Strategy Lessons from Fighter Pilots

Strategy Lessons From Fighter Pilots

The OODA Loop (Observe, Orient, Decide, Act)

The OODA Loop was a concept originally applied to fighter pilots, developed by Colonel John Boyd of the US Air Force. OODA has since become an important concept in both military strategy and business strategy.

Today’s rapidly changing business environment creates the opportunity for companies to gain a competitive advantage if they can properly understand the impact of the changing environment, respond with the right actions, and implement them more rapidly than competitors.

Consider a fighter pilot involved in a dogfight with enemy aircraft. One of Boyd’s winning insights concerning aerial combat was the need to change speed and direction faster than the opponent. Using the OODA Loop, the pilot must think and act faster than the opponent can think and act. In a dogfight, being able to think and act a fraction of a second faster puts adversaries off balance and increases the likelihood of victory.

The same principle operates in today’s hyper-competitive, increasingly globalized business landscape (but over a longer timescale than an aerial dogfight obviously).

The proactive and conscious application of the OODA Loop can give your business an advantage over competitors who are merely reacting to conditions after they occur, or who have poor awareness of the strategic impact of the forces that will shape your industry in the near future.

1. Observe:

As a business leader, you must periodically lift your head out of your day-to-day “business as usual” activities, and take a good look at what is going on around you. Be sure to perform a disciplined strategic analysis of the changes in the trends that are impacting (or are likely to impact) your industry in the near future. I recommend a thorough, high-level industry analysis at least once a year, with a strategic review every quarter in order to create and refine your winning strategy.

2. Orient:

This is where you form your hypotheses about the evolving situation in your industry by answering questions like:

  • Who are your key competitors (the “players”) and what moves are they likely to make?
  • What new entrants could disrupt your industry?
  • What alternative options could substitute for what you offer?
  • What moves are your suppliers likely to make?
  • What moves are your target customers likely to make?
  • Are there any political or regulatory changes that could impact your industry?
  • What impact will economic factors have on your industry?
  • What societal or behavioral changes could impact your industry?
  • What technology changes will influence your industry?

The aim of your industry analysis is to look for inflection points that are occurring (or are likely to occur) in your industry. Inflection points are where a significant change occurs in your industry, and we either make a good strategic decision and go on to be more successful, or we make a poor decision (or no decision) and go into decline, or out of business altogether.

(I’m sure you can think of many examples of where a company was once dominant in their industry, an inflection point occurred, they failed to implement wise strategic decisions in a timely manner, and as a result, their business went into decline or bankruptcy: e.g. Kodak, Blackberry, Nokia, Yahoo, Blockbuster Video, Borders Bookstores)

Based on the industry analysis questions above:

  • What industry inflection points have you identified?
  • What strategic moves could you take to address these future scenarios?

3. Decide:

Now it is the leader’s job to decide what action you will actually take. You can’t do everything, so you need to focus on the small handful of moves (I recommend no more than 3) that will have the greatest positive future impact.

The military teaches its officers that any decision is better than no decision. The decision to “do nothing” is still a valid option to be considered, but it needs to be a conscious choice.

Note: It is important that we continually improve our current operating model to make it more effective and to extract maximum value. This tweaking comprises a continuous series of experiments, data analysis, and go/no-go decisions to implement valuable new innovations. But don’t fall into the trap of continuously “improving what is”, when your strategic analysis points to major industry inflection points and the need for significant business model change. This is analogous to rearranging deck chairs on the Titanic.

Sometimes you need to make a bold decision to “create what will be”; which may mean letting go of the past and building something very different from what you are currently doing in order to successfully navigate the inflection points you have identified. Just sitting there conducting “business as usual”, tweaking your current business model, and hoping things will work out in times of significant change is not a winning strategy!

4. Act:

Now you must fully commit to your chosen course of action.

This is where you need a disciplined strategy execution framework to help you make good strategic decisions, and help you implement solid management disciplines into your company to make sure these things get done!

How can you use the OODA Loop to help you execute like a fighter pilot?

For more examples of the OODA Loop and its relevance to strategy see: Why Do Strategy Anyway?

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Until next time…
Stephen

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