“He who can handle the quickest rate of change survives.”1
This is a quote about air-to-air combat from American military strategist John Boyd2 in 1976. However, gender bias aside, it could equally have come from a present-day management article about disruption and opportunity.
Boyd had completed degrees in economics and engineering before arriving in Korea in 1953 as a fighter pilot. After the war, he developed numerous influential theories on combat. His most famous theory is the ‘OODA loop’.
Two types of information inform decisions and action
As organisations work to capitalise on opportunities and manage threats, the OODA Loop helps identify and distinguish between four critical activities – Observe, Orient, Decide and Act. While much is written on the ‘decide’ and ‘act’ phases, this article focuses on the two preceding steps and why it is worth considering both separately.
Observation means continually scanning the horizon for the full breadth of factors that need to be on the radar. This skill is one of the cornerstones of ‘self-disruptive’ leadership, where leaders use observation and foresight to anticipate where their organisation needs to focus. Completeness and breadth is prioritised over detail. The activity is necessarily proactive rather than reactive.
Orientation refers to the gathering and analysis of information on a specific topic that is chosen during the observation activity, in order to inform a decision with appropriate levels of confidence and speed. This exercise drives insight on a specific topic so the emphasis is around depth of insight rather than breadth.
John Boyd’s work underpins a Harvard Business Review article by George Stalk and Sam Stewart from BCG5. They note that any organisation can deploy a version of the OODA loop as a mechanism to make great decisions quickly in an environment of rapid and pervasive disruption.
Together, the broad and shallow focus of observation to create foresight, and the narrow but deep focus of orientation activity to produce insight form a T- shape. To avoid predictable pitfalls, organisations need to check that they are doing both, in balance, and at a rate that reflects the accelerating change impacting every part of the economy.
A comparison of Observation and Orientation
|Frequency||Ongoing, quarterly||As required|
|Focus||Broad scan and assessment of opportunities and threats to create strategic options||Deep-dive into a specific topic area or strategic option|
|Example questions||1. What is the future of retail banking?|
2. How might AI/ML impact the legal industry?
3. To what extent should engineers be more innovative and how might that be achieved?
|1. Are there potential procurement savings from Chinese manufacturers of these goods?|
2. What are best-in-class examples of tech firms deploying data/analytics to understand customer needs?
3. How should we roll out a chargeback model between our business units and IT function?
|Order||Do first||Do second|
|Output||Collection of the topics and for each the triggers that would make them a priority opportunity or threat. Akin to a risk register.||Specific insights on a topic sufficient to enable a confident decision.|
|Types of data required||– Trends (global and cross industry)|
– Technology updates
– General competitive intelligence
– Case studies of innovative practices and ideas
|– Experience from across geographies or industries|
– Information on how multiple organisations have tackled the same challenge
– Lessons learnt
– Specific benchmarks
Don’t be blindsided
Inadequate foresight leaves organisations susceptible to being blindsided or left behind as competitors steal a march on them. In aerial combat terms, this means not letting a potential threat or opportunity fly “under the radar”. Blockbuster’s decision not to buy Netflix in 2000, having concluded “the dot-com hysteria is completely overblown”3, is a classic example of a lack of foresight.
How confident are you that your organisation is sufficiently aware of the factors most likely to shape your future?
Foresight takes input from a wide range of perspectives that extend beyond a single organisation and likely beyond a single industry sector. Conferences and industry reports play a role in gathering these perspectives. Interviewing specifically chosen experts is another way to efficiently create the breadth of perspective that defines thorough observation of an organisation’s context.
For example, expert interview-based research has met the needs of a bank wanting to regularly understand possible future scenarios for the banking industry, specifically the views from outside of banking.
Gather the right information fast to make the right call
Inadequate insight risks strategic missteps that were avoidable if critical and available information had been used in the Orientation process. John Boyd taught that by knowing the position and velocity of an enemy aircraft, a pilot could deduce their attack options and determine an appropriate countering strategy. There are all too many stories of corporate blunders stemming from leaders not being adequately informed. One example is Starbucks’ problematic Australian market entry in 2000, which cost the company $143M over an eight year period4.
How quickly can you assimilate the information necessary to determine a way forward when you spot an opportunity or threat?
One of the most powerful tools to develop insight is hands-on expertise from someone who has been there before. One example is a global telecommunications provider that had a requirement to roll out virtualisation technology across its mobile networks. The provider utilised Accelerated’s ability to access engineers in multiple leading telco’s globally to learn about the approaches, benefits and lessons necessary to undertake these investments more successfully.
Faster high quality decisions help you win
Many organisations are accelerating their internal decision-making capability as the world they operate in looks increasingly like a jet-powered dogfight. Those that do are well placed to identify, and capitalise on the opportunities they find. Those that don’t might want to check they’ve packed parachutes.