Lean Startups and Dogfights

How the OODA Loop changed business decision-making

Businesses compete in an arena where the fastest to identify and adapt to trends in the marketplace win market share. It’s hard to believe that lean startups such as Dikidog (Berlin based startup attempting to disrupt the dikiebow for dogs market (1)) are applying techniques that originated from a diagram that was designed by a US Air Force instructor to teach fighter pilots how to win in a dogfight.

In his 1976 paper “Destruction and Creation” (2), Colonel John Boyd introduced the concept of an ever-changing environment containing multiple systems in a constant state of flux. In order to improve the capacity for independent action and decision making within these systems, Boyd suggests a two-stage technique involving

(1) Destructive Deduction
(2) Creative Induction

The first stage involves the deconstruction of multiple domains in order to deduce, analyse and differentiate the information consumed, which he calls destructive deduction. Having broken down a complex system into little pieces, the second stage involves the gathering of these “bits and pieces”, and by creative means, induct, synthesise and integrate this information to create a new pattern or concept; a technique he calls creative induction.

Boyd earned himself the nickname forty-second Boyd form his claim that by using the OODA loop in combat, any warrior could fly inside an enemy’s decision cycle and gain the upper hand to achieve victory within forty seconds. The OODA loop (3) can be broken down into the following components:

(1) Observe
(2) Orient
(3) Decide
(4) Act

The first stage involves the collection of data by observation of the circumstances as they unfold, outside information, unfolding interactions with the environment and the current state of guidance and control.

Having analysed all the information gathered, the Orient stage is based on identifying the best course of action to follow by synthesising or “filtering” all we have learned. At this stage of the loop, previous experience is taken into account as well as factors such as genetic heritage and cultural conditions of the environment.

After the two initial stages have been concluded and an underlying hypothesis has been concieved, the next stage is to decide whether to act. Action for a fighter pilot could mean an offensive/defensive manoeuvre, for a startup it means to test this new hypothesis on its userbase.

As we go through the OODA loop, every module in the sequence is in a feedback loop to the “Observe” module so that we have updated information available for the next iteration. Manoeuvre faster than a Mig-25 over the Arctic and you gain airspace superiority. Learn what customers want faster than your competitors and you gain market share.

Innovation can come from anywhere. Cold war dogfighting concepts are now used to create startups that can innovate and execute faster than market incumbents. When we have brought artificial intelligence to a point that can fly an organisation around the OODA loop, how will this change the dynamics of the supply chain, operational workflows and the nature of strategy in the organisation as a whole? Could we see organisational decision-making moving at the speed of high-frequency trading in the years to come? Please share your thoughts with me: @fuzzielabs or http://tinyurl.com/nkd2und

(1) This startup doesn’t really exist but I hope you get the point.
(2) http://goalsys.com/books/documents/DESTRUCTION_AND_CREATION.pdf
(3) http://herdingcats.typepad.com/.a/6a00d8341ca4d953ef014e89520ffe970d-pi