The Strategic Advantage OODA Loop

Winning and keeping customers is at the core of marketing strategy. In modern markets, changes in technology over time play an increasing role in customer retention and attracting new customers.

When new technologies are launched into a market, those technologies often create a strategic advantage which only lasts whilst competitors do not have the opportunity to apply that technology to their products.

You can assess the effect of technology over time on your products by applying the concept of the Strategic Advantage Cycle. This cycle is an adaptation of the Boyd Cycle (or OODA loop) developed by Colonel John L. Boyd of the US Air Force. This cycle was the cornerstone of US Air Force military thinking throughout the 1960s and 1970s and thus the design of military aircraft. It was this cycle that led to the creation of the U2 spy aircraft and the stealth bomber.

Boyd defined four phases where combat advantage could be gained through the application of technology:

  1. Observe: Where you watch and see what is going on around you.
  2. Orientate: Where you decide what is important in the environment that you have observed and when you understand why it is important.
  3. Decide: Where you decide what to do about the environment to make it more advantageous to your business
  4. Act: Where you take action to implement your decision.

Boyd then points out that the winner is the person who changes the environment in their favour faster than their competitors. When your competitor is ready to take their strategic decision, the outcome of their decision-making process is no longer appropriate.

Speed is a critical factor in the OODA loop. The winner in the combative situation is the one who adapts fastest to the changing environment and who can apply the four stages of the OODA loop quickest.

We can all agree that:

  1. Customers buy the products which, given their perceived needs, offer best value.
  2. Best value is determined by the environment within which a customer exists and how they perceive that environment.
  3. The exist in a market over the long-term, a business needs to continually offer consumers ‘best value’ as the environment changes:
    1. By waiting for the environment to influence the customer and to redefine best value: Then racing against your competitors to produce that new best value, or
    2. by influencing the definition of best value in the market (changing customers perceptions through communication).

In other words, if you can:

  1. Create factors which are perceived by customers as best value,
  2. Orientate your organisation to that best value,
  3. implement that value through your operations,
  4. deliver that value through a marketing channel,

faster than your competitors, then you will succeed in the market and either retain your position or grow your position.

You create ongoing customer value improvement by:

  1. Observing what in the environment defines best value for the customer
  2. Orientating your organisation
  3. Taking decisions strategically
  4. Implementing your decisions through operational actions which alter the market environment.

You need to apply Boyd’s OODA cycle to observe where in the market you can identify the drivers and manifestations of customer perceptions of best value.

You need to understand your organisational competencies and the other factors which give your business competitive advantages in the market. You need to understand how your strategic decisions affect those competencies. You also need to understand how the outcome of your decisions affect the market environment.

Finally, after you have assessed the market and made your decisions based on that assessment, you need to put into place marketing operations which are based on your strategic assessment of the environment. Those marketing actions must best satisfy the perceived requirements of your customers and which develop your marketplace so as to change the expectations of your customers. You should look to strengthen your organisational competences to create the desired environmental change.

You need a go-to-market programme which converts your desired market change into sales

Remember Technology changes markets over time. You must carry out PESTEL analysis of your macro-environment AND assess the effect of technology on your targeted customer group. This is a cyclical ongoing process. Depending on your market cycle such assessments may need to be taken annually, quarterly, monthly or in cutting edge industries weekly.