If you’re reading this, you probably read last week’s epic on the OODA Loop – thank you – and I appreciate you coming back to find out how you can best implement this philosophy into your organisation.

Last week, I explained how the OODA Loop works. I talked about the impact of mental models on our decision-making. Mental models are ‘ways of thinking’ that drive our behaviour. It is our ability to challenge, break and rebuild these that allow us to orientate and win in any given situation.

I want to briefly recap on the mental models point because I have had some feedback from some people who would like a few more examples.

Mental Models

Peter Thiel, who founded PayPal and was the first external investor into Facebook is an expert at building and breaking mental models. This is a core principle that has led to his success. One of the questions he often asks is:

If you have a ten year plan and know how to get there… why can’t you do this in six months?

Tim Ferriss expands on this question…

‘For purposes of illustration here, I might reword (Thiel’s question) to: ‘What might you do to accomplish your 10-year goals in the next 6 months, if you had a gun against you head?’ Now, let’s pause. Do I expect you to take 10 seconds to ponder this and then magically accomplish 10 years’ worth of dreams in the next few months? No, I don’t. But I do expect that the question will productively break your mind, like a butterfly shattering a chrysalis to emerge with new capabilities. The ‘normal’ systems you have in place, the social rules you’ve forced upon yourself, the standard frameworks – they don’t work when asking a question like this. You are forced to shed artificial constraints, like shedding a skin, to realise that you had the ability to renegotiate your reality all along.’

If you want to get better answers, you have to ask yourself better questions.

These are not the sort of questions that you can consider briefly before moving onto the next email. These require ‘deep thinking space’ – something that is rare in a world where companies live or die on their ability to compete for our attention.

Incremental vs Exponential Thinking

The difference between incremental and exponential thinking is another concept that forces you to think differently. Most people’s think incrementally whereas Thiel’s question forces you to think exponentially.

Peter Diamandis explains this brilliantly in this article which I have copied in below:

As humans we evolved on this planet over the last hundreds of thousands of years in an environment that I would call local and linear. It was a local and linear environment because the only things that affected you as you were growing up on the plains of Africa was what was in a day’s walk. It was local to you. Something would happen on the other side of the planet 100,000 years ago you wouldn’t even know. It was linear in that the life of your great grandparents, your grandparents, you, your kids, their kids, nothing changed generation to generation. It was pretty much the same. You used the same stone tools. You ate the same animals. You pretty much lived in the same place. Today we’re living in a world that is exponential and global. Something happens in China or Korea, it affects you in Manhattan literally minutes later, through stock prices, news, whatever it might be. That’s a global planet we’re living on. The life of your grandparents, your parents, you, your kids is extraordinarily different in every possible way and we know this from going to Best Buy and finding a computer that is twice as fast or four times as fast for the same dollars as you bought it a year or two ago. So we’re living in a world that’s exponential in that regard. To give a visualisation of this, if I were to take 30 linear steps, it would be one, two, three, four, five. After 30 linear steps I’d end up 30 paces or 30 meters away and all of us could pretty much point to where 30 paces away would be. But if I said to you take 30 exponential steps, one, two, four, eight, sixteen, thirty-two and said where would you end up? Very few people would say a billion meters away, which is twenty-six times around the planet. That’s the difference between our ability to project linearly and project exponentially. It’s what’s really causing disruptive stress because as humans we think linearly, but the world is changing exponentially. So a CEO in a company like Kodak or a company in the newspaper industries or the record industry doesn’t see the exponential technology coming out of right field and can put them out of business. Meanwhile you have companies going from zero to billions of dollars of valuation in 16, 18, 24 months that are growing in exponential curves. ‘When you change the way you look at things, the things you look at change’. Max Planck, German quantum theorist and Nobel Prize winner If you can break and build mental models, you will find ways to win by ‘re-stacking’ the deck so that it favours you.

Back to the OODA Loop – you get it – so now what?

Last week’s blog article focussed on helping you to understand the OODA Loop and its importance in competition. I explained that the faster someone can cycle through the OODA Loop and or control the tempo – the more likely they are to cause their opponent to panic, creating confusion and disorientation.

So the question becomes – how do we cycle through the Loop faster or control the tempo?

There are three principles that you need to understand and apply in order to be able to cycle through the Loop faster.

Decentralised Command

Only an organisation that is decentralised can have a fast OODA Loop. What this means is that people at the lowest level are empowered to make decisions. They have the best information in front of them because they are closest to the action – they must be encouraged to make decisions. David Marquet explains the impact of this philosophy in this video.

If people have to keep going back up the chain of command for decisions to be made, your organisation will have a slow OODA Loop. As a leader you have to push the ability to make decisions to the lowest possible level.

Anyone leading a team will face uncertainty about the future and there are two ways to deal with this problem. You can either centralise command or decentralise it.

Centralised command involves passing the information up the organisational hierarchy so that decisions can be made and then direction can be given.

This is the way that most businesses function. People on the coalface who are interacting with the customers are not empowered to make decisions – they do not have the authority.

I believe that this is why employee engagement is such an issue.

How can you engage an employee if their Manager ‘thinks’ for them?

Decentralised command involves giving people the space and freedom to make decisions based on the information that they have in front of them.

By giving them the freedom to make decisions, you are giving them responsibility. This encourages people to think about how to deal with a situation in front of them. The impact is that you leverage the ‘combined intellect’ of everyone in your organisation.

It is how we fight…

A Marine in Afghanistan does not ask if he can ‘open fire’ – he makes the decision himself based on the information in front of him. Can you imagine what would happen if he had to radio back to base to engage the enemy?

The enemy would be able to orientate themselves to his position, get in close and kill him. They would be able to cycle through the OODA loop faster and win.

Ritz-Carlton Hotel – Decentralised Command and Customer Service

The military aren’t the only ones that employ decentralised command. The Ritz-Carlton Hotel want to be known for their excellent customer service. The way they build this reputation is by empowering their employees to make decisions. Every employee from the CEO to the receptionist has permission to spend up to $2000 to deal with a customer complaint without seeking permission from a manager.

Take a moment to think about that – every employee has a ‘complaints budget’ of $2000. That’s unbelievable when you consider there are companies that don’t allow people to order stationary without going through procurement!

The reason that they’ve done this is that they really want to be known for exceptional customer service so their leaders give their employees enough control to be able to make this happen. This is an example of decentralised command.

How do you push decision-making into an organisation?

The first thing you will have to manage is yourself and your leadership team. For many, this will be completely alien to them. Giving control to subordinates will feel like they are creating a culture of chaos – and it will feel ‘wrong’.

They have probably been trained and developed by leaders who expected them to pass decision-making up the chain. Their mental models for how leaders behave have been built in these environments.

I can imagine that it took some real guts for the CFO of the Ritz-Carlton to sign-off on the $2000 complaints budget. I suspect he was probably fearful of uncontrolled spending which is understandable.

But just because someone CAN do something, doesn’t mean that they WILL do something.

There are three elements that need to be in place to create a culture of decentralised command and I have shared an example of how it has been done in an organisation.

Standards

The first thing you need to do is have clear standards. A standard can be defined as the one best way of doing something at a given moment in time. If you don’t have standards, you cannot train anyone properly. Without standards, the quality of your training is variable because it is dependent upon the teacher.

When people are taught how to handle weapons in the Royal Marines. They are taught in line with a standard. You do not teach someone how to unload a rifle the way you think is best. You do it in accordance with the standard. If a better way is found, the standard is updated and shared with everyone. We all move forward together – that is how you create a culture of continuous improvement.

If you look at any high performing industry, you will find standards. Pilots are not taught how to land planes the way that the instructor thinks is best. They are taught in line with a standard and they can either do it or they can’t.

Once you have standards – train people in them and make sure that they are following them.

Trust

The second thing you need to do is trust your people. This is easier if you have built standards that explain ‘what good looks like’. It makes it easier for your people to be successful because you have made it clear what a good performance looks like and give them feedback based on how they have performed against the standard.

Once they have a pattern of performing to the required standard – you can start to trust that they know what they are expected to do and how to do it.

Trust your people to use their initiative. Set them up for success by giving them clear direction and standardising ‘good’ performance.

Expect Mistakes

Everyone comes to work to do a good job – no-one comes to work to make mistakes.

If you trust your people to make decisions, you have to accept that from time to time they are going to make mistakes. What matters is how you react to them.

If you react negatively – picture a typical executive losing his temper – your people won’t make better decisions, they will just stop making them. The cumulative effect of this is a slower OODA loop which will kill your organisation in the long-term.

People are not zero-defect machines. If the fear of making mistakes is greater than that of exercising initiative, your people will not made decisions. They will not take risks and your performance will deteriorate.

A Practical Example