In his annual letter to shareholders CEO of JPMorgan Chase Jamie Dimon extolled the virtues of the OODA (Observe, Orient, Decide, Act) Loop decision-making model developed by military strategist John Boyd.

I have always believed that every successful CEO uses the OODA Loop decision model, even if they do not realize they are using the model or know its name. Successful CEOs must survive and thrive in competitive environments and that takes fast and good decisions executed well.

But I also believe leaders who study the model can improve their decision-making and ability to execute. Reading the context Jamie Dimon put around OODA helped underscore that. If the greatest most successful banker in the global economy uses this model and likes it enough to share it with the world, it is worth studying for sure.

In his letter he mentions that he enjoys sharing what he learns and has been benefiting from the OODA Loop. He says:

The military, which often operates in extreme intensity of life and death and in the fog and uncertainty of war, uses the term “OODA loop” (Observe, Orient, Decide, Act — repeat), a strategic process of constant review, analysis, decision making and action. One cannot overemphasize the importance of observation and a full assessment — the failure to do so leads to some of the greatest mistakes, not only in war but also in business and government.

The observe and orient steps of this loop are critical. Dimon says:

A full assessment is critical. To properly manage any business situation, you need to perform a full and complete assessment of it. In business, you have to understand your competitors, their distribution, their economics, their innovations, and their strengths and weaknesses. You also need to understand customers and their changing preferences, along with your own costs, your people and their skills. Then there’s knowing how other factors fit in, like technology, risk, motivations … hope you get the point. For countries, you need a thorough grasp of their economies, strengths and weaknesses, population and education, access to raw materials, laws and regulations, history and culture. Research, data and analytics should be at a very detailed level and constantly reassessed. Only after you complete this diligent study can you start to make plans with a high degree of success.

He goes on to provide advice to anyone seeking to improve their ability to understand their markets, providing a mini-tutorial/master class on corporate intelligence. Makes it pretty clear that in today’s environment you absolutely have to use your brains to figure our the truth, not to justify what you already think.

It’s often hard to change your own attitudes and beliefs, especially those you may have held on to for some time. But you must be open to it. When you learn something that is different from what you thought, it may affect many conclusions you have, not just one. Try not to allow yourself to become rigid or “weaponized,” where other employees or interest groups jazz you up so much that you become a weapon on their behalf. This makes it much harder to see things clearly for yourself. When people disagree with you, seek out where they may be partially right. This opens the door for a deeper understanding and avoids binary thinking.

I loved Dimon’s recognition that this not the only model out there. You need to use the right model for the right decisions. He also mentions another of my favorites, the “Law of the Carpenter” which is “measure twice, cut once.” That is a great model in situations where careful planning is key. The point, of course, is that leaders need to be able to distinguish between situations that require careful planning and those where quick decisions are better than delaying.

For example, with decisions that are hard to reverse, it’s usually better to go slow. With other decisions where you can test, learn, probe and change direction, it’s often better to go fast. It’s been my experience that it’s hard for some people to actually decide and act. This could be from analysis paralysis, lack of “perfect” information, fear of failure or the feeling that full consensus is needed before a decision can be reached. But whatever it is, it can slow down and possibly seriously damage a company.

Dimon spends a good bit of time on the topic of execution. How do you Act once you have made your decision. The context he provides includes his approach to acting with a heart, which he views as key to the mission of any serious business. Acting with a heart means earning the trust and respect of employees and other stakeholders. He also discusses other elements of successful business execution, including the importance of vision, communication and inspiration. But through it all he recognizes the main point. If you can’t execute, if you can’t act and implement decisions swiftly, you are not going to compete and win.

One area Dimon did not spend enough time on, in my view, is the fact that the OODA Loop is a loop. It is a continuous process which must be continuous because the actions you take will change the situation. Your adversary is also making decisions and changing and so is the environment. Action is never the end.

Leveraging the OODA Loop for Your Business

To summarize how leaders like Jamie Dimon apply the OODA Loop to business:

1. Observe: Begin with comprehensive market research. Understand your competitors, customer needs, and industry trends. Constantly gather data to stay informed.

2. Orient: Analyze the information from multiple perspectives and based on everything you know. Consider how changes in the market or new data might impact your strategy. Align your team and resources with the realities of the business landscape.

3. Decide: Make decisions based on a combination of real-time data and long-term strategic goals. Encourage decisiveness within your team, promoting a culture where quick yet informed decision-making is valued.

4. Act: Implement decisions swiftly and measure the outcomes. Be ready to adjust tactics as new data and results warrant. Remember your actions will cause change. Everything is in flux. The process must continue even as you execute.

Explore The OODA Loop

Looking to improve your organization’s ability to leverage the OODA Loop? Here are some additional resources: