Eric D. Brown, D.Sc.

Data Science | Entrepreneurship | ..and sometimes Photography

Tag: OODA Loop

Decision Speed, Performance and the CIO

Last week I wrote about “Turbulence, IT & The New CIO” and discussed the need to embrace agility and speed in order to address the turbulence that we see in business today.  In order to be agile, I mentioned the OODA (Observe, Orient, Decide, Act) model for use in helping keep agility at the front of your mind while planning and doing.

After writing last week’s post, I ran across an article by Kathleen Eisenhardt from titled “Making Fast Strategic Decisions in High-Velocity Environments“.  In this article, the author reports on a study that was conducted to compare the speed of the decision making process and the performance of those decisions at eight microcomputer organizations.

At the time of the article’s publication (1989), popular belief (and much research) stated the following:

  • Leaders & organizations should be autocratic
  • Decision making should be centralized for speed and control
  • When planning, an organization should look at future projections, not operational data
  • Careful analysis of the ‘best’ option should be performed
  • Fast analysis means less data

Sound familiar to anyone?  I still see a lot of organizations and leaders following this approach today, especially in the IT space.

Eisenhardt’s research showed something interesting.  She was able to show that those organizations that made quick decisions were more apt to use more information and look at more options than those that made slow decisions.  The data also showed that centralized decision making isn’t the fastest route to a decision; organizations that shared data with a larger audience and welcomed feedback were more apt to perform better in the long run.

I won’t go into the full outcome of the research, but I wanted to highlight a few of the key propositions from the paper:

  • The decision making process speeds up when you make use of real-time data
  • The decision making process speeds up when you increased the # of alternatives considered simultaneously
  • The more integrated your decision making process is, the faster it can go
  • In “high-velocity environments”, the faster the decision making process goes, the greater the performance.
  • Politics slows decision making and degrades performance.

So…what does this have to do with IT?

Everything.  To compete in the turbulent world today, we’ve got to be agile in our thinking and execution.  This research helps highlight that fact.

Organization’s, and especially organizations that use technology, are high-velocity environments.   We are doing more with less and have to do it faster than before.

The faster we can make decisions with more accurate data (real-time) and the more options we review, the better that decision outcome will be in the long run.  Will every decision be correct? No…but it will be a decision that moves you a little further.

If you take the OODA approach discussed last week, you’ll be making decisions, acting on those decisions and immediately looping back to review the post-decision environment and determining what needs to be tweaked in your strategy for the to reflect the ‘new’ environment and to prepare future.

Integrated Decision Making

One of the outcomes of the research showed that decision making processes worked better when they were integrated with each other.   Eisenhardt reports that in those organizations that had strategic planning integrated integrated with tactics (see my thoughts on this topic in Minding the gap between Strategy and Tactics), performance improved.  In addition, those leaders who brought together people from different parts of the organization during the decision making process performed better.

Surprised?  This is why it’s such a huge issue for The New CIO to be engaged and involved with the organizational strategic planning process and be tied in with other groups and teams’ decision making.    Eisenhardt reports that making decisions with as many options as possible using as much real-time operational information as possible is the key to performance…CIO’s should take this and run with it.

The New CIO needs to take research like this to heart.  Use all the data you can, include your team and others from the organization in your decision making process.  In addition, as CIO you need to push for inclusion in other teams’ decision making process.Ensuring integrated decision making with the proper people & data, you’ll be able to mind the strategy/tactic gap and act in an agile manner.

References

  • Eisenhardt, K. (1989). Making Fast Strategic Decisions in High-Velocity Environments. The Academy of Management Journal, 32(3), 543-576.

The New CIO is a weekly article about the challenges facing today’s CIO as well as what can be done to prepare for future challenges. Join me next week for another article in the series.

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Turbulence, IT and The New CIO

Turbulence, IT and the CIO

The New CIO is a weekly article about the challenges facing today’s CIO as well as what can be done to prepare for future challenges.

I just completed reading The Upside of Turbulence: Seizing Opportunity in an Uncertain World. Great book.  Go buy it…the link above is an affiliate link or just go grab one from your favorite bookseller.

The book does an excellent job of discussing the world of business and the role that turbulence has played in shaping it.  Donald Sull does a great job describing how to embrace turbulence and seize the opportunities that turbulence can bring.

How do you embrace turbulence?   By being agile.

Before we continue, don’t confuse ‘being agile’ with the agile development methodology….while they may be similar, for the purposes of this article, I’ll be talking about a different ‘agile’.

That said, let me clear up what I mean when I saw agile (and what Donald Sull means when he uses it): Agile isn’t about speed. Agile has to do with the ability to change course when needed. Being agile means taking a look at your organizational landscape (strategy, operations, etc) and breaking up the long-term view into smaller samples of time to make it easier to see and respond to opportunities.

Dr Sull defines agility as:

“the capacity to identify and capture opportunities more quickly than rivals” (p. 138).

In addition, he uses the concept of air warfare to help tell the story of how agility can provide tremendous benefits.  Out of these stories of air warfare, Dr Sull introduces John Boyd, a military strategist who helped with a lot of the science behind the F-16 and F-18 fighter jets, and Boyd’s OODA Loop.

John Boyd's OODA Loop

John Boyd's OODA Loop (Courtesy of Jeff McNeill's Flickr stream)

What is the OODA loop?  It stands for Observe, Orient, Decide, Act.

What does it have to do with IT? Everything.

In order to be an effective IT group and CIO in the world today, you’ve got to have some flexibility (i.e., be agile) so you can move quickly when opportunities arise.

As we all know, we are being asked to do more with less.  The only way to do that, is to remain flexible (as well as have a good team and not overwork them).  In addition to being agile, you’ve got to have a strategic plan and know how to execute that plan.

By using the OODA model, you might be able to be agile, plan and react as necessary.  Let’s look at how you might incorporate the OODA model into your business life.

Observe

To use the OODA model, the first (and perhaps most important) step is to continuously observe.

Observe your situation.  Look at your organization, team and the competitive landscape.  What can you and your IT team do to help move the company forward?

In addition, observe how your team operates. Do you have enough people?  Do you have the right people?

Is your strategic plan still valid based on these observations? What are the politics of your organization?

Orient

While observing, you’ll need to orient yourself to your landscape.  Orientation (in the OODA model) is all about positioning yourself.

Is your organization changing direction?  Are your competitors doing something differently that previously?  Is your team becoming overloaded?  Do you have the right people on board to make your plans successful?

Decide

You are observing your situation and have oriented yourself to the climate….now all you have to do is decide to do something.  Can you make a decision?  You better be able to.

In a turbulent world, you don’t have time to wait or over-analyze…you’ve got to decide quickly and move on.  In the world of air warfare, if you wait you die and in today’s world your fate and your organization’s fate might just hang on your ability to decide.

Act

You’ve decided on a plan of action.  Now you need to execute it.  If you’ve observed, oriented and made the right decision, you can act with ease…but do you have the right people in place?

Many organizations plan well but very few ACT well.  The ability to act and react after observing & orienting is a major reason that some organizations succeed and others don’t.

The New CIO & The Loop

The OODA model is built with feedback loops.  Each action is fed back to the observation stage to review for tweaks.  I’ve found that most organizations are missing this feedback mechanism…strategic plans are made and ‘rolled out’ without any feedback nor any way to change course quickly.

Dr Sull introduces his own version of the OODA loop…he calls it the ‘agility loop’.  The agility loop has four stages:

  • Make sense of situation
  • Make choices
  • Make it happen
  • Make revisions

I like what Dr Sull has to say about the agility loop…whether you use the OODA loop or Sull’s Agility loop, you’ll be in a position to improve your agility.

To succeed in the future, The New CIO has to remain agile.  Using the OODA loop (or Dr Sull’s agility loop) helps you keep your mindset right.  Remember to observe, orient, decide & act. Then repeat.

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