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





































Read Also: Continuous Innovation, Agile Methodology, Lean Startup, Business Model Innovation, Project Management.
Read Next: Agile Methodology, Lean Methodology, Agile Project Management, Scrum, Kanban, Six Sigma.
Main Guides:
- Business Models
- Business Strategy
- Business Development
- Distribution Channels
- Marketing Strategy
- Platform Business Models
- Network Effects
Main Case Studies: