An important concept in the field of decision making is the OODA Loop, or the Observe-Orient-Decide-Act loop. This refers to the strategic advantage that a decision maker gets over an opponent by observing the situation, orienting themselves, and then deciding and acting accordingly.
This concept was introduced primarily in combat and strategic warfare, where it was believed that a combatant’s “edge” over an opponent comes from having a fully functional OODA loop.
The term and the concept were proposed by the military strategist and member of the United States Air Force, Colonel John Boyd.
The theory underlying the OODA loop is that decision making within our minds happens according to the way in which the recurring loops of observation, orientation, decision and action happen in response to a situation.
The basic premise is that decision makers must be agile and alert to the situation, and have a clear head and cool mind, to take a decision lucidly and cogently.
Then the next stage, where the decision has to be taken, takes over — where the information from the situation meets the individual’s thought processes, leading to decision making capabilities.
Finally, the decision leads to the action, where the decision is actualized and made operational.
The important thing to remember about the OODA loop is that feedback is an integral component of all stages, with information flowing back and forth between the individual and the situation.
The point to note is that the OODA loop calls for exemplary mental and physical fitness (the latter more so in actual combat situations). This fitness is needed because the decision maker has to seize the situation, comprehend it, and take quick decisions on the spot depending on how the situation unfolds.
Though the concept was introduced in the armed forces, it is now regularly applied in the corporate world as well, since the OODA loop is a sound basis for decision making even outside combat. In the hectic corporate world, there is often no time to lose, especially when quick decisions have to be taken — and the OODA loop provides a good foundation for how decision makers can go about that process.
Applying the OODA Loop to Split-Second Corporate Decisions
The first and most important thing to remember about the OODA loop is that it is mainly concerned with situations that involve split-second decision making. Considering that it was developed by an Air Force pilot, it’s natural that the OODA loop describes decision making in combat-oriented situations — but this doesn’t preclude its use in corporate decision making, since there are many situations in which decision makers have to take split-second decisions with little or skewed information.
For instance, during board meetings and meetings of shareholders, important decisions and announcements often have to be made depending on the exigencies of the situation. During hostile board meetings, or meetings of senior management where decision makers have to confront other managers with competing agendas, they have to react quickly and agilely to ensure that the decision they take is in the best interests of the organization and its shareholders.
The point to note is that decision makers in these situations have to assess an opponent’s strategies, strengths and weaknesses, and react in a timely and quick manner. The time between receiving information and taking a decision is often measured in seconds and minutes, which means decision makers have to react quickly to the demands of the situation — often by getting inside the minds of their opponents.
For instance, understanding what an opponent’s strategies and intentions are by assessing their body language and words would be invaluable to a decision maker in this kind of situation.
The noteworthy aspect here is that decision makers have to rely on gut feelings and emotional intelligence to arrive at a decision. This means trusting themselves and their own judgment to take the decision that would be in the best interests of the organization and its shareholders — often while acting on imprecise or skewed information. The reason for this is that opponents are themselves actualizing their own OODA loops, which turns it into a situation where the one with the better decision-making abilities wins. This is part of why the OODA loop is popular in contemporary organizations, where training and mentoring often involves familiarizing people with the concept.
Finally, it isn’t always the case that decisions taken by decision makers are perfect and free from errors. There has to be a mechanism where feedback loops are activated to ensure that decisions are vetted and evaluated for the impact they have on the organization.
To sum up, this method, developed by John Boyd, is extremely useful for decision making in any setting where reaction times are short, and where the fitness and agility of the decision maker play a crucial part in making the decision.
