The OODA Loop

Learn to be a business fighter pilot to outmaneuver competition

Overview of OODA Loop

The OODA Loop is a strong framework for decision making. In today’s fast paced business world speed of decision making is a critical factor for success. Unlike Scenario Planning (which I covered in previous posts), the OODA loop is a framework for a strategy system to build upon for your business processes.

The OODA loop has 4 steps; Observe, Orient, Decide, Act

The components

The OODA loop is mental framework to setup your strategy to be resilient to changes.

The great philosopher Mike Tyson once said “Everybody has a plan until they get punched in the mouth”

• Observe: I am always looking at external and internal drivers for change. I’m looking for inflection points in trends.
• Orient: If you have done scenario planning you can reference your playbook to determine whether this aligns with your strategic plan. It is in this step that you do the analysis to determine what options you have.
• Decide: This is the moment of truth, which action do you take. A non-action is equal to an action at this point. I often times see companies punt to make a decision, which they don’t acknowledge as a strategic choice.
• Act: Once the decision has been made it is imperative to move quickly to mobilize and execute the strategy.

After you have taken action the feedback loop begins again to observe market changes. I have also found that you often start a new feedback loop for someone else. The results of deciding to act normally correspond with an observation for someone else.

How to put this in action

If this sounds too simple and too good to be true, you are right. Building out a system is more complicated than a simple funnel approach. Here are a few keys that I have found to having a system approach:

• Map your current decision processes (start with your traditional funnel process that you probably already have)
• Identify feedback loops or where there should be feedback into the process
• Get alignment on decision frameworks / principles (e.g. optimize for LTV or optimize for transaction revenue)
• Instrument your processes to get data

Model in Action

It is hard to not to hear someone talk about voice assistants, especially after CES. A few years ago I was working with an entertainment company on their product development process while voice was becoming a more prevalent medium. Below is an illustrative example of how we went through an OODA loop around observations around an increase in voice based user interfaces.

Source: Google Images / Gartner

• Observe: Speech recognition was starting to improve, though voice assistants like Alexa and Google Assistant had not yet launched (as can be seen in the diagram to the left). Google had completed their 411 experiment and implemented within Google Now. Siri was becoming a core element of the iOS experience. In addition, remotes were getting more complex and challenging.
• Orient: While the company didn’t have principles when we started the project they defined a set of principles for making the decision. For new user interfaces like voice they would only put up to 20% time towards it.
• Decide: The choice at this point was between a few options, 1) invest in voice, 2) invest in gesture based interfaces (at the time gesture based UI was gaining traction with Xbox Kinect and Sony Wii), and 3) continue to monitor
• Act: They decided to invest in voice by working with a partner to integrate voice recognition technology. So after the feedback loop to choose voice they quickly went through the next feedback loop of build, buy, or partner. Given the limited volume of voice transactions it made sense to partner as the first step. The team then instrumented the product to track usage to evaluate making further investments or improvements (which will then lead to another OODA loop)

Below is an example system diagram I created for a product development process that went along with the above example. In this case the choices above were all made by the Product Council or Product Owner. The follow on loops around specific implementation details are the responsibility of the product manager.

These were the principles the Product Council had laid out for decision making related to a digital video solution:

• 80% of our effort on most mature user interfaces, 20% on emerging
• Product available on all high-usage device platforms within 3 months of launch (10M users or greater)
• Compatible with all internet connected TV’s and set-top-boxes (e.g Roku, DIRECTV)

Closing

While I would love to say that I have transformed Porch to operate like a fighter pilot, we are still on the journey. Over the last 18 months we have setup regular cadences to evaluate our strategy on a more frequent basis and use weekly exec discussions to Observe and Orient. In addition, we have setup real-time streams of forensic metrics that give insight below the top line targets (often times these are leading indicators). This has led to much faster actions to resolve early warning signs.

If you want to hear more about the OODA loop, check out this episode of Masters of Scale hosted by Reid Hoffman last year. I will in future posts discuss more on system dynamics and how mapping the system can help organizations build their OODA loops.