The OODA Loop Approach to Innovation: Techniques for Accelerating Innovation Part 3

Published on INFORMS Analytics Magazine (Joseph Byrum)

Author’s note: This series Techniques for Accelerating Innovation will explore a new approach to innovation grounded in the Adaptive Response Framework—observe, orient, decide, act—which helps organizations navigate complexity with agility. Part Two described the landscape of current approaches to innovation.

This is the third in a series of articles exploring new approaches to innovation, and one compelling possibility was developed by military strategist John Boyd. Boyd created a strategy built around a cycle of observing, orienting, deciding and acting and called it the “OODA loop.” As an Air Force colonel, Boyd’s purpose was to give pilots an edge over opponents in the high-stress, fast-changing environment of aerial combat. The principles he developed, however, are broad enough to apply in many contexts, including becoming more innovative in our volatile, risky world.

The Observe-Orient-Decide-Act (OODA) Loop

Organizations that wish to survive in this risky world must be vigilant and keenly aware of threats around them. The OODA loop, developed in a military context, is ideal for this purpose. Briefly, the OODA loop model describes how an individual surrounded by threats operates for survival. The individual (or, by extension, organization) will observe, orient, decide and act and continue doing so in a loop or cycle. Each phase may include challenges that must be overcome. Observation can fall short because of bad data. Orientation can be thrown off by bias. Decisions can suffer from rigidity. Action can suffer from delay (not be fast enough) [1].

Observe

The act of observation is critical to survival. Humans must interact with the world around them. Boyd wrote that “if we don’t communicate with the outside world – to gain information for knowledge and understanding – we die out to become a nondiscerning and uninteresting part of that world.” Boyd himself believed that there was a natural law of observation (and, by extension, innovation). He emphasized the importance of observation as follows:

Gödel’s Incompleteness Theorems, Heisenberg’s Uncertainty Principle, and the Second Law of Thermodynamics, all taken together, show that we cannot determine the character or nature of a system within itself. Moreover, attempts to do so lead to confusion and disorder – mental as well as physical. Point: We need an external environment, or outside world, to define ourselves and maintain organic integrity, otherwise we experience dissolution/disintegration – i.e., we come unglued. [2]

Orient

In his writings, Boyd calls orientation [3] the Schwerpunkt (or center of gravity), stating that it “shapes the way we observe, the way we decide, and the way we act” [4, 5]. In the OODA loop, he writes, “implicit orientation shapes the character of insight and vision, focus and direction, adaptability, and security” [4].

Decide

This part of the OODA loop is the most revolutionary because it bases decisions on experience continually reevaluated rather than falling back on a set theory. As one scholar notes, there are two main aspects of the OODA loop: “The central tenets of the model are that the process is cyclical and adaptive … and that the precursor to any decision-making behavior is Situation Assessment. …” Furthermore, “Experienced decision-makers working under time pressure report that they use recognition-based rather than evaluation-based decision-making strategies; acting and reacting on the basis of prior experience rather than comparing decision options through formal or statistical methods” [6].

Act

All the preceding steps are to no avail unless there is action. As entrepreneur Tom Deierlein has written, “In order for the OODA loop to work in business there must be speed. A Bias Toward Action” [7]. One of the key ideas in Boyd’s work is speedy action, also called the “fast transient theory.” Boyd writes, “The ability to operate at a faster tempo than an adversary enables one to fold the adversary back inside himself so that he can neither appreciate nor keep-up with what’s going on. He will become disoriented or confused” [2].

Repeat

After observation, orientation, decision and action, the cycle starts again – hence the “loop.” Note: Repetition is an important part of the OODA loop. After all, the model is not OODA but OODA loop, which means that after one has observed, oriented, decided and acted, it then observes, orients, decides and acts again – as situations change – and repeats this four-stage process continually. As proof of the wisdom of the “loop” aspect of the OODA model, consider the rise and tremendous popularity of the so-called “spiral” approach to planning and project management, particularly in the software industry [8]. The spiral approach breaks a project down into short phases and keeps repeating the phases through changing conditions. It is considered ideal for a high-risk environment. The OODA -loop approach is similar to the spiral approach but is more adaptable to different kinds of agents – from individual to team to organization.

The iterative learning loop embedded in the OODA model is consistent with what we know about human learning through the reinforcement learning now used in machine learning applications. Machines tend to perform as well or better than humans on tasks when using an iterative process that rapidly adjusts to the environment. The “learning” aspect means that programs continually change based on what they encounter.

Drawing a lesson from the OODA loop, we can see that, in addition to collecting the data, we need to interpret it with a mind free of bias. Only then can we decide and act effectively. And we need to continue to adjust our viewpoint, decisions and actions. 

A Russian Doll Model for OODA-Loop Innovation in Complex Systems

The OODA loop clearly applies to innovation and at several levels: in the brain, a team, a company and a market. OODA-loop innovation (i.e., innovation involving observation, orientation, decision and action in a repeated cycle) occurs first and foremost in the brain itself as a complex adaptive system [9].

Furthermore, each of the other levels of the complex adaptive system (team, organization, market) can be viewed as having an OODA loop of its own. Understanding concentric OODA loops will give practitioners a competitive advantage and help them create products that are truly new.

First, an individual innovator needs to be aware of the surrounding environment, be able to orient (get situational bearings) and be able to decide and act quickly. This is the most obvious application of the OODA loop to innovation. While many innovations arise from the work of teams and even entire organizations, and although markets can make or break a new creation, the lone inventor remains relevant. A classic example is Thomas Edison, still a record-holder with 1,093 patents. A little-known fact about Edison is that as a young teen, he saved a toddler from being run over by a train; the near-death experience led immediately to a reward in the form of a railroad job (offered by the grateful father) [10]. This small anecdote, writ large, could well explain the trajectory of Edison’s career as an individual innovator. Constantly aware of his surroundings, he situated himself, made decisions and pursued actions, over and over. Edison’s famous quote about genius being 1% inspiration and 99% perspiration is part of a larger quote that includes this Boyd-like wisdom: “None of my inventions came by accident. I see a worthwhile need to be met and I make trial after trial until it comes” [11].

Second, the same applies to a development team. Hoogeboom and Wilderom tested six hypotheses about teams as complex innovative systems, studying 96 teams with 1,395 team members, and found that the key was not predictability/unpredictability of interactions (recurring versus heterogeneous) but rather the level of participation in the interactions [12]. Although this article does not mention the OODA loop, the connection is relevant because the main point of the OODA loop is that an individual must be engaged and dynamic. The formation of dynamic teams can be critical to innovation. A study of data analytics for innovation in 1,864 companies during a period of 25 years found that those that were decentralized outperformed those that were centralized [13].

Third, this loop occurs in organizations. As noted by Ioana Ceausu et al., “innovative ideas are rarely the product of a lone genius, therefore building a collaborative environment, accepting different ways of thinking, different viewpoints and diversity provide a good basis for the growth of innovation” [14]. Organizations are not only complex adaptive systems [15] but also agents in a dynamic world of threats and opportunities that require the level of vigilance and adaptability present in the OODA loop model. The innovative organization, just like the innovative individual or team, will observe, orient, decide and act – not just once but continually, in response to changing information.

Finally, an OODA loop cycle can occur in markets as complex adaptive systems [16]. Anyone who has followed the stock market over a long period can see how it observes, orients, decides and acts through its human agents. And while markets do not themselves innovate (only people, teams and companies can), they do decide to support or reject innovation, so in that sense, markets do participate in this important process.

References

1. https://modelthinkers.com/mental-model/ooda-loop
2. Boyd, J.R., 1987, “The Strategic Game of ? and ?,” June, https://danford.net/boyd/strategic.pdf. 
3. Liu, W., J. Gori, O. Rioul, M. Beaudouin-Lafon and Y. Guiard, 2020, “How Relevant is Hick’s Law for HCI?,” Proceedings of the 2020 CHI Conference on Human Factors in Computing Systems, April, https://doi.org/10.1145/3313831.3376878.
4. John Boyd, 1987, “Organic Design for Command and Control,” May, https://danford.net/boyd/organic.pdf.
5. He also writes about it in a book-length essay on Patterns of Conflict (December 1996): https://danford.net/boyd/patterns.pdf.
6. Banbury, S., H. Dudfield and M. Lodge, 2002, “Development and Preliminary Validation of a Cognitive Model of Commercial Airline Pilot Threat Management Behaviour,” 21st European Annual conference on Human Decision Making and Control, C.W. Johnson (ed.), http://www.dcs.gla.ac.uk/~johnson/eam2002/EAM_2002.pdf.
7. https://www.linkedin.com/pulse/ooda-loop-bias-toward-action-tom-deierlein/
8. Doshi, D., L. Jain and K. Gala, 2021, “Review of the Spiral Model and Its Applications,” International Journal of Engineering Applied Sciences and Technology, Vol. 5, No. 12, pp. 311-316.
9. Bassett, D.S. and M.S. Gazzaniga, 2011, “Understanding Complexity in the Human Brain,” Trends in Cognitive Sciences, Vol. 15, No. 5, pp. 200-209.
10. Maranzani, B., 2020, “Thomas Edison’s Near-Death Experience Set Him on the Road to Fame,” Biography, Oct. 15.
11. As quoted in “Uncommon Friends: Life with Thomas Edison, Henry Ford, Harvey Firestone, Alexis Carrel & Charles Lindbergh” (1987) by James D. Newton, p. 24.
12. Hoogeboom, M.A.M.G. and C.P.M. Wilderom, 2019, “A Complex Adaptive Systems Approach to Real-Life Team Interaction Patterns, Task Context, Information Sharing, and Effectiveness,” Group & Organization Management, June 21, https://doi.org/10.1177/1059601119854927.
13. Wu, L., B. Lou and L. Hitt, 2019, “Data Analytics Supports Decentralized Innovation,” Management Science, Vol. 65, No. 10, pp. 4863-4877.
14. Ceauşu, I., R. Murswieck, B. Kurth and R. Ionescu, 2017, “The Organizational Culture as a Support of Innovation Processes,” International Journal of Advanced Engineering and Management Research, Vol. 2, No. 6, pp. 2392-2403.
15. Schneider, M. and M. Somers, 2006, “Organizations as Complex Adaptive Systems: Implications of Complexity Theory for Leadership Research,” The Leadership Quarterly, Vol. 17, No. 4, pp. 351-365.
16. Vazquez, 2018, “Institutional Dynamics in an Economy Seen as a Complex Adaptive System,” Working paper, Bocconi University.