Key to business success: Consider the OODA Loop

OODA Loops And Business Success

The idea of OODA Loop stands for:

  • Observe
  • Orient
  • Decide
  • Act

As a basic concept, the idea is “move quickly on decisions.” Phrased in a BS corporate way, you need to “be nimble.”

Here’s a little backstory on OODA Loop in the context of entrepreneurial skill sets:

An acronym for “observe, orient, decide, and act,” this framework for rapid decision-making in fast-changing environments was created by Col. John Boyd, a U.S. Air Force fighter pilot, during the Korean War. For entrepreneurs, Wilkinson says, this means continually updating their assumptions and moving quickly from one decision and iteration to the next. David Sacks, PayPal’s first COO, told Wilkinson that PayPal’s team would look at new features that competitors were building and quickly iterate. When Dotbank.com, for example, gave a $10 bonus to those who signed friends up for its service, PayPal rolled out a similar offer within a week, and added a $10 bonus for the new customer, too.

Here’s Boyd:

The interesting thing here is that some huge companies, i.e. Wal-Mart, are beginning to understand that making decisions quickly — i.e. abandoning a constant quest for consensus — is actually a pretty good idea, business-wise. Consensus, as most people probably understand, can be absolutely paralyzing to decision-making.

That said, most managers and “leaders” still rely on consensus in almost every contextual situation, so … we may have an uphill battle going here.

FYI: if you really think about it, one of the major concepts that separates “entrepreneurs” and “Silicon Valley” apart from a “Let’s deify them!” standpoint is this ability to move pretty quickly in terms of their decision-making. When companies get slow or add lots of tiers/layers, that can hurt — especially as more decisions need to be made digitally and quickly.


Ted Bauer


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