Decoding decision excellence: Invoking the fighter pilot spirit in business

“Whoever can handle the quickest rate of change is the one who survives,” asserted Colonel John Boyd, one of the great unsung American war heroes.

In a narrative reminiscent of Top Gun, Boyd emerged not only as a maverick pilot but also as a pioneering thinker within the US Air Force. He was celebrated as one of the finest fighter pilots in history and acquired the moniker "40-second Boyd" for his unbeatable maneuvers and ability to triumph in every dogfight he participated in within a mere 40 seconds. Boyd later transitioned into an instructor role, sharing his unparalleled flying expertise with hundreds of aspiring pilots.

Driven by intellect and intuition, Boyd introduced the Energy-Maneuverability Theory, a groundbreaking contribution that revolutionized the design of military aircraft and gave birth to the iconic F-16 jets. Unyielding in his pursuit of innovation, he shifted his focus to understanding how organizations, military and civilian, navigate the complexities of decision-making during the chaos of battle. 

The OODA loop 

Boyd's deep dive into decision-making dynamics resulted in the creation of the OODA loop, which stands for observe, orient, decide, and act. This decision cycle, crucial in life-or-death dogfights, became a blueprint for effective decision-making. 

According to Boyd, success lay in speeding through the loop faster than competitors, whether you were a fighter pilot engaging in battle or an organization operating in a competitive market.

However, applying this principle to large organizations brings challenges, especially at the orientation phase. Achieving high standards of organization-wide decision-making involves creating the right culture, developing the right diversity of people, having the right tools, and ensuring the right training. Those organizations adept at moving through the decision cycle quicker — and overcoming these challenges — gain strategic advantage.

"The role of the CEO is not about making every decision, but rather about creating an environment in which decisions are made effectively."
– Nitin Nohria, the George F. Baker Jr. Professor at Harvard Business School and former Dean of HBS

Despite Boyd’s OODA loop theory being well-established at business schools and within corporate training, we still haven’t perfected the art of decision-making.   

A McKinsey study, Decision Making the Age of Urgency, interviewed 1,200 executives and discovered that only 20% of respondents believe their organizations excel at decision-making. Not only that, only 57% felt their organizations made good decisions which, as McKinsey points out, is only slightly better than a coin flip.

Decoding decision excellence

Considering Boyd's insights coupled with the McKinsey study, a pivotal question arises; how critical is decision excellence in running a company, and can the art of good decision-making be quantified? 

We delved into this, conducting research to develop the Anaplan Enterprise Decision Excellence Report™ 2024. We wanted to understand not just why decision excellence was important — it seems obvious that better decisions lead to better outcomes — but how executives can enable their entire organizations to make better decisions, and what was the financial impact of those decisions.   

Our research revealed that enterprise connectedness was fundamental to improving decision-making. We defined “enterprise connectedness” as an organization that has vertically, horizontally, and externally linked or integrated operations. 

To gauge this, we posed a range of 60 questions regarding the connectedness of each respondent’s organization, which allowed us to plot the answers into an Enterprise Connectedness Index. 

Replicating this approach, we also inquired about decision excellence — encompassing quality, velocity, and efficiency of decisions. The results were mapped onto the Decision Excellence Index which we segmented into four quartiles. The upper quartile representing the top 25% we called “winners” and the lower 25% were labelled “laggards.”

The power of decision excellence

Our research revealed compelling findings. Organizations improving decision excellence — achieved through enterprise connectedness — outperformed their peers by 6.1 percentage points of total shareholder return (TSR). Considering the average market capitalization of the top 1,000 companies is $70bn, this upswing in value translates to a staggering $4bn.

What's even more striking is the comparison between decision excellence winners and laggards, revealing a substantial 14-percentage-point delta in TSR, equivalent to a remarkable $10bn.

In a deeper exploration into enterprise connectedness, we focused on the influence of Anaplan in driving this connectivity. We discovered that Anaplan customers consistently outperform their counterparts by making elevated decisions throughout their entire organizations.

The data showed that companies using Anaplan pervasively exhibited an impressive 12 percent higher enterprise connectedness scores. This, in turn, led to a 4.7-point improvement in decision excellence, correlating with a 2.8% outperformance in TSR - equivalent to a substantial $2bn of value.

Bringing this full circle to John Boyd's OODA loop, Anaplan empowers organizations to contextualize current performance and forecast future outcomes, making faster, more accurate decisions to fuel growth, optimize costs, and mitigate risk.

By building broad connectedness, organizations can model and assess multiple scenarios to ensure excellent decision-making and move with confidence to act faster, rapidly moving through the OODA loop process, and driving the competitive and strategic advantage Boyd discusses.  

Stay tuned

In the fast-paced and dynamic landscape of modern business, the ability to traverse the OODA loop swiftly and efficiently, coupled with a commitment to enterprise-wide connectedness, emerges as a winning formula.  

As we navigate an age marked by urgency, the lessons from Colonel Boyd's aerial triumphs and decision-making theories remain not only relevant but imperative for organizational success. 

Want to unlock decision excellence across your organization? Stay tuned for more blog posts as we delve further into the actionable insights you need to succeed.