In 2013 Mark Bonchek and Chris Fussell published an article in the Harvard Business Review titled Decision Making, Top Gun Style.
Bonchek and Fussell argued that the business world would benefit from embracing the notion of the OODA Loop, a strategy that had proven effective for training fighter pilots just like those dramatized in the Tom Cruise movie, Top Gun.
OODA is an acronym for Observe-Orient-Decide-Act and it encourages decision makers to take in all the information they can, make a fast decision, and then act to implement that decision fast, too. The authors explained that business leaders, like fighter pilots, “need to make decisions better and faster than the opposition”. The C-suite, they claim, “must acquire data, turn data into insight, and then act on that insight” while also ensuring that their entire organization also develops this capacity to move and decide fast.
Corporations as diverse as Oreo, Dell, Facebook, and the City of New York have all been cited as examples of organizations that have embraced the OODA Loop to speed up decision making and make optimal decisions. However, despite the success that groups like this have enjoyed by moving faster, far too many businesses not only continue to move slowly but sometimes refuse to move at all. Indeed, in recent years I’ve noticed that, when it comes to corporate evolution, it’s often only a crisis or a potential crisis on the horizon that finally convinces a decision maker to act.
This is especially true when it comes to embarking on a digital transformation.
For any business leader, there are costs to consider when proposing or beginning a digital transformation. After all, it’s likely that the transformation is going to involve changing processes, hiring new team members and re-training existing employees, investing in hardware and software solutions, and overhauling systems that may have never been overhauled in years, even decades. The total investment is not only significant in terms of the company budget but it can all too quickly spiral out of control as new technologies emerge during the transformation process and costs pile up. For example, what was once a $1.5 million project in digital transformation in Canada, had already cost six times that much by the time that the project was only halfway complete – and the bills continued to pile up!
It’s probably not surprising, then, that choosing to begin the process of digital transformation is a decision that leaders don’t take lightly. With the potential for budget blowouts always looming large and horror stories of transformational investments that went wrong common place – one Forbes estimate put the proportion of failed digital transformations at more than 80% – there is a temptation to put off transforming a business for one more quarter, one more half, or one more year.
But decision makers also need to realize the cost of putting off a digital transformation can be far greater than the cost involved in even getting it a little bit wrong.
Put another way, companies that are weighing the pros and cons of a digital transformation need to consider the very real costs of not acting, and the potential impacts on a business of moving too slowly, too cautiously, or not at all – and like a couple of fighter pilots squaring off in an OODA loop, there is tremendous advantage to acting first.
It’s increasingly clear to me that when it comes to digital transformation, the first to move in an industry will take the market. Right now, many industries are at the bottom of a ‘hockey stick’ growth chart with competition chugging along as normal but approaching an opportunity for rapid and significant growth. Yet to charge up the hockey stick and win big it’s essential to choose to change, to choose not to be left behind, and to choose success through digital transformation.
So who will do this choosing? Who is responsible for pursuing digital transformation today instead of tomorrow, next quarter, or next year?
Clearly, the CEO of the company is key but the other company executives are also essential to moving things along faster. If we’ve learnt anything at CoSMo it is that companies are systems of systems and that decisions made in one part of business inevitably affect other parts of a business. Thus, while it is important for the CEO to choose digital transformation today, it’s also necessary for the executive team to get on board with this choice, too.
Achieving this consensus can be a challenge but it’s not insurmountable. Embracing the OODA Loop, for example, can see the C-suite coalesce around digital transformation quickly:
- Observe that there are opportunities to act fast, act first, and dominate a market through digital transformation
- Orient the business towards this goal of market domination and prepare the C-suite for change
- Decide to change – the faster, the better
Choosing to embark on a digital transformation is about inventing a future for the company that does not repeat the past but improves on it, helping the company to new heights and cementing its place as a market leader. The opportunity to succeed is there, and it’s obvious – but it demands real and fast action to achieve.