Decision-Making for Vision Masters – The Importance of Agility (Part II)

In my last post, “Decision-Making for Vision Masters – A Major Factor in Company Growth“, I suggested that frequent, committed decision-making was integral to business success. I introduced you to the OODA loop process, developed by military strategist Colonel John Boyd — observe, orient, decide, act — which has long been employed by military and business leaders to create a culture of agility in critical decision-making. In this post we will assess the OODA loop process in more detail, to give you an idea of how it works in practice.



Given that the OODA loop is premised on agility under stress, let’s begin with a question: is success in business all about agility?

I think a fair answer to that question is yes, but . . .

Yes, many times agility is a key to success, because everything from market trends to economic forces to competitive moves impacts your business in a number of cycles — daily, weekly, monthly, quarterly, annually, perhaps even longer at times. Agility thus depends on the length of those cycles, hence requiring quick decision-making for short cycle issues. But even when we look at longer cycles, such as the competitive environment in a market as it changes over time, agility is important, though the rapidity of decision-making is slower.

The idea is to be prepared at all times to decide, to act when action is called for, rather than being slow to move for lack of an ongoing decision-making process. To be adequately prepared to decide, then act on that decision, requires, above all, that you are evaluating the right information as it relates to the decisions to be made. This is the heart of the “observe — orient” portion of the OODA loop. According to Boyd, all decisions are based on observations of the evolving situation in which one finds oneself. Decisions and actions are made and executed upon from the raw information the situation provides. The observed information is then processed to “orient” it for decision making.

So, you have an ongoing, evolving situation in your business. Information is constantly coming in, being filtered through the lens of the particular decisions the situation requires or may require in the future. The collective wisdom and experience of your team, including your key advisors and mentors, plus whatever outside information is present (e.g., market research) makes up the filter through which you assess all information, orienting it towards the decisions to be made.

Since many of you are engaged (or will be engaged) in fundraising, let’s look at this process from an investor’s perspective, something I have quite a lot of experience with . . .

VC’s and other investors, who are neither fast nor successful as a group (most investments they make fail), often take only a few minutes to decide whether an investment is worth pursuing, but then spend months to carry out due diligence. 

What are we doing during those 30 to 60 days? Does it really have much value?

We’re looking for errors or deceptions in the facts we used to make the decision to invest.  But mostly, we are creating an elaborate justification for a decision already made. 

Yet, isn’t there something wrong with this lengthy cycle, since VC’s make bad decisions at least 80% of the time?  

My experience is that this is not a function of the natural uncertainty in business, but rather a function of a faulty decision-making process.  We’ve decided to invest intuitively or emotionally before we act on the decision. Whereas, in the OODA loop methodology the process of information gathering and processing (observe — orient) should inform the decision to invest, rather than be a justification process for the decision already made.

The truth is, VC’s are trying to evaluate the wrong information, information that has no predictive validity, and they know it, hence the long period needed to rationally justify the decision already made.  If the information that VC’s were using to make decisions were truly predictive (of business success) then the due diligence process would be measured in days or weeks, not months.

Forgive me for this little side-trip of self-criticism, but there is a point to this: decision-making can be a lengthy process when we are engaged in assessing unimportant or erroneous data in an attempt to justify our decisions.

Let me put it more bluntly: if you engage in a lengthy process of gathering evidence to justify your important business decisions, you’ll most likely be shot down in the dog fight of business.

You’ll lack the agility necessary to conduct business in today’s lightning fast world.

Does that mean that correct decision-making should be a product of acting on first impulses?

No, I’m not saying that either.  Rather, what I’m suggesting is that you commit to frequent decision-making by being constantly engaged in a decision-making process such as OODA.

So how do you as Vision Master apply the OODA loop in practice?

First, as so frequently repeated here, you must hire one or more execution experts, led by an individual who has a significant equity interest in the business and is a true Execution Master.

On a navy ship, just below the captain is the XO (executive officer) to whom all aspects of execution of strategic decisions are delegated.  In business, you must make sure that the person in this position has a willingness to carry out the OODA loop swiftly and repeatedly, in order to stay inside the decision-making loop of the competition (or changes in the market and technical environments). You have to understand the OODA loop of an Execution Master in your business, even if you are delegating the entire process to them because you will have to decide with whom to partner.  In any case, having an Execution Master on your team frees you to carry out your own strategic-level OODA loop decision-making process at the slightly-slower pace required of larger decisions.

Yet, as Vision Master, you must nevertheless carry out the OODA loop with a high enough frequency to make the pivots necessary for success in any market.   If you find yourself making major decisions only once or twice a year, your decision-making loop is probably too slow. Of course, the Vision Master of a company is called to make several different kinds of decisions (major strategic, customer relations, key hires, key product features, etc.) each with its own frequency of OODA loop.  What’s important is that you do not leave the OODA loop to unconscious chance, but instead make it a conscious process. Being mentored and coached by more experienced Vision Masters is key to getting the pace of decision making right for your business.   So also is experimentation and observing the results.

As you go through the OODA process in your business, in addition to observing the pace of decision making, observe where you get stuck.

Do you make decisions without gathering information at all (no observation)?

  • Do you gather information without consideration of its meaning for your business and for you (no orientation)?
  • Or conversely, do you get stuck in the orientation phase and fail to make a decision for excessively long periods of time?
  • Are there particular areas of decision that you avoid?
  • Do you make decisions without commitment, full of doubt, unwilling to make the necessary sacrifices and disciplines to make the decision work?
  • After you make decisions, do you in fact act resolutely on them, burning your boats, and in fact, make the necessary sacrifices and undertake the necessary disciplines to succeed?
  • Finally, as Vision Master, are you willing to make decisions (including assigning them to others) that are seemingly impossible, over and over?

On this subject, see the previous blog on Elon Musk’s secret management method.

Key Takeaways:

Since agility is critical in business, whether you’re dealing with short, medium or long-cycle issues, you should be engaged in a process that involves constant evaluation of information along with orienting that information towards the short and long-term decisions you’ll be making. This enables you to be agile, to act with clarity and decisiveness when conditions require it. It also generates confidence that you’ve prepared in advance to make and act on important decisions. The investment community often does this backward, making decisions before proper observation and orientation have been done, then spending significant time justifying their already-made decision. Instead, be in a constant state of observation and orientation of all relevant incoming information within the context of pending decisions that need to be made. Then act with confidence, putting your drive and energy into executing on those decisions, rather than justifying them.