How fast does your organization recognize competitive threats and take action?
One of the key lessons on equipping organizations to learn fast and change faster comes from a military strategist. When he was a young Air Force instructor pilot, John Boyd became known to others by the nickname “40 Second Boyd.” He earned this moniker from a standing bet he had for any other pilot. The bet was this: Starting from a position of disadvantage he could defeat any opponent in air combat maneuvering in less than 40 seconds. Word spread, and pilots from multiple branches of the military came to challenge the instructor. Boyd’s mastery of the physics of aerial dog fighting ensured the same results each time. Before he knew it, the recently quite confident challenger would hear Boyd through the radio yelling “Guns! Guns! Guns!” the signal that he’d moved into the winning position.
Later in his career, now Colonel Boyd was a strategist who earned distinction by delivering a controversial briefing, “Patterns of Conflict” hundreds of times throughout the Pentagon and government. His ideas were later credited with significantly influencing the coalition war plans for 1991’s Operation Desert storm.
The O.O.D.A. Loop
So what exactly can retailers learn from a fighter pilot? In both his air-to-air combat teachings as well as Patterns of Conflict, Colonel Boyd highlighted the concept he called an “O.O.D.A. Loop.” O.O.D.A., which stands for “Observation, Orientation, Decision, Action,” is the process by which an individual or an entire organization reacts to an event. In the concept, which has since been widely discussed in business strategy, the key to victory lies in being able to complete all of the pieces of the O.O.D.A. “loop” faster than your adversary.
As a simple retail example of the loop, imagine a large retailer introduces an iPhone app that lets customers scan a barcode in your store, and then offers them the same item online at a lower price. From the time this activity starts, how long does your organization take to react? To combat this competitive challenge your organization must first see this happening (Observe), understand the threat to your business (Orientation), then make a plan for how to respond (Decision), and finally execute on that plan across all of your retail units (Action).
Sam Walton, the founder of Walmart was well known for competitive practices that amount to the same as operating in fast “O.O.D.A. Loops.” In building Walmart, Walton barnstormed the midwest in a small prop plane in order to cover territory faster. Upon landing in a town, whether there was a Walmart located there or not, Walton would take a taxi to local department and discount stores. Inside he’d walk the aisles, look at merchandising displays, talk to customers, and check prices. “Always the lowest price,” became the organizing concept of the company. In fact, Walmart’s early and massive investment in satellite information technology and logistics was in servitude of the lowest price goal. The rest, of course, is retail-competitive-juggernaut history!
The New Pace of Change in Retail
Today, the challenge for retail is the accelerated pace of change. Today perhaps your company has an algorithm that replaces Sam Walton’s walking competitor’s aisles to check prices; however, it’s unlikely you have an algorithm that predicts the threat of Amazon’s “one-hour Drone Delivery!” To be competitive in a multi-unit environment your full organization needs to learn fast, and change faster.
In a large, geographically dispersed retail organization, the main activities of the “O.O.D.A.” loop can be roughly aligned with different parts of your organization. Your company’s most widely deployed assets in a position to Observe consumer wants and behaviors are the team members in your stores day-to-day. Observing competitive events morphs into the Orient portion of the cycle with your field organization. More than anyone, your field team provides your company with the most actionable “ear-to-the-ground” type of information. An event at one store is an anecdote. However, a district manager who hears about a competitive action at three of her stores makes it a point to specifically ask about the competition at every store in her district. The Orient and Decision cycles then formulate at corporate with people who have the ability to marshal resources and take action system-wide. Perhaps there’s a product change, a new incentive program, or a response through advertising. Whatever the decided-upon plan becomes, the Action portion of the response invariably involves both the field and in-store management.
How well does your company move through the stages that define competitive success? Square Root’s store relationship management platform could help. Interested in learning more? Download our white paper now.
Mike Ditson works in the Product group at Square Root, a provider of Store Relationship Management solutions based in Austin, TX. Readers can read more about John Boyd in the Robert Coram book “Boyd, The Fighter Pilot Who Changed the Art of War.”
Image Source: Jamie McCaffrey, Copyright 2013