What, you say?  OODA?  It’s a crazy name.  Every time I say it I have to smile.  Crazy name or not, it’s a powerful process that’s perfect for thinking about your financial life.  Whether it’s your work, your sources of income, your spending habits or your financial goals, using OODA can help you make effective decisions and take informed action.

OODA was designed for combat operations.  In 1995, USAF Colonel John Boyd designed the OODA Loop for use in war.  While an unusual source, a good idea is worth borrowing.  It is such a good idea that the OODA Loop is now used by businesses as they set strategy and by learning process organizations.

Let’s get to it.  OODA is short for observe, orient, decide and act.  While it works for both individuals and organizations, it was originally designed for one decision-maker.  OODA shows where to place your energy on an issue based on the facts plus the decision-maker’s personal goals, preferences and values.  The result is a clear decision and the steps to implement the decision. 

You’ll see from the diagram that OODA is a loop that starts with raw information, a thorough observation of the situation.  Information gained through careful observation is then processed (oriented) using personal goals, values and heritage to reach a decision.  The decision is put into action, sometimes in a test phase.  The informed and timely decision is based on observation and information gathering filtered by personal goals and values, thereby enabling action.

OODA is a process, it is repetitive.  As new information is gained, it is filtered by personal goals, values and heritage in advance of further decisions and action.  Actions taken can also provide new information.  That added information may also be the result of changing circumstance.  It takes OODA to reach decisions and take action that reflects our personal goals, values and heritage in the context of ever-changing circumstance.       

What are some of OODA’s advantages?

• It favors agility, nimbleness, maneuverability over power.  In other words, it favors individual decision-makers.
• It enables one to take control of situations/circumstances/issues by reaching informed decisions, putting those decisions into action and reviewing the result as an incoming observation.  OODA is best suited to changing circumstance.

OODA’s originator, John Boyd, explains  how you can use OODA to imprint your personal style onto your life experience.

“The essence of winning and losing is in learning how to shape or influence events so that we not only magnify our spirit and strength but also influence potential adversaries as well as the uncommitted so that they are drawn toward our philosophy and are empathetic towards our success.”

Source: http://en.wikipedia.org/wiki/OODA_loop

Boyd, John R., The Essence of Winning and Losing, 28 June 1995, a 5-slide set by Boyd.

Graphic: Author Patrick Edwin Moran, April 19, 2008.  Full diagram originally drawn by John Boyd for his briefings on military strategy, fighter pilot strategy, etc.