Is Your Company Straplegic?
“This downturn has changed the way we will think about our business for many years to come,” says Steve Odland, Office Depot’s chairman and chief executive.Walt Shill, head of the North American management consulting practice for Accenture Ltd., is even more blunt: “Strategy, as we knew it, is dead,” he contends. “Corporate clients decided that increased flexibility and accelerated decision making are much more important than simply predicting the future.” Strategic Plans Lose Favor, the Wall Street Journal January 25, 2010
Is your company crippled by its own strategy? If so you’re in good company and, if so, there’s hope for recovery and the freedom to enable your company to maneuver in this economy. Over 90% of emerging companies fold, often due to the fact that they allow themselves to become straplegic.
You might think our Special Forces are the ninjas of strategic planning. Most of us would surmise that these superbly trained warriors agonize over charts and maps to devise the next 25 steps of their next initiative. Not so, especially in the battlefield.
Special forces use a simple but powerful decision process called the OODA Loop. The “Loop” by definition is circular not linear, in other words it’s a fluid and flexible methodology that requires a continuous flow of essential information combined with the ability to analyze and synthesize that information into quick decisions. OODA stands for Observe, Orient, Decide, and Act. According to my close friend and former Special Forces member, Mickey Pittman, the OODA Loop is designed to accomplish two objectives – defeat the enemy and survive. Without the Loop, field warriors fall prey to attack and often are crippled in the line of fire.
Entrepreneurs can also become crippled by cumbersome, multi-teir strategic plans generated either by a Fortune 100 consultant or at 3 day workshops taught by a self proclaimed “thought leader”. These plans weigh as much as the Obamacare document and rely on a linear series of events that are more difficult to follow than a map to the Lost Ark. They traumatize Entrepreneurs and their leadership teams into a state of confusion and low moral; in other words the company becomes Straplegic.
Here’s a thought. Instead of spending the next 12 months Six Sigma-ing your company into efficiency Nirvana, why not embrace the brutal facts of our New Normal economy and focus on remaining flexible in the battle to beat your competition and survive. I suggest a 3 step process for business in lieu of the magnificent 4 step OODA Loop:
- Decide – Choose your company’s top 3-5 priorities
- Align – sync (continuously) your team on those priorities (look at previous “Sync’Em” posts)
- Track – hold team members accountable to actions that support priorities and update performance on company metrics
The DAT Loop requires continually updated information on team alignment, company investments, customer acquisition, management positions, and economic modeling. If that information is available then the company can remain maneuverable to make the right decisions, maintain team alignment and a use a concise scoreboard to track performance.
Do DAT! You’ll be on your feet in no time.The Six Secret Steps to CEO Split Second Decisions
I referenced a New Normal process for CEOs in the last post that equips the company to make critical decisions and maintain maneuverability on a continuous basis. It’s a “speed chess” decision process that enables the CEO and Inner Circle to defeat competition and win. The process is based on the strategy used by our military every day on the battlefield; Special Forces and Seals know it as the OODA Loop:
There are 6 secret steps a CEO must employ to make split-second decisions in order to effectively maneuver his/her company and win in our current economy.
The 6 Secret Steps to Split-Second Decisions
1. Readiness
Mickey Pittman is a Special Forces instructor and entrepreneur. He founded Lead the Way, a training program for Wall Street executives built on military tactics and the OODA Loop. Mickey and his team create elaborate customized simulations that instruct business leaders how to make quick and continuous decision. I asked Mickey to describe his primary goal for a weekend with Wall Street execs. He responded without hesitation, “To create readiness.” Readiness, as Mickey described it, is the eagerness to engage in battle and the willingness to make tough decisions on a continuous basis.
I’ve worked with over 200 CEOs during the past two years. The biggest hurdle these Economy Heroes face is their own lack of resolve to make the tough decisions on a timely basis. Readiness is the foundation of Gazelle success. Without the willingness to embrace the brutal facts revealed through accurate intelligence, and without the readiness to act on those facts a CEO will probably lose.
2. Unique Intelligence
Unique Intelligence provides situational awareness of the immediate current condition and issues a company faces. In the Korean War the MiG was faster and had greater turning ability, but the U.S. F-86 was quicker in changing maneuvers and it had, for the first time, a bubble canopy that enabled the pilot to enjoy a 360 degree view of his condition.
3. Observation
A relationship exists between the observer and what is being observed… If we are aware that these changes take place we reassess and recalculate our relationship with whatever it is that we are observing. In other words, the process not only shapes what is being observed but feedback reshapes the observer’s output.
John Boyd
The CEO must use the unique intelligence to identify critical patterns unfolding in the organization’s condition such as a vague value proposition, inadequate management, a poor economic model, or lack of capital. A highly qualified and experienced Advisor, equipped with unique intel generated by a continuous feed engine like the 4M Navigator (www.4MNavigator.com) can provide an objective perspective to identify the company’s critical patterns.
4. Orientation
Once the patterns are identified, the CEO can then analyze and synthesize the data to identify the questions that must be answered in order to make the best decision.
Here’s a sample scenario for fighter pilots seeking situational awareness:
- If I’m flying at 30,000 feet and 450 knots and pulling six G’s (G forces), how fast am I gaining or losing energy? Can my adversary gain or lose energy faster than I can?
Let’s rephrase that scenario from in an entrepreneur’s context:
- We’ll hit 8.5 million in revenue this year, EBITDA 15%, GP 23%. If I grow into the next revenue zone (10 -20 million) what are the average performance metrics of my competition and do I have the infrastructure, value proposition, management team, internal alignment, economic model and capital to survive the next few maneuvers?
5. Choice
The CEO chooses an option based on a hypothesis that fits the condition – considering the data, context, personnel, capital and risk identified during Orientation. I consulted with the specialty medical practice that experienced solid growth over the past year. When we reviewed his Unique Intelligence reports, a critical issue surfaced. Both Gross Margin and EBITDA dropped when the practice grew over $10 million in revenue. The CEO decided on the spot to limit their growth to $9 million instead of investing significant capital to expand into a large metropolitan area.
6. Action
It’s time to play out the decision and immediately engage with the necessary personnel and resources. The CEO maintains situational awareness at all times, capturing all data and nuances that can be applied to the next maneuver.
A CEO must have the fortitude and willingness to make tough choices quickly. In order to perform a strategic “button hook turn” the CEO requires an uninterrupted flow of unique intelligence to fuel the circular pattern of observation, orientation, decision and action. An experienced Advisor can dramatically increase the probability of success by offering insight and accountability to the critical issues continually surfaced in the company’s trusted decision process.
The CEO and Speed Chess
There’s a New Normal breaking through the ice concerning how a CEO makes decisions. The traditional linear method of forecast and response has been replaced by a new process that resembles both Special Forces field tactics and…. speed chess:
Here’s how the Wall Street Journal describes it:
Now, even though the economy is slowly picking up, those fresh habits aren’t fading. “This downturn has changed the way we will think about our business for many years to come,” says Steve Odland, Office Depot’s chairman and chief executive.
Walt Shill, head of the North American management consulting practice for Accenture Ltd., is even more blunt: “Strategy, as we knew it, is dead,” he contends. “Corporate clients decided that increased flexibility and accelerated decision making are much more important than simply predicting the future.”
Strategic Plans Lose Favor, Wall Street Journal 1.25.10
Who Was John Boyd?
In America’s current business “Story”, the question is not “Who is John Galt?” but “Who was John Boyd?”
John Galt is of course the famous antagonist of Atlas Shrugged, Ayn Rand’s classic tale of capitalism. Rand’s story begins with the question, “Who is John Galt?” in reference to the stealth anti-hero who eventually reaps global influence on America’s economy. John Boyd was on the other hand a non-fiction, relatively unknown Air Force colonel in the late 20th century; Boyd is a best kept secret where the Pentagon is concerned, but to fighter pilots he was a flying legend who, in less than forty seconds, could defeat any other aviator on the planet. When asked about his vocation, Boyd would announce “I’m a #%*&# fighter pilot!” But he accomplished more than owning the skies; Boyd also changed the art of war for our entire armed forces.
Boyd was somewhat of a Renaissance man; he revealed brilliance as an engineer, designer, author and teacher in addition to his role as “40 Second Boyd.” Little did Colonel Boyd realize that his brilliant calculations and theories would one day not only change American aerial and field combat tactics forever, but also equip business leaders to make decisions in the current “war” of our economy.
Boyd created the first calculations and strategic procedures for aerial combat. His landmark equations justified federal funding to create tactical fighters, like the F-16 and F-18 in lieu of traditional budget-busting bombers. Boyd also constructed the now famous OODA Loop (Observe, Orient, Decide and Act) after years of research and testing. Our aviators and Special Forces currently use the OODA Loop as their trusted decision process on missions around the world. Boyd designed the “organic” OODA so that officers could consistently out-maneuver the enemy.
Here are the brutal facts of American businesses in Boyd’s context: we currently experience a 9:1 kill ratio in favor of the enemy. Who is the entrepreneur’s “enemy”? In addition to competition and current political legislation, the CEO’s enemy could be his or her own lack of essential information and lack of readiness (more later) to make tough decisions on a continual basis to survive and defeat competition.
If our mental processes become focused on our internal dogmas and isolated from the unfolding, constantly dynamic outside world, we experience mismatches between our mental images and reality… The only alternative is to do a destructive deduction and rebuild one’s mental image to correspond to the new reality.
John Boyd
Over 90% of emerging businesses fail, but those that prevail produce over 85% of the jobs in our country. Many experts believe entrepreneurs need trusted process, as Special Forces and military aviators experience with the OODA loop, to make decisions quickly and remain maneuverable.
In the next post I’ll describe the contribution John Boyd made 30 years ago to the success of business today. I call it the Six Secret Steps to Split Second Decisions. It’s the “Speed Chess” of decision making and it could make the difference of CEO survival in 2011. Not that you’re scared of that, of course.
Brent Sapp
