Business leaders in 2022 are facing a raft of challenges; many of which they have never experienced before – and especially not concurrently. For all the talk of Covid-19 focusing the mind on rapid decision making, in this “post lockdown” era, is this assault on multiple fronts having the opposite effect?
Talk to many suppliers, and they will say that the decision-making process, so the time taken to get from proposal to signature, is elongating. Talk to many project managers and they will say that the same thing is happening on internal projects. The pace is lessening.
One hypothesis is that corporate governance is being re-prioritized post-pandemic, another is that there is simply more to do and that business leaders are once again being pulled in multiple directions. A third is that there is decision paralysis; leaders don’t know “which lever to pull first” to solve a problem. And so, they delay.
Thinking clearly under pressure is not easy, but there are models out there to help, such as OODA (Observe, Orient, Decide, Act). OODA is used extensively by the military, a prime example of where rapid decisions need to be made in the heat of the moment, and where decision paralysis is simply not an option. What would an organization need to ensure to adopt and excel through OODA work? The right support, a strong culture, good communication, and a willingness to learn.
That is the OODA Loop and how can it help?
The OODA (Observe, Orient, Decide, Act) Loop is a decision cycle, whereby we observe a change or threat, orientate ourselves to respond to it based on our experience, make a decision and take action. This is a continuous cycle – not a one-off, as every action taken may change the conditions or, an evolved landscape may provoke a new OODA loop.
Think about how this might be implied in a military context and the importance of committing fully to decisions shines through, but also the need to simultaneously maintain agility in the face of what may change as a result.
Why is this interesting?
In order to stay ahead of the multiple challenges businesses face in 2022; be that margin erosion, loss of competitive advantage or experiencing supply chain friction – the speed at which an organization can make informed decisions is critical.
With markets moving so quickly, being aware and agile is crucial to keep moving forward. A business that can make the majority of decisions effectively will outperform a slower competitor who is behind the market tempo, responding slowly, or not taking the initiative. OODA doesn’t necessarily mean right first time all the time; the ability to quickly recognize and course correct if results are not as expected or prevailing conditions change, is also key to momentum.
So can what works for the military also be applied in business as companies respond to market forces (commodity cost increases, supply chain disruption, labor shortages, cost inflation)?
Observation is about being able to see clearly. What is happening in front of you? What trends are being seen that are likely to continue? This could be:
- Consumers are moving to online shopping
- Commodity prices are rising
- Sustainability is a key influence in buying decisions
Orientation – is how you position yourself to take advantage of what you’re observing, setting yourself up for success (or to avoid failure) given the unfolding environment.
This is perhaps the most crucial part of the process because this is where experience and learned pathways inform your interpretation. These learned pathways may become instinctive and can be challenged, but to do so, you have to be conscious that they exist, if indeed they do.
In the case of the prevailing business environment, one might argue that there are no learned pathways because nobody has concurrently dealt with all of these challenges, meaning that the experience is not there to lean on. That can be resolved through the provision of market insights and external perspectives – using the learnings of others. These must be embedded into business, and the right questions asked of them.
Decision – Military decision-making accepts that most decisions be made with a less-than-perfect understanding of the situation and often in an unfamiliar environment. What does this mean? In simple terms, the army teaches its leaders to get comfortable knowing 80% – understand the risk the remaining 20% carries – and make an informed decision based on the data/knowledge available at that time that you believe achieves the strategy. If you wait until you have 100% of the information, most of it will be irrelevant or wrong anyway as the world has moved on.
Act: Take action, which in the procurement world most often means delivering an outcome or implementing a change.
Embedding and Optimizing OODA in Businesses
Like any model or process, once embedded the question becomes – how do we cycle through the Loop faster and, in this case, make ‘better decisions’ more often? Generally, decentralization or distributed powers is part of the answer, driving a faster OODA Loop.
Moving to this model is where the right support, a strong culture, good communication and a willingness to learn comes in. What this means for business leaders is giving the right information (or learning the pathways) and insight to people who are empowered to make decisions..
These decision-makers will need to know the “mission”, the end-state or strategic objective they are working towards and be allowed to operate within certain boundaries. Their objective should be geared towards generating tempo, encouraging them to make decisions that align to achieve this mission without the need to refer upwards at every stage.
What does ‘good’ look like?
The world is constantly evolving, making yesterday’s risks, tomorrow’s opportunities, and vice versa. Decentralized, informed and fast-learning organizations prevail – because only they can adapt fast enough to exploit the opportunities or avoid risks.
Success requires the ability to see the big picture, ground it in context, quickly gather and interpret data, and create the insight that enables decision-making. This is where organizations like Proxima play a critical role, bringing a currency of knowledge and depth of understanding that enables organizations to quickly access ‘learned pathways’ to make faster, better-informed decisions.
The quality of Decisions and Actions will inherently improve if the operating landscape is continuously challenged, this will in turn build confidence and provide better outcomes. Underpin this with learning and knowledge capture, to build a corporate memory and confidence to continue to improve.
Please get in touch, if you’d like to discuss how Proxima can help you and your business.