How are you supposed to make good strategic decisions when everything is always changing? The first step is to accept that you’re never going to have perfect information on which to base your decisions. The second step is to improve your decision-making by adopting a strategy that embraces this instability, rather than ignoring or fighting it.
Enter the OODA loop.
From the cockpit to the boardroom
The OODA loop – which stands for observe, orient, decide, act – is a method of decision-making developed by Colonel John Boyd of the United States Air Force. Although it was created to help fighter pilots gain the upper hand in dogfights, the OODA loop has since then been embraced as an approach to strategic thinking and decision-making that is applicable in all sorts of situations – including the workplace.
The main premise of the OODA loop is that in order to navigate changing conditions, you need to constantly analyse your situation, assess your options, make a decision, act upon it, see what happens and then repeat the cycle. This can be broken down into five steps:
- Observe – Start by gathering all available information regarding the external and internal conditions you are currently facing.
- Orient – Once you’ve compiled this data, you need to analyse what it all means by applying your existing knowledge and previous experience.
- Decide – Once you’ve analysed the available information regarding your situation, you need to assess your options, form a hypothesis about how each option would play out and then make a decision.
- Act – Once you’ve decided on a course of action, you need to implement it. Decision-making without action will lead to paralysis.
- Loop – Once you’ve started to take action, you need to return to step 1 and start the process all over again. This step is critical and reflects the fact that decision-making is an ongoing, dynamic process, not a one-off event.
At the core, the OODA loop is all about approaching decision-making as a continuous cycle of observation, action and adjustment aimed at staying one step ahead of your competitors.
Adapt or die
Why do people often make poor decisions when faced with changing circumstances? This article sums it up concisely: “According to Boyd, ambiguity and uncertainty surround us. While the randomness of the outside world plays a large role in that uncertainty, Boyd argues that our inability to properly make sense of our changing reality is the bigger hindrance. When our circumstances change, we often fail to shift our perspective and instead continue to try to see the world as we feel it should be.”
You may believe that your company’s products are technologically superior to your competitor’s products. However, if customers are nonetheless flocking to the latter, you need to accept this reality so that you can determine what steps are needed to change it.
The OODA loop acknowledges that success requires nimble and adaptive decision-making. If you become stagnant or stubbornly ignore the changing conditions around you, you’re going to be blown off course. This doesn’t mean that you have to follow the flock or change your final destination, but it does mean you need to be open to adjusting your route to get there.
Making sense of a dynamic business environment
Operating in an ever-changing business environment is difficult. Add to that the challenge of overcoming cognitive biases – which can further skew your thinking – and it can feel like strategic decision-making is a nearly impossible task.
With the OODA loop, you can improve your strategic decision-making by adapting in the face of changing conditions. To learn more about this decision-making framework and how you can put it into practice, download our free OODA Loop Decision-Making Checklist.