Flaws in the OODA Decision Structure as Applied to Business

Topics: Strategic management, Decision making, Balanced scorecard Pages: 7 (2556 words) Published: December 1, 2013


Flaws in the OODA Decision Structure as Applied to Business

Background:
Colonel John Richard Boyd, a military strategist, developed the OODA cycle from his Energy--Maneuverability theory and his observations with military combat between MiG-15s and American F-86s during the Korean War. He determined that to win, one must be able to create a situation where they can make a decision faster than the opponents, then adapt to the constant changing environment. “Observation, Orientation, Decision, and Action (OODA) Loop. In this process, rivals observe their positions, the environment, and their opponents; orient themselves to the situation; decide on a course of action; and act. The cycle begins again as each rival observes the changes brought by the action, orients himself to the altered situation, decides on the appropriate course of action and acts” (Bell, V. 2003). Businesses want to dominate and survive in a competitive market. Their success depends on utilizing this type of business cycle and maintaining one step ahead of their competitor. The four states of the OODA Loop:

1. Observe--collect current information from as many sources as practically possible. 2. Orient-- analyzes this information, and uses it to update your current reality. 3. Decide-- determines a course of action.

4. Act-- follows through on your decision. (MindTools, n.d.) The original concept of the OODA Loop was meant as military strategy for pilots. It helped them outmaneuver their opponents in the air. It created a flexible method, allowing pilots to quickly adapt to a rapidly changing environment. This required a high level of trust and common outlooks that were shared by others. Commanding officers needed to be confident that their pilots had a plan of action and that the subordinates did not need the commanders constantly directing them to achieve the goals of a mission. “Without the OODA Loop…’we will find it impossible to comprehend, shape, adapt to, and in turn be shaped by an unfolding, evolving reality that is uncertain, everchanging and unpredictable.’ John Boyd, author of the OODA Loop” (Wilson Research Group, 2009). OODA Loop:

In theory this cycle is logical, adaptable and useful in business strategy; however, the fundamental assumption simply fails in reality because, except on a battlefield, you do not have a tight immediacy. Not all decisions must be made in a split second when it comes to business practices.

In today’s economic times, retailers continuously have to adjust their pricing on items that they offer consumers. Using the OODA Loop allows them to adjust for the competitor’s price differences and the dynamic economic conditions that influence consumer spending behaviors. Retailers are also looking at their current sales numbers and sales figures, inventory levels, store traffic, competitor pricing and advertising as well as other market indicators to make strategic decisions. OBSERVATION:

As described in the loop, the first step of the loop is to Observe. Observe means that you should be looking for new information. We should become familiar with, and aware of, unfolding information and situations. A retailer will gather market intelligence by identifying the competition and gathering information on the competitor’s price points for the same products in their markets. Retailers will use market feedback, current selling of the same items or similar items and consumer surveys to evaluate what products will be in high demand. The retailer should ask questions such as: “What’s happening in the environment that directly affects me? What’s happening that indirectly affects me?

What’s happening that may have residual affects later on?
Were my predictions accurate?
Are there any areas where prediction and reality differ significantly?” (Mind Tools, n.d.). Here are some examples answering the questions presented in the above quote for the Observe phase of the...

References: (cont.)
The OODA Loop and Decision Making. (2008). The Observe Orient Decide Act (OODA) Loop and Decision Making. Retrieved December 06, 2012, from http://www.managementstudyguide.com/observe-orient-decide-act-loop-decision-making.htm
OODA Loops. (n.d.). Mind Tools New Articles RSS. Retrieved December 06, 2012, from http://www.mindtools.com/pages/article/newTED_78.htm
Pincus, R. (2012, June 11). ARTICLE. ARTICLE. Retrieved December 06, 2012, from http://www.imakenews.com/eletra/mod_print_view.cfm?this_id=2451505
Renault, V. (2012). The Community Tool Box. SWOT Analysis: Strengths, Weaknesses, Opportunities, and Threats. Retrieved November 03, 2012, from http://ctb.ku.edu/en/tablecontents/sub_section_main_1049.aspx
Risk Analysis. (n.d.). - Decision Making Techniques from MindTools.com. Retrieved November 03, 2012, from http://www.mindtools.com/pages/article/newTMC_07.htm
SWOT Analysis. (2012). - Strategy Tools from MindTools.com. Retrieved November 03, 2012, from http://www.mindtools.com/pages/article/newTMC_05.htm
Timmerman, T. J., Major. (2003). Assessing Effects- Based Operations Crucial Feedback for the Air Component Commander (Doctoral dissertation, Air Command and Staff College Air University, 2003) (pp. 26-30). Maxwell AFB, AL.
Youngman, K. J., Dr. (2003). A Guide to Implementing The Theory of Constraints (TOC). Retrieved December 06, 2012, from http://www.dbrmfg.co.nz/Thinking%20Process%20Cloud%20OODA.htm
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