'Creativity is about connecting things into something new.' - Steve Jobs.
Creative people do not see today’s rapidly and constantly changing environment as a negative disrupting force, but as an opportunity to gain competitive advantage. Enter the trained fighter pilots’ ODDA loop.
The OODA loop (for Observe – Orient – Decide – Act) was developed in the early 1950s by Air Force pilot John Boyd, who noticed that American F-86s during the Korean war were disrupting their adversary’s tactics (despite the superiority of the MIG-15s) due to better information and faster execution.
Boyd’s insight of the need to change speed and direction faster than the opponent is now seen as equally applicable to today’s competitive and increasingly globalised environment. A disciplined and conscious application of the OODA loop can give a business an advantage over its competitors through a better strategy based on anticipating market changes, understanding the strategic impact of such changes, taking the right actions and implementing them, all more rapidly than the competition.
“Observe” is inward-looking and refers to understanding of what is happening in a business while “Orient” is outward-looking and relates to monitoring its outside environment. Both require deciding which information is relevant and which data to look for, how to gather it and how often to monitor it. The data is then analysed for its implications for the business. “Observe” would typically look at sales, customers (e.g. renewal rates, level of returns, frequency and the severity of customer complaints) or a company’s inventory. “Orient” would watch competitors’ activity, key trends in the industry (e.g. alternative substitutes to the product being offered, suppliers, etc) or other key trends (e.g. regulatory changes in legislation; societal, behavioural and technological evolutions that could impact the industry). Carefully selected KPIs for both should help the business develop awareness and identify which strategic moves it needs considering to address both challenges and opportunities.
“Decide” uses the data that has been gathered and analysed to select a course of action which one can then “Act” on. As a business implements its plans, it continues to gather new information and make new decisions as the situation unfolds, hence the loop.
Boyd’s loop can be used as a framework to accelerate the development and implementation of strategy. It does not require businesses to observe, orient, decide, and act, in that order, all the time but drives businesses to draw feedback constantly from the orientation step (which then helps to interpret a situation, based on experience or culture) into their decision-making processes and then act quickly and decisively.
Success is not always driven by being the quickest to market but by being the most agile i.e. to be the first to decode fast-changing conditions and respond decisively. More fundamentally this implies establishing a culture or environment within which people will solve technical and operational problems and invent ways to improve, develop, test, adjust and produce new products or services quicker than competitors.
In essence, a business shapes itself and the marketplace to improve its capacity to survive on its terms, generally at the expense of competitors – for example, this is the centerpiece of Apple’s strategy process.
Apple has grown almost entirely through repeatable and sustainable organic growth using the combination of product innovation (e.g. the iPod, iPad, iTunes, and iPhone) including sleek design and user-friendly interfaces and business-model innovation (e.g. a workable business model for downloading music) to create entirely new markets.
By anticipating and exploiting market trends such as the convergence of technology, media, and entertainment before anyone else, Apple seems to have the ability to create customer needs and change their own understanding of the products’ possibilities. This materialises into new customer-centric designs and products with outstanding usability, constantly evolving into new iterations with new and compelling features. The iPod did what was expected – play music – but also what was not expected – it is intuitively easy to operate (unlike the MP3 players). The iPhone was not the first mobile phone, but it fundamentally changed what a mobile phone could be through gaining easy access to e-mail and mobile browsing. The iPad re-shaped centuries-old traditions of paper-based reading and re-defined the way information is access via a touchscreen instead of a mouse. In addition, each iteration has resulted in better technology: e.g. thinner, lighter, and faster than its predecessor, etc.
Internally, Apple believes that it has no competition as its strategic focus is to meet the needs of its customers and to expand its ecosystem. However its strategy is still based on the OODA loop concept of figuring out and changing the situation before the competitors to out-think, out-innovate and out-execute them. Apple sold over 700 million digital devices over the last six years and had amassed $160 billion in cash by end 2013. Let us see how Apple takes advantage of the major trends in the new digital economy.
More findings on Apple’s latest ventures can be found here
by Christelle Espinasse - inSTRATEGIA
