#63 - Masterful Tactics: The OODA Loop

A short letter on one of my favorite mental models

Before we get into this week’s letter, here are some recent Exonomist letters I’ve published. Welcome new readers!

#62 - You Should Throw a Hail Mary Once Per Week

#61 - Launching Homegrown, My New Startup

#59 - How You Do Anything is How You Do Everything

The Simple-But-Magical Power of the OODA Loop

Whenever you start a new job, there are undoubtedly lessons ahead of you that you couldn’t have seen coming. Each experience teaches you how to observe, think, act, and learn from your actions.

As I write these words, I’m reminded of this method the U.S. Air Force uses to go through this process of Observe —> Think —> Act. It’s called the OODA Loop.

Here’s what an OODA loop is:

1. Observe

2. Orient

3. Decide

4. Act

Quite simple. Let’s use it an example. You are in the middle of a negotiation. You’ve been talking with this other company for many months about a potential “partnership” (**Cough cough: acquisition**), and you’re nearing the finish line… Nearing it. You’re not quite there yet, and in these final moments what you say and how you say it is going to lead to one of three outcomes — Deal Won, Deal Not Yet Done, Deal Canceled. Here’s how to use the OODA loop to move thoughtfully:

1. Observe — listen carefully, watch body language, note silence, note who is talking and who’s not talking. Are people looking at watches? Have they been listening to you talk for way too long (Exonomist #42)?

2. Orient — How is this system laid out in front of you. Imagine a field of nodes, with each person representing a node, and perhaps they’re organized into two clusters. One cluster is yours, one cluster is the other team’s

   1. Start to generate hypotheses around how different actions might land with this group.

      1. Is this your moment to go for glory? To make an impassioned speech? (probably not)

      2. Is this your moment to stand up and throw a chair at the other team (probably…no, most certainly not!)

      3. Is this your moment to ask a clarifying question to someone who just finished talking. A question like, “…What I think I hear you saying is that the current structure of the royalty agreement is causing you anxiety because you don’t feel the multi-year targets are informed by a bottoms-up data model. Tell me where I’m right and where I’m off”

3. Decide — You start to realize that path iii above is probably going to yield more information… and you also know that the other side loves when you ask questions because it shows that you actually care, so you decide to take this route

4. Act — You ask the question you thought about in the “Orient” phase. And now you’re back to the first step, Observe.

And through this whole process you’re keeping in mind some outcome. At least you should be. Losing sight of your outcomes (what you want to achieve in this particular example) is when you start to just act without intention —> leads to sloppiness —> most of the time leads to sub-optimal results.

Why am I writing about this right now?

It’s week 5 of my latest attempt at entrepreneurial greatness. I can tell you that Michael this time is far, far, far more effective than Michael the last few times. My last startup was a wonderful learning ground where I honed in on skills that I am 1000% sharpening now, but my goal isn’t just to learn: it’s to build something enduring that changes the world for the better. If it sounds airy, that’s because it is, and I couldn’t be more f*cking serious about it.

The reality of this journey we’re on is that every day counts, and outcomes build companies; not just aimless acting / outputs.

I was talking to one of our team members this past Friday (you know who you are!) about the “secret” to achievement is in actually thinking about what you want to achieve, and then getting after it thoughtfully, and then pursuing maximum self honesty in how you actually did at achieving the thing.

And if you have the bravery to be brutally honest with yourself, you are enabling yourself to get better at everything I laid out above in the OODA loop. The loop is only as valuable as the inputs. If you’re a shitty listener, and terrible at orientating situations, and not so creative with generating hypotheses, and terrible at testing of a hypothesis, then you’re probably going to get sub-optimal or terrible outcomes.

^^^^I think this is actually the most important thing about this thing we call “business.” You can apply this framework to basically every aspect of it. Think about it:

• Helping to make a drive-through run faster

• Helping a sales executive to get more meetings

• Helping a team to power through a tough interpersonal challenge

• Helping to resolve an internal political conflict

• Helping to create a new product that beats your competition

  • Observe = what are they doing? What are they not doing? What did they do? Why do you think they’re doing it?

  • Orient = Map the space. How is the marketing organized. Synthesize your observations and then generate some hypotheses — what do you think they will do?

  • Decide = Pursue (that is, test) the hypothesis or hypotheses that you find optimal. This could be a marketing mechanism… a product mechanism… a legal mechanism…a financial mechanism

  • Act = Build the feature or product. Launch the marketing campaign. A targeted promotion…

Which leads me to the end here: in pursuit of actual results, the OODA loop is great, but it’s power comes when you maximize the thoughtfulness in the interstitial space between “observation” with “action.” If I were to explain this to a five-year old (hey kiddo, Dad just set a timer for five years from now hahaha), I might change it to be:

1. Look!

2. What’s causing what you just saw?

3. What happens if you do X? Or Y? Or Z?

4. Do X or Y or Z

5. Look again and Learn…

6. Repeat

See you in a couple of weeks! Shockingly since I’ve re-entered startup land, I’ve been 100% focused on building Homegrown, so a bit less time to write, but that experience alone is going to probably yield another 100 letters.