OODA Loop

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The OODA loop is a great tactical tool for ensuring that your startup is nimble and reactive.

It originated in research carried out by Air Force Col. John Boyd following the Korean War, but has been successfully applied to law, corporate strategy, military strategy and law enforcement. It's taught at business school, and I highly recommend it as a way of structuring your startup.

The OODA Loop

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  • OBSERVE - Observe what is going on, both internally and externally
  • ORIENT - Determine how you are positioned, particularly wrt competitors, your strengths and weaknesses
  • DECIDE - Decide what this means for you and what you should do
  • ACT - Execute on the plan that has been decided upon

Success in air-combat, law, military strategy, or executing at your startup is correlated with: -

  • Speed of iteration around the OODA loop
  • Accuracy of decision-making with the loop

Methodology

Observe

Observe what is going on at and around your startup. Typically the best sources of information here are dashboards with clear numerical data - sales numbers, deals closed, active customers. Look at this data and understand it. Other sources of information may be reports on competitors, industry reports from consulting firms, or whitepapers.

Orient

Determine what this information means for you. Typically this means sitting down and pondering over stuff, digging into numbers, watching trends, or looking at outcomes versus the plan. This shouldn't be a quick summary glance - it should be a thorough and detailed analysis of where you are currently. Leave as few stones unturned as possible, and questiona as much as you can.

Discuss observations in a group and what they mean to everyone present. This is particularly powerful if you can gather employees from different departments or functions, or who have very differing expertise, experiences or perspectives.

Decide

Based upon the hypotheses formulated above, you need to decide what to do.

Teams should be empowered to make decisions themselves, and not have to wait for senior management approval, or other buy-in - these slow down the process of iterating around the OODA loop. Conversely, this means that all stakeholders need to be present in the room, and the broader ramifications of an action determined.

Act

You now need to execute on the plan agreed above. Ideally the Startup's reporting cadence is such that meaningful work can be done on the plan, and results seen before the next time results are observed and discussed.

Example at ChefHero

During the launch of ChefHero in Toronto, we used this process to rapidly understand the market and iterate around various solutions towards Product-Market Fit.

We collected data on sales, revenue, new signups, churned customers etc. for the preceding 7-days every Thursday evening, and compiled this into a report that was distributed every Friday morning at 9am. We held an Operations meeting every Friday at 10am for an hour - of which the first 15-20mins were spent reviewing the data and discussing what we saw.

This structure ensured that we had relevant data and information to discuss. Each participant had time to review the data beforehand, consider what was going on, and come to their own conclusions. We then discussed at length to ensure that we weren't personally missing anything.

After we had discussed the data and what it meant, we moved to discussing what we should to about it. The meeting allowed us to brainstorm various ideas, and we ensured that we had representatives from vendor success, customer support, operations, finance, accounting and sales present to have their say. This ensured that we could rapidly brainstorm feasible ideas with all stakeholders present, and discuss which made the most sense.

We were able to make decisions quickly and effectively because of a combination of all stakeholders being in the room, and Saif (ChefHero's CEO) trusting and empowering us to do as we saw fit. Operations were able to come into the office on a Monday with a clear plan forward to execute, and a deadline of Thursday evening by which to get clear results and an outcome.

This structure kept us focused on the data, forced us to iterate quickly, and ensured that we made decisions rapidly and effectively.

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Posted by Phillip Gales

Phillip is a serial entrepreneur who specialises in Operations, Data and Metrics. He applies AI and Machine Intelligence to old, antiquated and/or forgotten industries that are ripe for disruption.

Phillip holds an MBA from Harvard Business School, and an MEng in Electrical Engineering from the University of Cambridge, specialising in Machine Intelligence.

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