ERIC SCHMIDT, FORMER CEO OF GOOGLE learned his lesson on effective decision making while taking his flying lessons. In the aviation industry there is a catchphrase: “decide, decide and decide” which means it’s always better to make a decision and then accept the results. One of the key traits of leadership and executives is decision-making, with no place for indecisions.
Just scan the pages of history and you’ll see that one of the characteristics that great leaders demonstrate is their decisiveness. Though when you take quick and fast decisions, there is always this element of making mistakes, but still, you need decision-making. It’s better to make a wrong decision than no decision at all.
Eric Schmidt recalls the decision by Google to purchase YouTube, an incredibly historic decision that was taken in just 10 days.
In a Global Survey done by Mckinsey, only 20% of participants felt that their organizations excel at quick decision-making.
The business environment can be described as Volatile, Uncertain, Complex, and Ambiguous, or VUCA. In the VUCA world making good decisions and taking the right decisions is the essence to survive and thrive. But it’s no small feat because these types of decisions impact their employees, shareholders, customers, and their organizations.
Great executives and leaders know when to move fast and quick with the available information, versus when to go slow and take time to know more and collect additional information, input, and insights, but also know when to stop and go ahead with the decision.
Understand this: more is not more in decision-making- more information, more data, more statistics, more inputs, and more figures. while it may seem desirable to have as much information and data as possible, but the same information can be very time-consuming and even can lead to analysis-paralysis.
Just imagine that you are starring in a high-stake situation with a significant chance of failure but you still need to make a rational decision and take immediate action right away.
What to do?
Just observe and learn from the techniques that leaders/people use in life-saving positions such as doctors or military strategists. Military leaders and personnel invest a lot of time and resources into developing various models and processes that help in decision-making. Since the probability of them working in difficult conditions and drastic scenarios is quite high, they have an equally good chance to work effectively in a typical one.
One such highly effective model is the OODA Loop which stands for four distinct yet interconnected parts: “Observe, Orient, Decide, and Act.”
It is a mental model, a great way of thinking on decision-making developed by U.S Air Force fighter pilot and military strategist John Boyd.
During his time as a fighter pilot, Boyd was nicknamed “Forty-second Boyd” referring to his expertise and ability to win any ariel fight against his opponent in less than forty seconds.
His experience of serving in World War II and the Vietnam war served him well and later on, he spent a great deal of time studying people and organizations. Boyd finally came to the conclusion that success in both personnel and professional life depends on the ability to make fast decisions under chaotic conditions and uncertain environment. This conclusion is what eventually led him to create the OODA Loop.
The OODA loop encourages decision-makers to think quickly and fast, anticipate threats, and neutralize them before they become critical.
The OODA loop is a practical concept designed to function as the foundation of rational thinking in confusing, chaotic, dire, and drastic situations.
Let’s break down and understand the four parts of the OODA Loop and see how they connect.
The observation phase is the data and information collection phase. In this step, the decision-maker keenly observes the internal and external environment to identify the problem and gain an overall understanding of the situation. You as a decision-maker will try to ingest all the information you can with the aim of using the observed information to build and develop an overall curate and comprehensive picture as possible.
For example, a fighter pilot might consider the factors like weather conditions, the opponent’s situation, etc. Just look at yourself and the situation from an outsiders’ perspective as a witness to collect as much information as possible. You don’t think about what to do with all the information, you just focus on collecting what’s available and possible. But information alone is not sufficient, you need to develop the skill to segregate which information is plain white noise and which information is relevant for the current decision.
In your workplace, this can be equated to data and information gathering regarding the overall business landscape, competitors, available resources, management mindset, team relationships, and much more. It means understanding your surroundings, your available data, your competitor’s move, your industry trends, your industry regulations, and your operating landscape as a whole.
The critical point is to understand that all available information is a snapshot in time and may become obsolete tomorrow. Therefore, you must gather all that is available as quickly as possible and then make your decisions based on it. Since speed is of the essence, you cannot wait to gather endless amounts of data but to use whatever is available though incomplete.
Not to forget the “Loop” part, the whole process is intended to be repeated again and again. So, you can always re-calibrate should new information come in. Each repetition offers more information to update the next stage, making it a feedback loop.
So, if you want to make good decisions, you need to master the art of observation.
The orientation phase is considered the most important step in the OODA loop, where you play with what you have gathered. John Boyd referred to this phase as “schwerpunkt” in German which means- “the main emphasis.” This phase is about organizing the information and data collected in phase 1. Here you analyze the available information, crunch the data and try to make sense of it. You think and reflect on the findings from the previous phase, evaluate, understand the options available, and then decide what to do next.
The main objective of this phase is to visualize options and spot gaps which you can then use to your advantage. For this, a significant level of understanding and awareness is needed. The higher your understanding, the better you can reorient the situation, the better you can connect with reality and see the world as it is not as you want to see. You don’t allow to infest reality from the influence of your beliefs, biases, and prejudices.
According to Boyd, orienting can give you the edge over the competition, offers a head-start, and helps overcome the disadvantage in terms of less information and fewer resources to defeat an opponent. Joh Boyd identified the following four factors that play an important role in this stage: genetic inheritance, cultural traditions, past experiences, and new information.
In phase 3 the word says it all. The first two steps saw the collection of raw data and analysis of that data. Both these steps provide the foundation you need to make a good decision. From raw data to analysis to final decision, the third step allows the decision-makers to decide on the option they intend to pursue.
Finally, you choose the course of action from among the available options which can deliver the best intended potential outcome in line with your goals. The choice you select will be the one that will take you closer to your ultimate objective. Based on his understanding of the situation the decision-maker predicts the best course of action. This phase is the pre-cursor to the action stage.
According to Boyd, another way to describe this phase is- a hypothesis which means that you test the decision in the loop, look for errors or flaws, learn from the experience, fine-tune, and re-loop again in the future.
No surprises here! The final stage of the OODA Loop is to act on the decision. This is the culmination of all the previous stages and implementation of the hypothesis generated in the decision phase.
It’s time to walk the talk, time to play out the decision, time to follow the Nike logo: Just Do It.
In the final phase, you do two things: implement the decision, and also test if your hypothesis was right or not. In the process, you can learn from the experience and use the feedback as additional input when the OODA loop starts over again. Since, the OODA after all, a loop, action is not the last phase of the process. The learnings from the previous cycle will make the future cycles more accurate and faster.
Though the entire loop is broken down into 4 phases for the purpose of understanding, in some real-world situations, they might just happen in a fraction of a second. The key to the success of the OODA loop is to make it as short as possible. Organizations and people who are great performers have a short and fast OODA loop while poor performers have a long and slow OODA loop.
Though John Boyd developed the OODA loop with military strategy in mind, like all other effective mental models, it has become popular and found liking in other fields like law enforcement, intelligence agencies, lawyers, doctors, sportsmen, and the corporate world.
Almost in all aspects of life, success is measured by your ability to identify problems and issues quickly, orient the resources accordingly, decide on the course of action and ultimately execute the decision effectively. Isn’t it?
Now, start applying it to your daily decision-making routine and see what happens. You’ll start seeing things from a different perspective and from a different lens.
“When you change the way, you look at things, the things you look at change” Max Planck, German quantum theorist, and Nobel Prize winner
Rather than jumping to conclusions, you’ll learn to stop, reflect on your beliefs and biases, orient to new information, and be more conscious of your decisions. As with everything in life the more you practice it the more, you’ll get better at it. You’ll start making better decisions in life and experience more growth and progress. Better decisions always lead to wins.
As far as the business landscape is concerned the OODA loop is a very effective business strategy for start-ups, as most of their success depends on how fast and agile, they are in making decisions to beat the competition by releasing new products and services, to take calculated risks to adapt and grow. The philosophy of the OODA loop: to react quickly and swiftly to changing circumstances than your competition is the same needed for the start-up to survive and scale-up.
In a start-up ecosystem, the faster you make decisions, the more control you’ll have over the situation. Before your opponent gets ready to act, you have changed the landscape by acting on it. This results in your competitor losing control of the situation and as they start to realize what is going on confusion and panic set in. A panicked and confused opponent is an easy target to outwit and outsmart.
In the hectic business world, there is very little time to react or adapt and hence the OODA loop can be used as part of your strategic toolkit to assist you to constantly scan your surroundings and make the right and timely decisions than your competitor. And the best part is that even if you make the wrong decision, it’s not the end, you can correct it anytime and learn in the process. In short, the OODA loop is a winning strategy for head-to-head contests.
This article was a humble attempt to explain the significance of the OODA loop in all spheres of life. If you have found this helpful or interesting, please do share your feedback in the comments section below and also share it with others.
Happy Quick and Fast Decision-Making.