OODA Loop And Why It Matters In Business

The OODA loop was popularized by U.S. Air Force fighter pilot Colonel John Boyd to describe maneuver warfare during the Korean War. The OODA loop is a four-step approach to decision making where strategies must be adjusted quickly. Those four steps comprise observe, orient, decide, and act.

Understanding the OODA loop

Boyd noted that USAF pilots flying F-86 fighter jets were able to consistently down the Korean Mig-15 by a factor of 10 to 1. This was even though the Mig-15 was a technically superior aircraft, with better acceleration and higher climb rates. 

However, the F-86 had two distinct advantages. Thanks to a hydraulic control system, it could transition from one maneuver to another in rapid succession. The canopy of the F-86 was also more expansive, allowing pilots to better observe and react more quickly in combat. Ultimately, the F-86 was the more agile of the two jets.

In the context of the OODA loop, agility is represented as a series of decision-making cycles. Businesses can use these cycles to solve specific problems quickly, thereby remaining competitive.

In the next section, we will look at the cycle in more detail.

Decision-making cycles of the OODA loop

In its simplest form, the OODA loop has four stages.

Stage 1 – Observe 

What are the internal and external drivers of change? Where are the inflection points in trends? 

Decision-makers must observe changes at the micro or macro level to determine whether a response is required. Drivers might include ever-increasing internet speeds or the continued replacement of jobs with technology and automation.

Stage 2 – Orient 

Is the business aligned with the observations made? Scenario planning is useful in ensuring that strategic plans are meeting expectations or challenging expectations. 

This is the most important step because it determines how a business will position itself to take advantage of its observations. It’s also the step most vulnerable to bias, which has five main influences:

  • Cultural traditions.
  • An ability to analyze and synthesize.
  • Genetic heritage.
  • New information.
  • Previous experience.

As a rule, each decision made in the orienting process must be based on evidence. Businesses must also understand the perspective of a competitor by using the five influences above. This, to some extent, can predict how a competitor will behave.

Stage 3 – Decide 

What is the most appropriate course of action?

Here, taking no action is sometimes the best choice. Indeed, businesses should avoid acting for the sake of it. 

Since the OODA loop advocates quick decision making in fluid environments, businesses often cycle between Stage 1 and Stage 3 as more information becomes available.

Stage 4 – Act 

Once a decision is made it is important to act quickly and implement it. The results of decision implementation are then fed back into the observation stage and their impact re-assessed.

Note also that the OODA loop is not a cyclical process but a series of iterative adjustments. 

Businesses should also remember that it favors quick decision making to remain competitive. For some decisions where the cost of failure is high, a more considered approach is required. 

For example, a relatively minor change in customer refund policy can be made quickly and adapted if required. But a significant product refresh has a higher cost of failure and as a result, would likely reduce competitiveness if not implemented properly.

OODA loop examples

So what are some examples of OODA loops outside military contexts? Let’s take a look at some scenarios used in everyday life to make better decisions.

Professional development

Imagine that you feel stuck in your current career and want to enhance your skill set and boost your career prospects in the process. 

  • Observe – what are the specific skills you need to learn to reach your objectives? Observation can be used as a tool to ensure you are staying abreast of the latest trends and developments in your industry. Thus, it’s important to see the observation phase as a chance to asset your current skillset. Is it still relevant and valuable?
  • Orient – the most important phase of any OODA loop is the orientation phase. In this case, you’ll be required to be completely honest with yourself and spot errors or contradictions in your thinking. What is standing between you and career success? What is preventing you from operating outside your comfort zone? Is it based on rigid beliefs instead of logic and rationality? Maybe you were once fired in a similar role and falsely believe you would be unqualified for future roles.
  • Decide – in the third phase, take what you have learned from the previous two phases and come up with a concrete action plan. Choose one or two meaningful tasks to focus on instead of setting too many simultaneous goals. There have never been more opportunities for career advancement than there are today, but this can be a blessing and a curse since it leads to information overload. Think hard about the best course of action with respect to your unique situation.
  • Act – while you can theorize about the best course of action indefinitely, it is only action itself that can determine whether you are on the right path. Acting on our intentions also means we will inevitably make mistakes, but missteps should be seen as vehicles for learning, growth, and career development.

Blockbuster and Netflix

In the early 2000s, DVD rental services Blockbuster and Netflix were in direct competition with each other.

An OODA loop can explain why Blockbuster eventually went bankrupt and Netflix achieved a valuation of around $100 billion.

  • Observe – in 2002, Netflix co-founders Marc Randolph and Reed Hastings observe that the speed of consumer broadband is increasing rapidly. As a consequence, the internet starts to become intertwined with consumers’ lives. Blockbuster, of course, maintains its belief that consumers will want to rent DVDs from a store for the foreseeable future.
  • Orient – Netflix then orients itself toward a future where consumers stream their favorite films and television shows online. Since the market (and indeed technology) is not quite ready for the revolution that is to come, Netflix has time to analyze and evaluate information, leverage raw statistics to develop industry insights, and size up potential competitors, threats, partners, and opportunities.
  • Decide – at this point, Netflix had several options. The company could upload its entire DVD library onto servers, negotiate with producers to develop exclusive streaming content, or launch a scaled-back trial service. Netflix could also develop a box unit that downloaded movies while consumers slept so they’d be ready to view the next day. Ultimately, the co-founders belief in streaming was reinforced after witnessing the popularity of low-resolution video streaming on YouTube.
  • Act – in January 2007, Netflix launched its streaming media service with video on demand via the internet. The service, which started with 1,000 films from the company’s DVD library, now boasts over 200 million subscribers and has the rights to around 17,000 titles around the world.

Key takeaways

  • The OODA loop is a quick, effective, and proactive decision-making process that allows businesses to remain competitive.
  • The OODA loop is based on four stages that help decision-makers identify key drivers of change, identify unbiased solutions, and then implement the best course of action quickly.
  • Despite its name, the OODA loop decision-making process is less of a loop and more a series of iterative and interactive adjustments. Businesses should also be careful not to rush important decisions where the cost of failure is high.

Connected Agile Frameworks


AIOps is the application of artificial intelligence to IT operations. It has become particularly useful for modern IT management in hybridized, distributed, and dynamic environments. AIOps has become a key operational component of modern digital-based organizations, built around software and algorithms.


AgileSHIFT is a framework that prepares individuals for transformational change by creating a culture of agility.

Agile Methodology

Agile started as a lightweight development method compared to heavyweight software development, which is the core paradigm of the previous decades of software development. By 2001 the Manifesto for Agile Software Development was born as a set of principles that defined the new paradigm for software development as a continuous iteration. This would also influence the way of doing business.

Agile Program Management

Agile Program Management is a means of managing, planning, and coordinating interrelated work in such a way that value delivery is emphasized for all key stakeholders. Agile Program Management (AgilePgM) is a disciplined yet flexible agile approach to managing transformational change within an organization.

Agile Project Management

Agile project management (APM) is a strategy that breaks large projects into smaller, more manageable tasks. In the APM methodology, each project is completed in small sections – often referred to as iterations. Each iteration is completed according to its project life cycle, beginning with the initial design and progressing to testing and then quality assurance.

Agile Modeling

Agile Modeling (AM) is a methodology for modeling and documenting software-based systems. Agile Modeling is critical to the rapid and continuous delivery of software. It is a collection of values, principles, and practices that guide effective, lightweight software modeling.

Agile Business Analysis

Agile Business Analysis (AgileBA) is certification in the form of guidance and training for business analysts seeking to work in agile environments. To support this shift, AgileBA also helps the business analyst relate Agile projects to a wider organizational mission or strategy. To ensure that analysts have the necessary skills and expertise, AgileBA certification was developed.

Agile Leadership

Agile leadership is the embodiment of agile manifesto principles by a manager or management team. Agile leadership impacts two important levels of a business. The structural level defines the roles, responsibilities, and key performance indicators. The behavioral level describes the actions leaders exhibit to others based on agile principles. 

Bimodal Portfolio Management

Bimodal Portfolio Management (BimodalPfM) helps an organization manage both agile and traditional portfolios concurrently. Bimodal Portfolio Management – sometimes referred to as bimodal development – was coined by research and advisory company Gartner. The firm argued that many agile organizations still needed to run some aspects of their operations using traditional delivery models.

Business Innovation Matrix

Business innovation is about creating new opportunities for an organization to reinvent its core offerings, revenue streams, and enhance the value proposition for existing or new customers, thus renewing its whole business model. Business innovation springs by understanding the structure of the market, thus adapting or anticipating those changes.

Business Model Innovation

Business model innovation is about increasing the success of an organization with existing products and technologies by crafting a compelling value proposition able to propel a new business model to scale up customers and create a lasting competitive advantage. And it all starts by mastering the key customers.

Constructive Disruption

A consumer brand company like Procter & Gamble (P&G) defines “Constructive Disruption” as: a willingness to change, adapt, and create new trends and technologies that will shape our industry for the future. According to P&G, it moves around four pillars: lean innovation, brand building, supply chain, and digitalization & data analytics.

Continuous Innovation

That is a process that requires a continuous feedback loop to develop a valuable product and build a viable business model. Continuous innovation is a mindset where products and services are designed and delivered to tune them around the customers’ problem and not the technical solution of its founders.

Design Sprint

A design sprint is a proven five-day process where critical business questions are answered through speedy design and prototyping, focusing on the end-user. A design sprint starts with a weekly challenge that should finish with a prototype, test at the end, and therefore a lesson learned to be iterated.

Design Thinking

Tim Brown, Executive Chair of IDEO, defined design thinking as “a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” Therefore, desirability, feasibility, and viability are balanced to solve critical problems.


DevOps refers to a series of practices performed to perform automated software development processes. It is a conjugation of the term “development” and “operations” to emphasize how functions integrate across IT teams. DevOps strategies promote seamless building, testing, and deployment of products. It aims to bridge a gap between development and operations teams to streamline the development altogether.

Dual Track Agile

Product discovery is a critical part of agile methodologies, as its aim is to ensure that products customers love are built. Product discovery involves learning through a raft of methods, including design thinking, lean start-up, and A/B testing to name a few. Dual Track Agile is an agile methodology containing two separate tracks: the “discovery” track and the “delivery” track.

Feature-Driven Development

Feature-Driven Development is a pragmatic software process that is client and architecture-centric. Feature-Driven Development (FDD) is an agile software development model that organizes workflow according to which features need to be developed next.

eXtreme Programming

eXtreme Programming was developed in the late 1990s by Ken Beck, Ron Jeffries, and Ward Cunningham. During this time, the trio was working on the Chrysler Comprehensive Compensation System (C3) to help manage the company payroll system. eXtreme Programming (XP) is a software development methodology. It is designed to improve software quality and the ability of software to adapt to changing customer needs.

ICE Scoring

The ICE Scoring Model is an agile methodology that prioritizes features using data according to three components: impact, confidence, and ease of implementation. The ICE Scoring Model was initially created by author and growth expert Sean Ellis to help companies expand. Today, the model is broadly used to prioritize projects, features, initiatives, and rollouts. It is ideally suited for early-stage product development where there is a continuous flow of ideas and momentum must be maintained.

Innovation Funnel

An innovation funnel is a tool or process ensuring only the best ideas are executed. In a metaphorical sense, the funnel screens innovative ideas for viability so that only the best products, processes, or business models are launched to the market. An innovation funnel provides a framework for the screening and testing of innovative ideas for viability.

Innovation Matrix

According to how well defined is the problem and how well defined the domain, we have four main types of innovations: basic research (problem and domain or not well defined); breakthrough innovation (domain is not well defined, the problem is well defined); sustaining innovation (both problem and domain are well defined); and disruptive innovation (domain is well defined, the problem is not well defined).

Innovation Theory

The innovation loop is a methodology/framework derived from the Bell Labs, which produced innovation at scale throughout the 20th century. They learned how to leverage a hybrid innovation management model based on science, invention, engineering, and manufacturing at scale. By leveraging individual genius, creativity, and small/large groups.

Lean vs. Agile

The Agile methodology has been primarily thought of for software development (and other business disciplines have also adopted it). Lean thinking is a process improvement technique where teams prioritize the value streams to improve it continuously. Both methodologies look at the customer as the key driver to improvement and waste reduction. Both methodologies look at improvement as something continuous.

Lean Startup

A startup company is a high-tech business that tries to build a scalable business model in tech-driven industries. A startup company usually follows a lean methodology, where continuous innovation, driven by built-in viral loops is the rule. Thus, driving growth and building network effects as a consequence of this strategy.


Kanban is a lean manufacturing framework first developed by Toyota in the late 1940s. The Kanban framework is a means of visualizing work as it moves through identifying potential bottlenecks. It does that through a process called just-in-time (JIT) manufacturing to optimize engineering processes, speed up manufacturing products, and improve the go-to-market strategy.

Rapid Application Development

RAD was first introduced by author and consultant James Martin in 1991. Martin recognized and then took advantage of the endless malleability of software in designing development models. Rapid Application Development (RAD) is a methodology focusing on delivering rapidly through continuous feedback and frequent iterations.

Scaled Agile

Scaled Agile Lean Development (ScALeD) helps businesses discover a balanced approach to agile transition and scaling questions. The ScALed approach helps businesses successfully respond to change. Inspired by a combination of lean and agile values, ScALed is practitioner-based and can be completed through various agile frameworks and practices.

Spotify Model

The Spotify Model is an autonomous approach to scaling agile, focusing on culture communication, accountability, and quality. The Spotify model was first recognized in 2012 after Henrik Kniberg, and Anders Ivarsson released a white paper detailing how streaming company Spotify approached agility. Therefore, the Spotify model represents an evolution of agile.

Test-Driven Development

As the name suggests, TDD is a test-driven technique for delivering high-quality software rapidly and sustainably. It is an iterative approach based on the idea that a failing test should be written before any code for a feature or function is written. Test-Driven Development (TDD) is an approach to software development that relies on very short development cycles.


Timeboxing is a simple yet powerful time-management technique for improving productivity. Timeboxing describes the process of proactively scheduling a block of time to spend on a task in the future. It was first described by author James Martin in a book about agile software development.


Scrum is a methodology co-created by Ken Schwaber and Jeff Sutherland for effective team collaboration on complex products. Scrum was primarily thought for software development projects to deliver new software capability every 2-4 weeks. It is a sub-group of agile also used in project management to improve startups’ productivity.


Scrumban is a project management framework that is a hybrid of two popular agile methodologies: Scrum and Kanban. Scrumban is a popular approach to helping businesses focus on the right strategic tasks while simultaneously strengthening their processes.

Scrum Anti-Patterns

Scrum anti-patterns describe any attractive, easy-to-implement solution that ultimately makes a problem worse. Therefore, these are the practice not to follow to prevent issues from emerging. Some classic examples of scrum anti-patterns comprise absent product owners, pre-assigned tickets (making individuals work in isolation), and discounting retrospectives (where review meetings are not useful to really make improvements).

Scrum At Scale

Scrum at Scale (Scrum@Scale) is a framework that Scrum teams use to address complex problems and deliver high-value products. Scrum at Scale was created through a joint venture between the Scrum Alliance and Scrum Inc. The joint venture was overseen by Jeff Sutherland, a co-creator of Scrum and one of the principal authors of the Agile Manifesto.

Stretch Objectives

Stretch objectives describe any task an agile team plans to complete without expressly committing to do so. Teams incorporate stretch objectives during a Sprint or Program Increment (PI) as part of Scaled Agile. They are used when the agile team is unsure of its capacity to attain an objective. Therefore, stretch objectives are instead outcomes that, while extremely desirable, are not the difference between the success or failure of each sprint.


The waterfall model was first described by Herbert D. Benington in 1956 during a presentation about the software used in radar imaging during the Cold War. Since there were no knowledge-based, creative software development strategies at the time, the waterfall method became standard practice. The waterfall model is a linear and sequential project management framework. 

Read Also: Continuous InnovationAgile MethodologyLean StartupBusiness Model InnovationProject Management.

Read Next: Agile Methodology, Lean Methodology, Agile Project Management, Scrum, Kanban, Six Sigma.

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