When starting a new business, or even running an existing one, decision making is a difficult piece that requires a lot of thought and has no ready answers. After all, chances are that your decisions can have far-reaching consequences that could affect future courses of action and have long-term consequences. And that responsibility requires a lot of foresight and experience to bear successfully.
In the process of decision-making, several processes go on almost simultaneously in our minds. Subconsciously, we’re often analyzing and trying to figure out the consequences of each iteration before finalizing a decision. And it is using this idea that the OODA loop was developed as a framework for smart and strategic decision-making.
The OODA Loop was developed by the American military strategist and the United States Air Force Colonel John Boyd. It was a framework that was used to devise strategies for combating opposition and developing combat operational strategies. What is interesting, however, is that Boyd’s concept of the OODA loop is not specific to the military concept. In fact, it is now considered a highly effective framework in managing litigation, business and even learning operations. At its root, the OODA loop functions on automatic reactions of the brain to external stimuli, and it tries to articulate the analyses we do every time we have to make a decision.
The OODA Loop stands for Observe-Orient-Decide-Act and is a cyclical framework that relies on 4 major components of decision-making. Usually used as a loop diagram, it can be used as a flow diagram as well. The main idea is that it should communicate your process effectively, regardless of the diagram employed.
In making an OODA loop, it is important to understand what each step of the process entails.
In this stage, you should be focusing your energy on collecting information. Acquire raw data, statistics, primary research, and other important information that can facilitate your decision-making process. As the name suggests, most of the data come from careful observation of the situation, trying to analyze internal and external factors that can affect your operations. A good practice to follow is to assume you are an outsider looking into the situation. It helps you keep your objectivity while eliminating potential biases in your observations.
The next step of the process involves actively eliminating all biases from our observations. This implies that you are now orienting yourself in the right direction, and your decision will be made solely based on pragmatic data, and not any preconceived biases. Five things to keep a lookout for include – culture, genetics, ability to analyze and synthesize, and previous experience. All these factors can affect the way we process information, so it is important to be cognizant of them and ensure we are orienting ourselves for a fruitful decision-making process.
This is where active planning takes place. Once you have collated your information in a clear-cut, bias-free manner, you can now create a working document that outlines your decision based on the information you have. Deciding what to do, based on data, is the most important part of this process and it is what will decide the outcomes of your planning and execution. It is also what enables the cycle to continue as this decision may be revised again and again, as it undergoes multiple iterations of the same process to optimize and strategize the right decision for an organization. This is the step that should involve the most critical thinking and analysis of decisions versus consequences.
Once you have a decision in place, as well as an exhaustive plan for its execution, the only thing left is the act of physical execution of a strategy. It can be easy to fall into the trap of doing excessive research and analysis without ever converting it into an actionable plan, which is why this is a crucial step in the OODA loop as it allows for abstract and virtual ideas to become a reality, with real-world implications.
It is with the data collected as a result of the physical execution of a decision that the OODA loop cycles back to the beginning, as the process repeats itself over and over, learning something new and eliminating wasteful information and actions in the process.
What are the uses of the OODA Loop?
Adaptability in a Competitive Market
One of the biggest uses of the OODA loop is to counter your business competitors. After all, the concept was devised as a combatant strategy. But how exactly the OODA loop helps in that is a long process of constant iterations and multiple loops working simultaneously. The main idea is that by collecting information about your competitors, you can feed them to an OODA loop and understand how that information affects their standing in the market. Additionally, another OODA loop is involved in understanding customer data, and what it is that the clients are looking for.
Once you’ve got the information, it is simply a matter of analyzing and coming up with a business plan that effectively orients you to the market better than your competitors, giving you a significant advantage. This is what is meant by the adaptability of a firm, and being able to constantly analyze and act upon changes in the market is what makes the OODA loop so effective.
Identifying Patterns of Behaviour
In terms of analyzing patterns of behavior, an OODA loop can function on two ends. It can attempt to analyze your own firm’s functioning based on its own strengths and weaknesses and find ways to capitalize on the strengths while eliminating or improving on the weaknesses.
On the other hand, it can also look for patterns of behavior of your target demographic and consumers, and allow you to orient your processes to the requirements and expectations of your consumers. By identifying patterns of behavior, you can make an educated guess about consumer response to any new product or service that you intend to put out.
Creating Quick Responses
By studying market trends and your competitor’s processes, an OODA loop can enable you to make quick decisions about sudden changes in the market, demographic or company processes. And being quicker than your competitors to respond is the most important aspect of combating your competitors with sound planning and decision-making.
Alternatively, having quick responses can simply be a result of orienting your OODA loop and decision-making process towards the future. Analyzing top and upcoming market trends and trajectories can help you scope out a possible plan for the future, and orient your processes to give you a headstart over your competitors.
Pros and Cons of OODA Loop in Decision-Making
As with every model and framework, the OODA Loop has both significant advantages and disadvantages it can offer to decision-makers. It is important to understand these to utilize the OODA Loop to its max effectiveness.
Good at adapting to messy and disorganized markets. Using the OODA Loop makes quick decision-making based on ever-changing data possible and simple.
It allows you to gain a competitive advantage by effectively disrupting a competitor’s decision-making process.
In this age of data, it is a model that allows your organization to become data-driven and allows for planning based on evidence, rather than experience and intuition solely.
There is no scientific basis for the OODA Loop. All evidence of its functioning is rooted in anecdotal evidence.
It is not the easiest decision-making framework as it requires a lot of legwork to be effective. Moreover, its processes are open to interpretation, making them slightly volatile.
Can create the illusion of credibility if incorrect or incomplete data is used to formulate plans.
It does not account for reusing tactics for similar situations as the loop only functions in its entirety, and isolated elements cannot function on their own.
Few examples of OODA Loop templates for PowerPoint:
Perhaps an audacious statement, but every business functions almost like a battlefield, with a well-oiled battalion of employees and leaders working in tandem to reach their goals. And so, it makes sense that a decision-making framework with its roots in the military can be as effective as it in tackling business decisions. The OODA Loop is a great resource for leaders that want to make decisions that are rooted incredible data and can be, to a certain extent, be sure of the results.
Now you don’t have to scour the web to find out the right templates. Download our PowerPoint Templates from within PowerPoint. See how?