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How to Use the OODA Loop for Strategic Planning in Business

The OODA Loop is an acronym for Observe, Orient, Decide, and Act. It’s also called the Boyd Cycle, named for military strategist U.S. Air Force Colonel John Boyd, who developed this decision-making process. In a nutshell, it is a cybernetic theory of strategic planning in business that can apply to any situation or process. By using these four distinct steps, individuals or organizations learn how to make better decisions faster.

OODA Loop-Related Terminology and Why it’s Important to Strategic Planning in Business

Before we get into the finer points of the OODA loop, how to make decisions faster, and learning to be strategic about planning for your business, there are a few terms you should be familiar with first.

  • Maneuver warfare is a military strategy of outwitting enemy forces in battle, rendering them vulnerable to attack. Maneuver warfare draws heavily on the principle of acting fast with available resources. It’s the concept from which the OODA loop originated.

  • Mental models are a way to evaluate your thoughts, which helps you understand how to make decisions faster. They help reveal and overcome any pre-existing assumptions that could prevent you from being strategic in planning for your business.

  • Situational awareness describes an individual’s knowledge of a situation and how much of that knowledge they receive from sources outside their direct influence. Drawing information from multiple sources is crucial for making better decisions faster rather than relying solely on your own perception.

  • Reaction time is the time it takes you to react to a stimulus. Tracking reaction time as tasks get added to a process can help planners optimize strategies.

The 4 Steps of OODA

Like other problem-solving methods, the OODA loop is an interactive, iterative process that involves repeating the cycle, observing and measuring results, reviewing and revising the initial decision, and advancing to the next step. While the process is not always simple or linear, the four phases are relatively easy to understand.

  1. Observe: The first step in the OODA Loop is to observe what’s going on in your environment. This step includes taking in as much information as possible from the surrounding environment. This includes gathering intelligence and looking for patterns, signals, and cues that may indicate either a threat or opportunity in your industry.

  2. Orient: The second step of the process is to orient yourself in response to what you’ve observed based on your company’s goals and values. This is an evaluative period of the loop, in which you decide whether your company should respond to a given circumstance and what that response might look like.

  3. Decide: After you have developed a number of potential responses to the situation, the third step is to choose a course of action. Perhaps you choose to engage the “enemy” directly, or perhaps you decide to pursue an alternate route to the same destination. Either way, you must be prepared to fully commit to this single course of action.

  4. Act: Finally, after gathering data and determining the best course of action, the fourth and final phase is to put your chosen plan into effect.

But that’s not the end of the process — it’s called a “loop” for a reason. After you’ve acted, you must return to the beginning to observe how your action has affected the environment and how that will affect your next move.

Only 32% of data available to enterprises is put to work. The remaining 68% is unleveraged.

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Use the OODA Loop to Make Faster Decisions in Strategic Business Planning

Military strategies are designed to be effective under chaotic, conflicting scenarios and allow for versatile reactions. In the business world, agility is essential for any company to succeed. Organizations that can adapt or react the fastest are the ones that win. Thus, the OODA loop has seamlessly translated into strategic planning in business.

So how might this look in your business?

Let’s say a competitor has a wildly successful online presence that you’d like to emulate or overtake. You can use the OODA Loop to learn how to make decisions faster and be strategic about planning for your business.

  1. Observe the competitor’s actions online. What do they do? How do they interact with customers? What platforms and strategies are they using?
  2. Orient your company’s online marketing strategy while staying true to your unique business persona and values.
  3. Decide on the online marketing strategy that’s most appropriate and feasible for your company.
  4. Act by putting your strategy into effect.
  5. Start the cycle again. Observe the response to your new approach and orient/decide/act again. Repeat until you achieve your desired outcome.
You’ll always be in some phase of the loop with your decisions. Maintaining awareness of your position will improve your decision-making skills and the outcome.

Online Leadership Guidance from Eighth Mile

Using the OODA Loop in your business takes more than following a simple series of steps to make decisions faster. It requires self-awareness, honesty, courage, and plenty of practice. The Eighth Mile helps business leaders develop highly effective leadership skills that build dedicated, high-performance teams. Whether you’re an entry-level to mid-career employee, a new manager, or an entrepreneur, our eight-week online leadership course will help you make decisions that make a difference. Get in touch to learn more.

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The Fog of War: Making Better Decisions on a Deadline

As leaders and managers, part of our responsibility is to find credible information to assist practical and informed decision-making. Unfortunately, decisions often have to be made on deadline — without all the necessary information available. Decision makers in these circumstances must leverage their management experience to estimate the likely risk-to-reward ratio of a business decision and act within their authority on limited information. How to make better decisions faster is a skill all leaders must learn, or else they may be left behind.
 

Indecision Is a Decision

From my own experiences, I have often observed leaders who are very uncomfortable making decisions without “all” the information. But to not make a decision is also a choice. In a competitive environment, indecision is the kiss of death: Situational opportunities get snatched up by competitors who are more adaptable and agile. Decisiveness now on an incomplete set of facts beats a perfectly informed decision later — provided the educated guess was close enough.
 
Military strategist Carl von Clausewitz coined the phrase “the fog of war” to describe uncertainty within the complex, high-stakes arena of military conflict. It addresses the complexities of gathering accurate and timely information in a constantly changing environment against thinking opponents.
 
Key to the “fog” metaphor is the importance of how to make command decisions faster with what little information one has. Fog is also everywhere; there is no place to hide from it. Indecision does not lie outside the Fog of War, but within.
 
In war, achieving goals requires maintaining momentum. Momentum requires action. The skilled commander must timely act within the Fog of War, maintaining momentum on limited information rather than losing by default to indecision.
 

No Perfect Decisions in the Fog of War

So why can’t people conceive of making better decisions in the absence of “all” the information? The simple answer is fear of making the wrong decision. With no information at all, this prudent caution is perfectly understandable. But there is no prudence in wasting time on an endless search for the “perfect decision” because it does not exist, except maybe in hindsight.
 
If there is no such thing as a time-constrained “perfect decision,” and if all decisions are time-constrained, making better decisions while maintaining momentum is the wiser course. A leader whose decisions are rash and ill-considered doesn’t stay a leader for long. Overcompensating for this, however, is no better.
 
What a wise leader will find is that the most effective balance lies closer to action. From my own experience in competitive environments, I’ve found that making faster decisions that are good 80% of the time beats 100% of the decisions made too late. Making better decisions while maintaining momentum creates the most reliable recipe for projects succeeding on time.
 

In the Fog of War, Information Is on a Budget

On a time budget, gathering data is not income but expense. To make better decisions, your information needs to be worth more than the time it takes to gather. For every data-gathering endeavor, ask yourself, “Am I gathering the right amount of the right data? Was the time I spent worth the cost?”
 
Sir Richard Branson once said, “There’s no such thing as perfect decision making — only hindsight can determine whether you made the ‘right call.’”
 
One of Branson’s techniques places greater emphasis on a small set of key questions, gathering the most accurate information possible on a small set of parameters to inform the broader decision. “Perfect information” on a narrow set of specifics is a viable technique — it’s the time budget that matters. If budgeting all the time on a narrow set of specifics provides a way to make better decisions faster, it’s a good method.
 
Too often, people appear to be gathering information without a good understanding of what decision it will influence. In these instances, people are most certainly busy; unfortunately, they are likely collecting the wrong information. Quantity without quality is wasteful spending of the time budget. Getting the right data and only the right data is how to make decisions faster.
 

4 Ways to Manage the Fog of War

As a trained leader, there are several things you can do to assist your team members so they spend the minimum of their precious time collecting the most valuable information:
  • Prioritize your questions of fact. Determine what one must know versus what is nice to know. In some cases, a metric applied to the data itself might signal the end of the useful collection. Always place greater emphasis on answering questions that will determine go/no go criteria for the project.
  • Route the right questions to the right stakeholders. Too often, we engage the wrong people with our critical questions. When engaging with subject matter experts, ensure that your question drives toward a decision and that you ask in language or vernacular appropriate to your audience, as words often mean different things to different professionals. Don’t make the common mistake of assuming every project manager knows complex engineering terminology.
  • Streamline data collection toward specific questions targeted to make better decisions. Effective project managers adequately define the project scope and ensure the project remains oriented toward a measurable end-state. If you are collecting information that does not target how to make decisions faster, stop collecting it.
  • Sequence your data collection to align toward project milestones. Get what you need most first. Do, however, keep one eye on preserving data you might need later.

Make Better Decisions Within the Fog of War

If you wait too long for too much information, you can miss critical opportunities as projects and situations evolve. The Fog of War will never part to reveal the perfect decision until it’s too late to matter. Do you have enough information to make a “good enough” decision now? Make it. Learn how to make decisions faster, and you’ll find you can make better decisions.
 
These principles inform our work at The Eighth Mile Consulting. We work with good people who are ready to take a critical inventory of their skills and make the changes necessary to become better leaders for their teams and businesses. If you’re facing the uncertainty of the Fog of War, we’re a good ally to have on your side. Take a look at our 8-week online leadership course and see how The Eighth Mile can help you make better decisions faster.
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