Make better decisions with OODA Loop

OODA is an acronym for a four-step process in decision making – observe, orient, decide, act. American fighter pilot John Boyd developed the OODA Loop after tracking U.S. Air Force success in the Korean War in the early 1950s. Ed Broschinski has adopted OODA Loop for farm marketing.

Broschinski, lead market analyst with Cargill Marketsense, based in North Battleford, Saskatchewan, presented “The OODA Loop – How to cut out the noise and make better decisions” at Farm Management Canada’s Agricultural Excellence Conference in Guelph in November.

Broschinski follows a lot of financial podcasts, and came across the OODA Loop concept. “I hadn’t heard it applied to farm decisions – such as marketing grain, buying new land or bringing in a partner,” Broschinski says. So he shaped it into a farm decision-making tool.

Broschinski provides an abbreviated version of the OODA Loop history: Boyd noticed that U.S. Air Force pilots were shooting down Korean MiG-15s at a 10:1 ratio, even though MiG-15s were considered superior to the American F-86 fighter jets. Boyd noted that F-86s had a larger bubble cockpit, which gave the pilots better sight lines – better observation. F-86s also had a hydraulic control system that would orient quicker and better against a technologically superior enemy. Boyd summarized the process: “If you can observe and orient better, you can make better decisions, and better decisions lead to wins.”

The “loop” comes from the constant review and feedback of the process and final decisions. “OODA Loop should make high pressure decisions easier and faster,” Broschinski says.

Dean Roberts, SaskCanola vice chair who farms at Coleville, Saskatchewan, heard Broschinski’s presentation at the conference. Since the conference, Roberts has looked into formal decisions making processes like OODA Loop. “It is easy for farmers to own their successful decisions. It is harder to look objectively at our failed decisions, identify what went wrong, and learn from them,” Roberts says. “Using a consistent tool like OODA makes it harder to ignore a bad process.”

OODA Loop on the farm

Farmers can use OODA Loop to add structure to decision making. “This is something we inherently want to do, but until we explicitly call it out, we can’t repeat it effectively,” Broschinski says. “We don’t want repeatability to happen by chance.”

Observe

• Set up a mechanism to gather a diverse set of information, Broschinski says. He lists a few good sources:
• Coffee row for the local market situation
• A trusted advisor for national and international perspectives
• Newsletters for diverse viewpoints, including opinions of people you don’t really agree with.
• Unbiased data on weather and export figures. Broschinski suggests Canada Grain Commission export data and StatCan merchant trade data.

Orient

This step considers goals, financial constraints and commitments, and your emotional state. “This is, in my opinion, the most important step,” Broschinski says. “It doesn’t change based on weather in Europe.”

• What are your goals?
• What are the goals of your partners – family, investors, business partners?
• What are your cash flow constraints, bills to pay, storage risks?
• What is your emotional state? Results from the previous action might have you feeling regret, euphoria or fear. This emotional state can affect the next decision. Ask yourself, how am I oriented today relative to incoming data?, Broschinski says.

If you have to ask who, when and how before acting, that can lead to missed opportunities or second guessing. “Farms can get tripped up with multiple decision makers.” – Ed Broschinski

Decide

Once you’ve observed the market and have an idea of prices – for grain, for land, for machinery – and your goals, cash flow and emotional state are accounted for, the next step is making a decision. Before making
the decision, Broschinski suggests you think about:

• What would success feel like?
• How do I measure if I’m wrong?
• What happens if I’m wrong?

Decisions will be different depending on answers to these questions. “There are many ways to sell grain,” Broschinski says.

Act

Once the decision is made, you have to act. “This part can trip us up the worst,” Broschinski says.

It helps if decision-makers feel free to make the final call. Broschinski identifies one other possible advantage for U.S. fighter pilots. “U.S. soldiers are empowered to make individual decisions,” Broschinski says. They are trained to act individually and quickly once they’ve made a decision.

This can be a challenge for a farm with a number of partners or stakeholders. If you have to ask who, when and how before acting, that can lead to missed opportunities or second guessing. “Farms can get tripped up with multiple decision makers,” Broschinski says. It would be better to have all partners involved at the orient step to set the groundwork and goals, and assign one person responsible to decide and act when opportunities come along that align with the agreed orientation. If an action leads to a loss, the decision process loops back to the team for improved observation and orientation.

Test your habits, values and intuitions

To make one final point, Broschinski points to a study from Sweden. Bo Öhlmér, economist at the Swedish University of Agricultural Science in Uppsala, co-wrote “Understanding farmers’ decision making process and improving managerial assistance,” printed in Agricultural Economics in 1998.

The researchers studied real farmers in Sweden to see how they would approach 18 case studies. The researchers identified four phases of decision making: problem detection, problem definition, analysis and choice, which are very much in line with the OODA Loop steps.

Farm managers’ “consciousness of their values” was higher than expected,” the researchers wrote.

Broschinski thinks values are important in decision making. “A lot of decision making we do is based on habit, tradition and values,” he says. “Intuitive farmers make decisions based on many years of experience, which allows them to consistently go-with-their-gut and be successful.”

But he has a challenge for farmers. Have you given your habits, values and intuitions the OODA Loop test? Regular review can test whether they’re still current. Are they leading to repeatable results? If yes, keep doing them. If not, try something different.

The OODA Loop gives a name and process to decision making practices that farmers often follow intuitively, as the Swedish study showed. Looping back to refine and improve the farm’s decision-making process will lead to faster, better informed and more profitable decisions that also align with your values.