Transcript Conflict in Time Strategy for the 21st Century

Certain to Win
Boyd’s OODA Loop as a business weapon
Or, any position other than first is a tie for last.
Chet Richards
J. Addams & Partners, Inc.
March 2008
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Starting Point: Wars don’t
always turn out as expected
Russia
Chechnya
Soviet Union
Afghanistan
United States
Vietnam
Various Arab States
Israel
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Business doesn’t either
General Motors
Market share fell from 52%
to around 25%
Sears
Dropped to #52 on Fortune
500
American Airlines
Lost billions in 2001, 2002,
2003, & 2004
Delta, Northwest, United
Airlines, US Airways
In Chapter 11
Digital Equipment, Compaq,
Montgomery Ward, Eastern
Airlines, TWA, Pan Am,
McDonnell-Douglas
Gone
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But it’s not inevitable
Automobiles
Toyota, Nissan
Retailing
Wal-Mart, Target
Airlines
Southwest, JetBlue,
Singapore, Emirates,
Ryanair, AirTran
Computers
IBM, Apple
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In other words, there are many times
when the side we’d pick to win, based on:
• size/financial resources
• technology
• market share
loses.
5
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Why?
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The military’s answer is
something called “maneuver
warfare”
And that is the business of decision cycles, or inside
the decision loop, as people say … if, in fact, you
can deceive him with respect to what you are going
to do, to cause him further confusion and make him
keep his force in place one day too
long, then, in fact, you find yourself
all the way to Baghdad.
Gen Tommy Franks,
Commander, USCENTCOM
in Peter Boyer, “The New War Machine,”
The New Yorker, June 30, 2003
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The primary advantage we want
to achieve in all forms of
maneuver is time.
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Using time as a weapon:
The “H-Y War”
1981 - 1983
• Honda Motorcycles introduced or replaced 113
models, effectively turning over its entire
product line twice.
• Yamaha, which also started with about 60
models, was only able to manage 37 changes
in product line over the same 18 months.
• So, for one thing, Honda was able to
incorporate (and test in the marketplace) a
much wider variety of styling & technology.
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H-Y War: The Results
• But more fundamental: Honda succeeded in
making motorcycle design a matter of fashion,
where newness and freshness are important
attributes to customers.
• Next to a Honda, Yamaha’s bikes looked old,
unimaginative, unattractive.
• Yamaha was left with 12 months of unsold (and
unsellable) inventory.
Stalk & Hout, Competing Against Time, 59
Comment: a classic example of
“shaping the marketplace.”
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A time-compressed company does the same thing as a
pilot in an OODA loop … It’s the competitor who acts on
information faster who is in the best position to win.
George Stalk, Jr. & Tom Hout,
Competing Against Time, 180-181.
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Business is a dogfight.
Your job as a leader:
Outmaneuver the competition, respond
decisively to fast-changing conditions, and
defeat your rivals. That's why the OODA loop,
the brainchild of "40 Second" Boyd, an
unconventional fighter pilot, is one of today's
most important ideas in battle or in business.
Keith Hammonds, “The Strategy of the Fighter
Pilot,” Fast Company, June 2002.
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This is the OODA loop
Orient
Observe
Decide
Act
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This is not the OODA loop
Orient
Observe
Decide
Act
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An OODA “loop” with power
Observe
Orient
Implicit
Guidance
& Control
Unfolding
Circumstances
Observations
Feed
Forward
Genetic
Heritage
Analyses &
Synthesis
Feed
Forward
Decision
(Hypothesis)
Previous
Experience
Outside
Information
Act
Implicit
Guidance
& Control
Cultural
Traditions
New
Information
Unfolding
Interaction
With
Environment
Decide
Feed
Forward
Action
(Test)
Unfolding
Interaction
With
Environment
Feedback
Feedback
J. R. Boyd, “the Essence of Winning and Losing,” 1995.
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Observations on orientation
for business
Orientation
Implicit
Guidance &
Control
Implicit
Guidance &
Control
Cultural
Traditions
Genetic
Heritage
Observations
Feed
Forward
Analyses/
Synthesis
Feed
Forward
Decision
Action
New
Information
Previous
Experiences
Observation is the only
feed into Orientation
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Orientation locked tight
The company (A&P), under pressure from
Kroger, experimented with a new concept, “The
Golden Key.” “It sold no A&P branded products,
it gave the store manager more freedom, it
experimented with innovative new departments
… Customers really liked it.
“What did A&P executives do with ‘The Golden
Key’? They didn’t like the answers it gave,
so they closed it.”
Jim Collins, Good to Great, 68.
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Battle of Orientations: 1
James E. Press, president of Toyota Motor
Sales, said any top American company must first
have a lineup that meets its customers' needs. It
also must produce vehicles in the United States
that lead their category in quality, resale value,
comfort and design, he said. A leading American
player has to have a strong brand image, a dealer
network that offers good service and most
important, put buyers first, Mr. Press said.
Asked if Toyota meets those criteria, he said, "Not
yet. We can improve on everything."
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Battle of Orientations: 2
Mark Fields, president of Ford's operations for
the Americas, said: "Americans want to buy
American cars.”
Micheline Maynard,
Toyota Shows Big Three How It's Done,
New York Times, January 13, 2006
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Improving orientation
Toyota calls this hansei
• Set aside specific times (e.g., at each staff
meeting) to review feedback on possible
mismatches (“Reflection must be
institutionalized as a business
process.” Michael Hammer, co-author of
Reengineering the Corporation, and
Steven A. Stanton, Fortune OnLine, Nov
24, 1997)
• Abolish the Executive Dining Room.
• Abolish “Management Clubs.”
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These are tubs for
drinking your
own bathwater
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Improving orientation (II)
• Post on internal web site (& invite discussion):
– Assessment of the current situation:
customers, competitors, economy,
government, our situation, etc.
– Post-mortems (proposals, projects, etc.)
– Specific competitor observations (esp. things
they do better)
• Also include a competitive intelligence, “what
competitors do better,” section in staff
meetings.
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What about “action”?
• The idea is that the vast majority of the time,
actions should flow smoothly from orientation
via the “implicit guidance and control” link.
• Thus, excellence in technique is vitally
important – study, train, rehearse, practice,
critique constantly, from the factory floor to the
executive suite.
• “I don’t make decisions,” the fireground
commander announced to his startled listeners.
“I don’t remember when I’ve ever made a
decision.” – Gary Klein, Sources of Power
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Observation
Implicit
Guidance &
Control
Unfolding
Environment:
• Customers
• Competitors
• Economy
• Government
• Employees
• Financials
• Other
Indicators
• Etc.
Observations
(Orientation)
Feed Forward
(Orientation)
What you’re looking for
are “mismatches”
between
Feedback
From Decision
Feedback
From
Action
a) what your orientation is
telling you the world
ought to be
and
b) what the world really is.
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In one of the first games he attended, [New
Sacramento Kings Owner] Gavin [Maloof] missed an
entire quarter waiting in a beer line. Knowing his
father would have gone nuclear, Gavin arranged to
have 20 minibars installed throughout the arena.
Nobody waits for a beer now.
Hugo Lindgren, The Flying Maloof Brothers,
New York Times, February 15, 2004
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Decision
(Orientation)
Feed
Forward
Decision
(Hypothesis)
Feed
Back
Note: Decision is fed
only from Orientation
(Observation)
Feed
Forward
(Action)
Note: Decisions, in this sense,
are needed when action
does not flow from
orientation. These
types of decisions
always slow down the
OODA “loop”
They can be considered as part
of the learning process.
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What OODA “loop” speed really
means
Quickly
understand
what’s going on
Observe
Know what
to do
And be able to
do it
Orient
Decide
Implicit
Guidance
& Control
Unfolding
Circumstances
Observations
Implicit
Guidance
& Control
Feed
Feed
Forward
Forward
Decision
(Hypothesis)
Outside
Information
Unfolding
Interaction
With
Environment
Act
Feed
Forward
Action
(Test)
Unfolding
Interaction
With
Environment
Feedback
Feedback
While learning
from the
experience
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Key Points:
• When you’re doing OODA “loops” right,
accuracy and speed improve together;
they don’t trade off.
• A primary function of management is to
build an organization that gets better
and better at these things.
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According to Boyd, a fighter pilot didn’t
win by faster reflexes; he won because his reflexes
were connected to a brain that
thought faster than the opponent.
Bing West and
MajGen Ray Smith, USMC, Ret.
The March Up, p. 11
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Question
How can your corporate “brain” think
faster?
Answer:
•
Ultimately, a culture or climate that
encourages people to use their initiatives
to further the goals of the organization.
•
Under such a culture, people will solve the
technical & operational problems.
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The Principles of the Blitzkrieg
• Fingerspitzengefühl - Zen-like quality of intuitive
understanding. Ability to sense when the time is
ripe for action. Built through years of
progressively more challenging experience.
• Einheit - Has the connotation of "mutual trust"
and implies a common outlook towards business
problems. Built through common experience.
Fingerspitzengefühl at the organizational level.
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Blitzkrieg, continued
• Schwerpunkt - Any concept that gives focus and
direction to our efforts. In ambiguous situations,
answers the question, "What do I do next?”
Requires leadership.
• Auftragstaktik – Convey to team members what
needs to be accomplished, get their agreement
to accomplish it, then hold them strictly
accountable for doing it - but don't prescribe
how. Requires very high levels of mutual trust.
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Fingerspitzengefühl: excellence
at the level of tactics
• Every day the sales team met at 7am for two hours of
training that involved role playing, sales strategies, and
videotaping of mock sales calls.
• Don Sumner, 38, an account executive, says Winkler
has handed him a three-page performance analysis
more than once, after overhearing one of Sumner's
phone pitches. "Dealing with someone who can be such
an S.O.B. has made me more thick-skinned," says
Sumner.
• Since his arrival the number of clients at SecureWorks
has grown from 100 to 800 … New orders at the now
profitable company are growing at 200% to 300%
a year
~ Fortune Small Business, “The Best Bosses,” October 2004.
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Fingerspitzengefühl as strategy
There is a surface version of genchi genbutsu (go
and see for yourself) and a much deeper version
that takes many years for employees to master.
What the Toyota Way requires is that employees
and managers must deeply understand the
process of flow, standardized work, etc.
Jeffrey K. Liker, The Toyota Way, p. 224
emphasis added
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“The Operating System is
GE's learning culture in action.
“It is a year-round series of intense learning
sessions where Business CEOs, role models and
initiative champions from GE as well as outside
companies, meet and share intellectual capital.”
http://www.ge.com/en/company/companyinfo/at_a_glance/operating_
system.htm - 2/25/2003
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Einheit hits the beach
It is not more command and control
that we are after. Instead, we seek to
decrease the amount of command
and control that we need.
We do this by replacing coercive
command and control methods with
spontaneous, self-disciplined
cooperation based on low-level
initiative, a commonly understood
commander’s intent, mutual trust,
and implicit understanding and
communications.
MCDP 6, Command and Control, p. 6
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Flowdown: Schwerpunkt for
manufacturing
The Toyota Production
System, quite simply, is
about shortening the time it takes to
convert customer orders into vehicle
deliveries.
This tells everybody in Toyota manufacturing:
“When in doubt, take the action that has the
biggest impact on order-to-delivery time”.
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Augtragstaktik—missions and
contracts instead of tasks
The concept of mission can be thought of as a contract,
hence an agreement, between superior and subordinate.
– The subordinate agrees to make his or her actions
serve superior's intent in terms of what is to be
accomplished.
– The superior agrees to give the subordinate wide
freedom to exercise his or her imagination and
initiative in terms of how intent is to be realized.
J. R. Boyd, Patterns of Conflict, 76
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Augtragstaktik—what
“commitment” means
As part of this concept, the subordinate is given the right
to challenge or question the feasibility of the mission if:
– he feels his superior's ideas on what can be achieved
are not in accord with the existing situation or
– he feels his superior has not given him adequate
resources to carry it out.
Likewise, the superior has every right to expect his
subordinate to carry out the mission contract when
agreement is reached on what can be achieved consistent
with the existing situation and resources provided.
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Auftragstaktik—focused
initiative
Abbott recruited entrepreneurial leaders and
gave them the freedom to determine the
best path to achieving their objectives.
On the other hand, individuals had to commit
fully to the Abbott system and were held
rigorously accountable for their objectives.
They had freedom, but freedom within a
framework.
Jim Collins, Good to Great, 123.
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It’s really pretty simple
I. (Individual)
Fingerspitzengefühl
II. Einheit
III. Schwerpunkt
IV. Auftrag
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A case study in cheng / ch’i
In October 2001, Apple introduced
the iPod. It did what you’d expect play music - but also what you
didn’t expect - be intuitively easy to
operate (in 2002, this was
unexpected in MP3 players).
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A case study in cheng / ch’i
iPod
1 Gen
2 Gen
3 Gen
4 Gen
5 Gen
6 Gen
Mini
1 Gen
2 Gen
Nano
Exploit!
“Penetrate”: Learn
the marketplace;
build
Fingerspitzengefühl
& Einheit
1 Gen
2 Gen
It turns out that the real iPod killer is Apple
3 Gen
itself. Last week, the company eliminated its
top-selling model, the iPod mini, and topped
Shuffle
1 Gen
itself with the iPod nano, an even smaller device
2 Gen
that becomes the new target dangled in front of
the competition
Touch
— Seattle Times, Sept 17, 2005
2002
2003
2004
2005
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2006
2007
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And how well did Apple’s
strategy work?
iPod
100
million
1 Gen
2 Gen
3 Gen
4 Gen
5 Gen
6 Gen
Mini
1 Gen
2 Gen
Nano
1 Gen
2 Gen
3 Gen
Shuffle
1 Gen
2 Gen
Touch
2002
2003
2004
2005
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2006
2007
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How well did Apple’s strategy
work?
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Cheng
• After 8 hours sitting on a ramp in Austin, American
Flight was out of water and food and all the toilets were
overflowing. “This wasn't a story about the "perfect
storm," but about corporate cultures that don't put
customer service first.”
• American's Mr. Hotard says the airline is truly sorry for
the mess. He says one reason the airline may not have
contacted customers to apologize is that its Fort Worth
headquarters, where customer-service specialists work,
was closed for four days over New Year's. -Scott
McCartney, Wall St. J.
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Ch’i
• Bob Hamel: "I had a similar experience with Southwest last
summer. Sat in Chicago for five hours to go to Detroit. The
difference was Southwest sent me two $50 vouchers and a
letter of apology. In this case, it wasn't even their fault, it was
the weather.”
• “Southwest staff took care of me and made sure I was as
comfortable as possible despite the long lines and what I was
sure had been long hours for them. Yeah, there were a
couple of glitches, but these were taken care of in a manner
that definitely put the customer's needs first. Finally,
Southwest staff never seemed to lose what I consider to be
one of the best things about flying Southwest -- a great sense
of humor. Even when they may have been laughing just to
keep from crying."
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Military analysts say
we [US Navy SEALs]
are becoming skilled disciples of John Boyd. That
is, we execute the Boyd Loop—observation,
orientation, decision, action (OODA)—far better
and far quicker than our enemies.
— Dick Couch,
The Finishing School, p. 258
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You don’t wait for the future.
You create it.
Hwang Chang Gyu,
President, Samsung Semiconductor
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