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Carl von Clausewitz, the OODA Loop and…your business strategy?

Following up with his informative series of three blogs he authored for us last month, Jeff Sisco has offered to share insights which continue to add value for all business owners. Enjoy Jeff's latest blog - let us know what you think!

Once upon a time, I was an aspiring academic. My field of study was political science and my primary focus was security studies. As a hard-charging PhD graduate student, I spent more time than I’d like to admit, reading the seminal works of military strategy.  This next series of blog posts is my attempt to convince myself all those nights and weekends were not a waste of time. I hope to explore the relationship between many of history’s greatest military strategists and your business strategy. Bear with me, as I think we can all learn a lot from these masters.

The Prussian military analyst Carl von Clausewitz is often credited with developing the precursor to the modern military concept called the “fog of war.”  In his 1832 book, On War, von Clausewitz wrote:

“War is the real of uncertainty; three quarters of the factors on which action in war are based are wrapped in a fog of greater or lesser uncertainty.  A sensitive and discriminating judgement is called for; a skilled intelligence to scent out the truth.”

In modern military strategy, the concept of the fog of war is meant to illustrate the confusion that engulfs the battlespace. As anyone who has ever driven in heavy fog will attest, recognizing patterns, processing what is important information versus what is less important information (the signal vs. the noise), and maintaining your normal driving pace and tempo are all greatly diminished. The fog is a perfect analogy for confusion, not being able to recognize up from down or right from left. It can force us to rethink our entire strategy and reason for being where we are at that point in time. If the fog is thick and heavy enough, it can envelope us to the point of incapacitation.  Soldiers and their battle commanders often are confronted with all of these sensory depriving factors—usually at once.

The military attempts to combat the incapacitating effects of the fog through training. The more soldiers are exposed to conditions that mimic the fog, the better equipped they are to “read and react.”  One training method used in the military to teach soldiers in high stress environments is the OODA Loop. The OODA Loop is what strategists call a decision cycle. OODA stands for: Observe, Orient, Decide and Act. The OODA loop concept was developed by Air Force Colonel John Boyd. Boyd was a fighter pilot who went on to become a leading military strategist at the Pentagon. Much of his work has become instrumental in the worlds of sports, military and litigation strategy. Without going into too much detail in this blog post, the OODA loop is meant to give the user a decision making advantage over his or her opponent.  If she can take in, synthesize, determine a course of action and play out the decision faster than her opponent, she has the advantage. A foundational underpinning of military strategy is to “be first.”  Being first puts your opponent on the defensive. In many ways, you would prefer to be first even if your plan of action is less than perfect. You know this concept as the first mover advantage (more on this in a subsequent blog post!).

So I can imagine what you are thinking.  Thanks for the military strategy history lesson but what does any of this have to do with my business strategy? Honestly, it has everything to do with your business strategy.  Think about what von Clausewitz said. Nearly 75% of the decisions on a battlefield are clouded in the fog of uncertainty and imperfect information. Substitute the battlespace for the competitive environment of your business and ask yourself if you regularly deal with the fog? Does the chaos of the competitive environment in some ways mimic the confusions of the battlefield? Is it difficult to turn information into actionable intelligence? Ask yourself if as a senior executive in your business you are regularly forced to make decisions inside the fog.  Lastly, ask yourself if you think your decision making would benefit from the application of a framework like the OODA Loop. The fact is most of what we understand to be modern business strategy is rooted in military strategy—even down to the analogies and acronyms.

We are sitting just past the halfway point of 2017. Never in the course of human history have individuals and individual business executives had access to more information. As a corporate strategist, you have access to market data, customer data, supplier data, and competitor data. You can track how many people visit your website, what they look at and whether they leave without making a purchase. You can track your shipments from the time the leave your supplier’s back door until you check them into inventory. If you dig deep enough, you can figure out what your competition across town or across the globe is doing. You can measure social media engagement. The examples are endless. The challenge for you is turning data into actionable business intelligence without getting enveloped by the fog. The challenge for you is to create decision making frameworks that are a source of competitive advantage, rather than disadvantage. Knowing what is worth observing is a critical decision in today’s overloaded data environment. It is critical to understand that data does not equal insight. Determining the proper orientation for your firm is a process that requires real effort—daily. The act of “deciding” can spawn dozens of separate blog posts and conversations. You must force yourself to avoid deciding on gut instinct. Lastly, you must take decisive action with commitment and enthusiasm. Be first. Don’t make perfection the enemy of the good.

Make von Clausewitz proud—don’t get enveloped by the fog.

 

The Valuation and Strategic Advisory Group specializes in assisting business owners, senior executives and corporate strategists with identifying drivers of value, actionable business intelligence and achieving strategic objectives. If you have any questions or are interested in discussing a strategy engagement, please contact Jeff Sisco at Jeffrey.sisco@sobel-cpa.com or Chris Young at Christopher.young@sobel-cpa.com or by telephone at 973.735.7664.