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© Chet Richards (+1) Certain to Win Boyds OODA Loop as a business weapon Or, any position other than first is a tie for last. Chet Richards J. Addams & Partners, Inc. March 2008
2 © Chet Richards Starting Point: Wars dont always turn out as expected RussiaChechnya Soviet UnionAfghanistan United StatesVietnam Various Arab StatesIsrael
3 © Chet Richards Business doesnt either General Motors Market share fell from 52% to around 25% Sears Dropped to #52 on Fortune 500 American Airlines Lost billions in 2001, 2002, 2003, & 2004 Delta, Northwest, United Airlines, US Airways In Chapter 11 Digital Equipment, Compaq, Montgomery Ward, Eastern Airlines, TWA, Pan Am, McDonnell-Douglas Gone
4 © Chet Richards But its not inevitable AutomobilesToyota, Nissan RetailingWal-Mart, Target Airlines Southwest, JetBlue, Singapore, Emirates, Ryanair, AirTran ComputersIBM, Apple
© Chet Richards (+1) In other words, there are many times when the side wed pick to win, based on: size/financial resources technology market share loses.
© Chet Richards (+1) Why?
7 © Chet Richards Gen Tommy Franks, Commander, USCENTCOM in Peter Boyer, The New War Machine, The New Yorker, June 30, 2003 The militarys answer is something called maneuver warfare And that is the business of decision cycles, or inside the decision loop, as people say … if, in fact, you can deceive him with respect to what you are going to do, to cause him further confusion and make him keep his force in place one day too long, then, in fact, you find yourself all the way to Baghdad.
8 © Chet Richards The primary advantage we want to achieve in all forms of maneuver is time.
9 © Chet Richards Using time as a weapon: The H-Y War Honda Motorcycles introduced or replaced 113 models, effectively turning over its entire product line twice. Yamaha, which also started with about 60 models, was only able to manage 37 changes in product line over the same 18 months. So, for one thing, Honda was able to incorporate (and test in the marketplace) a much wider variety of styling & technology.
10 © Chet Richards H-Y War: The Results But more fundamental: Honda succeeded in making motorcycle design a matter of fashion, where newness and freshness are important attributes to customers. Next to a Honda, Yamahas bikes looked old, unimaginative, unattractive. Yamaha was left with 12 months of unsold (and unsellable) inventory. Stalk & Hout, Competing Against Time, 59 Comment: a classic example of shaping the marketplace.
11 © Chet Richards A time-compressed company does the same thing as a pilot in an OODA loop … Its the competitor who acts on information faster who is in the best position to win. George Stalk, Jr. & Tom Hout, Competing Against Time,
12 © Chet Richards Business is a dogfight. Your job as a leader: Outmaneuver the competition, respond decisively to fast-changing conditions, and defeat your rivals. That's why the OODA loop, the brainchild of "40 Second" Boyd, an unconventional fighter pilot, is one of today's most important ideas in battle or in business. Keith Hammonds, The Strategy of the Fighter Pilot, Fast Company, June 2002.
13 © Chet Richards This is the OODA loop Observe Act Orient Decide
14 © Chet Richards This is not the OODA loop Observe Act Orient Decide
15 © Chet Richards An OODA loop with power Feed Forward ObserveDecideAct Action (Test) Implicit Guidance & Control Observations Unfolding Circumstances Outside Information Unfolding Interaction With Environment Orient Decision (Hypothesis) Feed Forward Feedback J. R. Boyd, the Essence of Winning and Losing, Cultural Traditions Genetic Heritage New Information Previous Experience Analyses & Synthesis
16 © Chet Richards Feed Forward Observations Orientation Observation is the only feed into Orientation Cultural Traditions Genetic Heritage New Information Previous Experiences Analyses/ Synthesis Feed Forward Decision Implicit Guidance & Control Implicit Guidance & Control Observations on orientation for business Action
17 © Chet Richards Orientation locked tight The company (A&P), under pressure from Kroger, experimented with a new concept, The Golden Key. It sold no A&P branded products, it gave the store manager more freedom, it experimented with innovative new departments … Customers really liked it. What did A&P executives do with The Golden Key? They didnt like the answers it gave, so they closed it. Jim Collins, Good to Great, 68.
18 © Chet Richards Battle of Orientations: 1 James E. Press, president of Toyota Motor Sales, said any top American company must first have a lineup that meets its customers' needs. It also must produce vehicles in the United States that lead their category in quality, resale value, comfort and design, he said. A leading American player has to have a strong brand image, a dealer network that offers good service and most important, put buyers first, Mr. Press said. Asked if Toyota meets those criteria, he said, "Not yet. We can improve on everything."
19 © Chet Richards Battle of Orientations: 2 Mark Fields, president of Ford's operations for the Americas, said: "Americans want to buy American cars. Micheline Maynard, Toyota Shows Big Three How It's Done, New York Times, January 13, 2006
20 © Chet Richards Improving orientation Set aside specific times (e.g., at each staff meeting) to review feedback on possible mismatches (Reflection must be institutionalized as a business process. Michael Hammer, co-author of Reengineering the Corporation, and Steven A. Stanton, Fortune OnLine, Nov 24, 1997) Abolish the Executive Dining Room. Abolish Management Clubs. These are tubs for drinking your own bathwater Toyota calls this hansei
21 © Chet Richards Improving orientation (II) Post on internal web site (& invite discussion): – Assessment of the current situation: customers, competitors, economy, government, our situation, etc. – Post-mortems (proposals, projects, etc.) – Specific competitor observations (esp. things they do better) Also include a competitive intelligence, what competitors do better, section in staff meetings.
22 © Chet Richards What about action? The idea is that the vast majority of the time, actions should flow smoothly from orientation via the implicit guidance and control link. Thus, excellence in technique is vitally important – study, train, rehearse, practice, critique constantly, from the factory floor to the executive suite. I dont make decisions, the fireground commander announced to his startled listeners. I dont remember when Ive ever made a decision. – Gary Klein, Sources of Power
23 © Chet Richards Observation Observations Feedback From Action Feedback From Decision Implicit Guidance & Control (Orientation) Feed Forward Unfolding Environment: Customers Competitors Economy Government Employees Financials Other Indicators Etc. What youre looking for are mismatches between a) what your orientation is telling you the world ought to be and b) what the world really is.
24 © Chet Richards In one of the first games he attended, [New Sacramento Kings Owner] Gavin [Maloof] missed an entire quarter waiting in a beer line. Knowing his father would have gone nuclear, Gavin arranged to have 20 minibars installed throughout the arena. Nobody waits for a beer now. In one of the first games he attended, [New Sacramento Kings Owner] Gavin [Maloof] missed an entire quarter waiting in a beer line. Knowing his father would have gone nuclear, Gavin arranged to have 20 minibars installed throughout the arena. Nobody waits for a beer now. Hugo Lindgren, The Flying Maloof Brothers, New York Times, February 15, 2004
25 © Chet Richards Decision Feed Forward Decision (Hypothesis) (Orientation)(Action) Feed Back (Observation) Note: Decision is fed only from Orientation Note: Decisions, in this sense, are needed when action does not flow from orientation. These types of decisions always slow down the OODA loop They can be considered as part of the learning process. Note: Decisions, in this sense, are needed when action does not flow from orientation. These types of decisions always slow down the OODA loop They can be considered as part of the learning process.
26 © Chet Richards Implicit Guidance & Control Know what to do Act And be able to do it Unfolding Interaction With Environment Action (Test) Feedback Decide Decision (Hypothesis) Feed Forward Feedback While learning from the experience What OODA loop speed really means ObserveOrient Feed Forward Observations Unfolding Circumstances Outside Information Unfolding Interaction With Environment Quickly understand whats going on Implicit Guidance & Control
27 © Chet Richards Key Points: When youre doing OODA loops right, accuracy and speed improve together; they dont trade off. A primary function of management is to build an organization that gets better and better at these things. Key Points: When youre doing OODA loops right, accuracy and speed improve together; they dont trade off. A primary function of management is to build an organization that gets better and better at these things.
28 © Chet Richards According to Boyd, a fighter pilot didnt win by faster reflexes; he won because his reflexes were connected to a brain that thought faster than the opponent. Bing West and MajGen Ray Smith, USMC, Ret. The March Up, p. 11
29 © Chet Richards How can your corporate brain think faster? Answer: Ultimately, a culture or climate that encourages people to use their initiatives to further the goals of the organization. Under such a culture, people will solve the technical & operational problems. Question
30 © Chet Richards The Principles of the Blitzkrieg Fingerspitzengefühl - Zen-like quality of intuitive understanding. Ability to sense when the time is ripe for action. Built through years of progressively more challenging experience. Einheit - Has the connotation of "mutual trust" and implies a common outlook towards business problems. Built through common experience. Fingerspitzengefühl at the organizational level.
31 © Chet Richards Schwerpunkt - Any concept that gives focus and direction to our efforts. In ambiguous situations, answers the question, "What do I do next? Requires leadership. Auftragstaktik – Convey to team members what needs to be accomplished, get their agreement to accomplish it, then hold them strictly accountable for doing it - but don't prescribe how. Requires very high levels of mutual trust. Blitzkrieg, continued
32 © Chet Richards Fingerspitzengefühl: excellence at the level of tactics Every day the sales team met at 7am for two hours of training that involved role playing, sales strategies, and videotaping of mock sales calls. Don Sumner, 38, an account executive, says Winkler has handed him a three-page performance analysis more than once, after overhearing one of Sumner's phone pitches. "Dealing with someone who can be such an S.O.B. has made me more thick-skinned," says Sumner. Since his arrival the number of clients at SecureWorks has grown from 100 to 800 … New orders at the now profitable company are growing at 200% to 300% a year ~ Fortune Small Business, The Best Bosses, October 2004.
33 © Chet Richards Fingerspitzengefühl as strategy There is a surface version of genchi genbutsu (go and see for yourself) and a much deeper version that takes many years for employees to master. What the Toyota Way requires is that employees and managers must deeply understand the process of flow, standardized work, etc. Jeffrey K. Liker, The Toyota Way, p. 224 emphasis added
34 © Chet Richards The Operating System is GE's learning culture in action. It is a year-round series of intense learning sessions where Business CEOs, role models and initiative champions from GE as well as outside companies, meet and share intellectual capital. The Operating System is GE's learning culture in action. It is a year-round series of intense learning sessions where Business CEOs, role models and initiative champions from GE as well as outside companies, meet and share intellectual capital. system.htmhttp://www.ge.com/en/company/companyinfo/at_a_glance/operating_ system.htm - 2/25/2003
35 © Chet Richards It is not more command and control that we are after. Instead, we seek to decrease the amount of command and control that we need. We do this by replacing coercive command and control methods with spontaneous, self-disciplined cooperation based on low-level initiative, a commonly understood commanders intent, mutual trust, and implicit understanding and communications. MCDP 6, Command and Control, p. 6 Einheit hits the beach
36 © Chet Richards Flowdown: Schwerpunkt for manufacturing The Toyota Production System, quite simply, is about shortening the time it takes to convert customer orders into vehicle deliveries. This tells everybody in Toyota manufacturing: When in doubt, take the action that has the biggest impact on order-to-delivery time.
37 © Chet Richards Augtragstaktikmissions and contracts instead of tasks The concept of mission can be thought of as a contract, hence an agreement, between superior and subordinate. – The subordinate agrees to make his or her actions serve superior's intent in terms of what is to be accomplished. – The superior agrees to give the subordinate wide freedom to exercise his or her imagination and initiative in terms of how intent is to be realized. J. R. Boyd, Patterns of Conflict, 76
38 © Chet Richards Augtragstaktikwhat commitment means As part of this concept, the subordinate is given the right to challenge or question the feasibility of the mission if: – he feels his superior's ideas on what can be achieved are not in accord with the existing situation or – he feels his superior has not given him adequate resources to carry it out. Likewise, the superior has every right to expect his subordinate to carry out the mission contract when agreement is reached on what can be achieved consistent with the existing situation and resources provided.
39 © Chet Richards Abbott recruited entrepreneurial leaders and gave them the freedom to determine the best path to achieving their objectives. On the other hand, individuals had to commit fully to the Abbott system and were held rigorously accountable for their objectives. They had freedom, but freedom within a framework. Jim Collins, Good to Great, 123. Auftragstaktikfocused initiative
40 © Chet Richards I. (Individual) Fingerspitzengefühl III. Schwerpunkt IV. Auftrag II. Einheit Its really pretty simple
41 © Chet Richards A case study in cheng / chi In October 2001, Apple introduced the iPod. It did what youd expect - play music - but also what you didnt expect - be intuitively easy to operate (in 2002, this was unexpected in MP3 players).
42 © Chet Richards A case study in cheng / chi iPod 1 Gen 2 Gen 3 Gen 4 Gen 5 Gen Mini 1 Gen 2 Gen Nano 1 Gen 2 Gen Shuffle 1 Gen Gen 3 Gen Touch Penetrate: Learn the marketplace; build Fingerspitzengefühl & Einheit Exploit! It turns out that the real iPod killer is Apple itself. Last week, the company eliminated its top-selling model, the iPod mini, and topped itself with the iPod nano, an even smaller device that becomes the new target dangled in front of the competition Seattle Times, Sept 17, 2005
43 © Chet Richards And how well did Apples strategy work? iPod 1 Gen 2 Gen 3 Gen 4 Gen 5 Gen Mini 1 Gen 2 Gen Nano 1 Gen 2 Gen Shuffle 1 Gen Gen 3 Gen Touch 100 million
44 © Chet Richards How well did Apples strategy work?
45 © Chet Richards Cheng After 8 hours sitting on a ramp in Austin, American Flight was out of water and food and all the toilets were overflowing. This wasn't a story about the "perfect storm," but about corporate cultures that don't put customer service first. American's Mr. Hotard says the airline is truly sorry for the mess. He says one reason the airline may not have contacted customers to apologize is that its Fort Worth headquarters, where customer-service specialists work, was closed for four days over New Year's. -Scott McCartney, Wall St. J.
46 © Chet Richards Chi Bob Hamel: "I had a similar experience with Southwest last summer. Sat in Chicago for five hours to go to Detroit. The difference was Southwest sent me two $50 vouchers and a letter of apology. In this case, it wasn't even their fault, it was the weather. Southwest staff took care of me and made sure I was as comfortable as possible despite the long lines and what I was sure had been long hours for them. Yeah, there were a couple of glitches, but these were taken care of in a manner that definitely put the customer's needs first. Finally, Southwest staff never seemed to lose what I consider to be one of the best things about flying Southwest -- a great sense of humor. Even when they may have been laughing just to keep from crying."
47 © Chet Richards Military analysts say we [US Navy SEALs] are becoming skilled disciples of John Boyd. That is, we execute the Boyd Loopobservation, orientation, decision, action (OODA)far better and far quicker than our enemies. Dick Couch, The Finishing School, p. 258
48 © Chet Richards You dont wait for the future. You create it. Hwang Chang Gyu, President, Samsung Semiconductor
March 13, 2006 © 2006 Kettle Creek Corporation 1 The OODA “Loop” Sketch Note how orientation shapes observation, shapes decision, shapes action, and in.
August 2006 © 2006 Kettle Creek Corporation 1 The OODA “Loop” Sketch Note how orientation shapes observation, shapes decision, shapes action, and in turn.
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