inherent in team settings and collaboration results in friction among team members.
Let’s dive deeper into the first two stages of the OODA Loop.
Stage 1: Observe
The foremost step in the OODA Loop necessitates gathering data, carefully ascertaining the threat or problem, and comprehending the organizational and external circumstances.
Observations impact decisions. If the first step of the OODA Loop is flawed, it leads to a flawed decision and, subsequently, a flawed action. The Observation step warrants collecting all information relevant to the existing organizational state, competitors, and market to accurately discern the unfolding circumstances. This is critical since, while speed is important, improving your analytical skills and being able to see what’s really happening are even more important before making a decision.
Stage 2: Orient
The “Orientation” phase of the OODA Loop involves gathering information, analyzing it, and developing a comprehensive understanding of the situation. The stage involves reflecting on what has been found during observations and considering what should be done next.
In this stage, we try to create a mental model of the environment or problem, taking into account our past experiences and biases.
Interested in learning more about the other steps or stages of the OODA Loop? You can download an editable PowerPoint presentation on the OODA Loop here on the Flevy documents marketplace.
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