Perhaps as long as 38 years ago, I was waiting to enter a presentation which my agency was giving at the Pentagon. Some of the creatives were a bit nervous presenting new work but all I had to do was show a magazine schedule that had largely run and answer a few questions. While my colleagues paced, I looked for a place to get a coffee.
As I was pouring my cup, I overheard a major and a lieutenant colonel talking about an upcoming visit by retired Air Force Col. John Boyd. He was going to discuss his Ooda Loop strategy. For some reason, I employed a memory trick that I learned as a teenager. I made a ridiculous association and locked in his name and his strategy (I imagined William Boyd, the actor who played Hopalong Cassidy in my youth in fully Hoppy regalia in a jet doing barrel rolls). A few weeks ago, I heard of Ooda Loop again, and like magic, John Boyd came back to me instantly.
During the Korean War, fighter pilot Boyd worked out an approach for making quick decisions that would improve chances of success in environments that were changing quite rapidly. His approach dubbed OODA was--Observe, Orient, Decide, and Act. I would argue that it is applicable to 2017 business, especially in tech.
Boyd observed that US pilots tended to win most dogfights in the air even though their planes were a bit slower than the Soviet MiG jets. The trick was not simply that his pilots were better trained. It was that they were able to make TRANSITIONS more swiftly.
So, he developed OODA. The Observe part was basic. Pay rigid attention as things are progressing. The Orient task came next. Unless you are able to interpret information it is not worth much. You need to digest information and come away with a more sophisticated view than most. Decide is next--just as a fighter pilot has to act so does a man or woman in business. Cut through the fog and make a judgement. Finally, you Act. The best way to mess up a rival be it a hostile jet or a business competitor is to hit them with unexpected actions. If you take action before an opponent can switch their tactics, you competitor will be at least temporarily disoriented.
It appears that many successful Silicon Valley entrepreneurs are using the OODA loop in some form. I have seen write-ups about how the PayPal founders employed it directly and it appears many are doing it without realizing it.
This is contrary to Warren Buffett’s famous “moat.” The great Omaha investor always has stated that he likes to invest in businesses with a moat around them. The cost of entry is high and the well established brand (Coca-Cola, Wells Fargo, Washington Post) has a sustainable competitive advantage over its competition. Such an approach has served Buffett and Berkshire Hathaway shareholders very well. Are the times changing, however, especially in new wave disciplines?
Eighty-eight year old business guru and former Royal Dutch Petroleum executive, Arie de Geus, said a few years ago that, “The ability to learn faster than your competitors may be the only sustainable competitive advantage.” If he is right, we may be seeing a great deal more about the OODA loop in the years to come.
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