Theory of Constraints Handbook - James Cox Iii [383]
A Whole-System View
Means and ends don’t exist in isolation. Every system having means and ends operates in some kind of environment. The nature of the environment—its economic, social, political, and technical characteristics—defines and delimits the resources and range of options a system can exercise in executing its strategy.
The relationship between a system and its environment naturally implies decisions about how to employ available resources in pursuit of the system’s ends—in other words, in executing strategy. In the modern world, neither the environment nor resource availability remains stable for long. The external environment is subject to a wide variety of variables, too. Consider, for example, the extreme fluctuations in international oil prices, the collapse of the U.S. sub-prime mortgage sector, and the failure of huge commercial banks. For most systems—commercial, government agency, or not-for-profit—such external factors, predictable and unpredictable alike, change their respective playing fields in dramatic and uncontrollable ways. Such turbulence continually generates situations requiring choices (decisions), any of which can affect outcomes or ends.
It’s almost impossible—certainly impractical—to predict changes in the external environment with any confidence. The same might be true for the availability of resources. It is likewise impractical to preplan for an indeterminate number of contingencies that might happen. Such unpredictability drives a need for rapid, effective decisions, or reactions, during the execution of strategy—perhaps even the revision or replacement of the entire strategy. The point is that in the modern world,strategy can never be static. It’s inextricably linked to execution, and it must be continually reevaluated against the evolving conditions of an ever-changing environment.
The OODA Loop
Perhaps the most influential development in the art of decision making in the past 30 years is the OODA loop (see Fig. 19-2). The name is an acronym for observe, orient, decide, and act. However, the OODA loop is considerably more robust than the mere sequential execution of the four steps the name implies.
FIGURE 19-2 The OODA loop. (From Boyd, J. R. The Essence of Winning and Losing. 1996.)
In much the same way that the Five Focusing Steps (5FS) guide the management of system constraints in constraint theory (Goldratt, 1990), the OODA loop is a routine that facilitates rapid, effective decisions at all levels—tactical, operational, or strategic—of any kind of system, whether commercial, government agency, or not-for-profit.
The OODA loop is the conceptual brainchild of John R. Boyd, a U.S. Air Force colonel (1927–1997) who synthesized it from his personal experiences in air-to-air combat, energy-maneuverability theory, policy “battles” in the Pentagon, and extensive research into military history, strategy, and science. However, Boyd’s synthesis resulted in far more than the OODA loop alone, which is merely the most visible part of a larger system-level perspective on adjusting and evolving in an ever-changing world. (Coram, 2002; Hammond, 2001; Richards, 2004; Osinga, 2007; Safranski, 2008).
How does the OODA loop facilitate the development and deployment of strategy?
Strategy as a Journey
If one accepts the concept of strategy as summarized in Fig. 19-3, a robust approach to decision making can mean the difference between success and failure in a rapidly changing environment. The first three stages of the OODA loop—observe, orient, and decide—are essential to the creation of strategy in the first place. The last stage—act—clearly applies to deployment of strategy. Nevertheless, it’s called a “loop” for a reason—the first three stages also provide