This book aims to apply Boyd’s strategic concepts, primarily the OODA loop, to business. It is a quick read. I read it on a flight to and from Madeira. In general it is well written and interesting, if a bit repetitive at parts. It contains a very clear and straightforward overview of Boyd’s thought and the key concepts of maneuver warfare and the OODA loop. It rehashes the standard Boyd points but is a good aid to spaced repetition of the main points. It also has a straightforward history lesson on Blitzkrieg and guerilla warfare.
Then it tries to apply the core concepts of the OODA loop for business. This is where I think the book begins to fall apart. This is because there are some significant differences between the environment of business and the environment of warfare, especially split-second fighter duels that Boyd primarily analysed. There are two primary issues with the standard OODA loop formulation. The first is that whereas war is generally a two sided (at most <10 sided) game, business is not. In business you are not competing only against a single adversary (except in oligarchical conditions) and firms and consumers generally form an aggregate mass. Additionally, unlike in war where your goal is to physically destroy the enemy, in business force is generally disallowed and your goal is not necessarily to destroy opponents but to get customers to buy your product. This lack of a close similarity means that while the core ideas may be applicable, significant work is needed to translate the formalism from blitzkrieg into business strategy which is not always done. Chet acknowledges this but provides no solution – this is an exercise for the reader, so to speak. It is, really, ultimately the final test of Boydian principles is if you can learn enough to apply it in a disparate field successfully. He cites the Toyota production system as essentially the only implementation of Boydian principles in business (manufacturing) today and that the rest of business is thus lagging behind. Today I wonder if the ‘lean startup’, ‘agile’ methodologies of Sillicon Valley can claim to be implementations of maneuver warfare in tech. Obviously they are inspired by Boydian ideas primarily through being inspired by the Toyota production system. The whole idea of agile methodology with its’ kanban and its’ kaizen etc speak to that effect. A direct implementation is not necessarily there however.
A second issue with Boyd’s framework and the OODA loop is the importance of speed. In warfare things generally happen fast. From literally fractions of a second for fighter pilots, to hours to (perhaps?) days in the case of rapid blitzkrieg offensives. In this case OODA warfare primarily works because by increasing the tempo of your actions, you manage to change the world faster than the enemy can orient. The efficacy of this strategy ultimately depends on the relative timescales of action and orientation. In the figher case they are essentially the same - action can happen in split-seconds as can orientation. The same is true of blitzkrieg. Major maneouvers and advances take place in a few hours. This is also roughly the same amount of time it takes for headquarters to piece together a decent assessment of the situation from various confused reports and begin responding. With action and orientation occuring on roughly the same timescales, then by increasing the tempo of action you are able to overwhelm the enemy’s orientation, thus operating inside their OODA loop and collapsing their ability to orient.
I would argue that business generally is not like this. Typically orientation occurs much faster than action. Significant changes in business typically happen in months, while orientation typically only takes days for senior levels of an organisation. For huge organisations it can take longer. This obviously excludes market crashes and other rapid events where Boydian confusion is in full-flow, but such events are generally large macroeconomic disruptions and not under the control of a single agent. This relative slowness of action is one key property that distinguishes it from warfare. It takes time to produce a product and to market it and to get customers to like it. No product has succeeded literally overnight.
This is not to say that strategic surprise is impossible in business, or that speed is unimportant. What it does mean however is that the compounding effects of a more rapid OODA loop are lost or at least are less apparent. While other companies may be surprised and discombobulated by your surprise announcement of a superior product, they will generally have plenty of time to react to that product before your next product hits the market. Speed can still bring decisive advantages, but they are in the loop of action against action not of action against orientation. This still brings a significant advantage – imagine a game of chess where you are allowed 2 moves for every one of your opponents – but not as much as overwhelming orientation – imagine a game of chess where you can make moves faster than your opponent can see them.
The second major issue with applying maneuver warfare to business is the difference in objectives. Your goal in business is not to destroy your competition physically, but rather to get customers to prefer to buy stuff from you rather than the competition. And the way to get customers to buy is to produce better products, not blitzkrieg them with your tanks. This means that directly applying ‘tactics’ like ‘flanking’ or ‘strategic retreats’, ‘multiple thrusts’ etc generally are not straightforward. Moreover, there is generally not a single competitor but a wide spectrum of potential competition. The more competitors the less direct tactics from warfare are helpful and the more strategy turns into microeconomic effects on the aggregate demand rather than the game-theory of military tactics. In the book there is, for instance, a good example of cheng/ch’i tactics from Sun Tzu which is great on its own merits as military strategy but does not directly apply in business. Ch’i is not the unexpected dazzle of a product, although that dazzle is always something to seek.
Despite all the ideas and talk about strategy, this is primarily a book about culture. Chet goes deep into explaining the cultural fundamentals required of any high performance organisation which is going to be able to successfully implement any strategy of maneuver warfare. He breaks this down into 4 key cultural fundamentals which he argues are required for a high performance organisation. The traits all have german names since they are inspired by the theory of blitzkrieg expounded by german generals after the war. They are:
1.) Einheit – mutual trust. This is the key cultural fundamental underlying all others. Everyone at the company must trust (in general) everybody else. This means that the managers trust the workers and vice versa, and everybody trusts the CEO who also trust all the managers and workers.
Trust is fundamental to maneuver warfare because the goal is fundamentally rapid action and orientation. This requires subordinates to be able to take initiative and act creatively in unknown circumstances. This can only happen when leaders trust subordinates to do the right thing, and subordinates trust leaders to treat them fairly, to fairly assign credit, and not to react unfairly to failed enterprise. Trust cannot be simply wished into existence by a mission statement or a teambuilding exercise. It must arduously be built through constant example and reinforcement of trustworthy behaviour. The company must always ‘do the right thing’ and never cut corners. Everybody must trust everybody else to put the good of the whole above their own selfish good and this must be directly incentivised and broadcast.
Maintaining einheit is the most fundamental step in building a culture. Without it, all is lost. Chet offers a simple recipe for building trust – be trustworthy. There is no other way. People are not dumb. You cannot fool them forever. The best and only long-term way to have trust it to be trustworthy. This means:
- Open communication. Running an organisation purely on a need to know basis rapidly erodes trust.
- Shared sacrifice - if the company is hitting tough times or sacrifices have to be made, they must be borne equally by everyone (if not disproportionately by the highest ranks). People can tolerate sacrifice as long as its evenly distributed. But there is nothing worse than being forced to sacrifice while the other guy is running off with all the loot.
- Status equality within the company. No business ‘cast systems’ or ‘perks’ which are really demeanours for everybody without the perk.
- No micromanagement or adversarial policies. These are prime demonstrations to the worker that the company doesn’t trust them, and if it doesn’t trust them, why should they trust it?
- The best constructor of einheit is shared struggle and sacrifice. Friendships and trust forged in ‘the crucible’ of whatever challenge will be exceptionally strong.
2.) Fingerspitzengefuhl – intuitive competence. This is tacit skill or knowledge. The kind of intuitive and subconscious skill that experts naturally have in their domain which looks like magic to the untrained. Companies must build and train their employees to have this in their domain and moreover, given trust, rely it to solve the big problems.
3.) Auftrag – perhaps the most interesting cultural competence. Auftrag is the idea of a mission as a contract. There should be no direct orders. Rather every ‘order’ is phrased as a contract between leader and subordinate which both must agree to and neither is forced. The terms of the contract are: – The leader shall set out the broad goal of the mission. They shall provide as best resources and information as are available and required. They shall explain in detail their reasoning and goals behind the order (and the subordinate is free to disagree). They shall set a mission which they believe to be within the subordinates abilities. The leader shall not micromanage or otherwise meddle during the mission. – The subordinate shall use their own initiative to do whatever it takes to see that the mission is accomplished. They shall speedily and unbiasedly report progress and problems upwards. They shall make on the spot decisions without waiting for orders in line with the tradeoffs implicit in the leaders reasoning and goals. Key to the use of mission contracts is einheit. Both subordinates and leaders must enter into the contract in good faith, and with full consent to its terms. They must trust that each will uphold the terms to the best of their ability. If trust collapses then an effective auftrag system is one of the first casualties.
4.) Schwerpunkt – focus point. The goal to which all efforts are dedicated. This is where culture shades into strategy. The designation of the schwerpunkt is fundamentally a question of strategy. Where should the business focus its time and resources, what tradeoffs should be made. The organisation cannot do everything at once and always faces choices and tradeoffs. Having a clearly communicated schwerpunkt that everybody has internalised so they know on-the-spot which tradeoffs to make is vital to effective and unified effort. While each subordinate works on their own initiative, they do so within the wider context of the schwerpunkt set from above. In general for a single ‘unit’ of the business there should only ever be one goal. This decomposes hierarchically so that each layer or sub-unit can have its own schwerpunkt as long as it is harmonised with those above.
With these cultural attributes firmly in place the organisation is ready to embark on a blitzkrieg. The key ideas are that top down communication is limited to high level goals and reasoning. Subordinates are entrusted (by einheit) to use their own initiative and ideas on how to achieve the mission. By fingerspitzengefuhl a fair few of them should succeed. Bottom-up communication should be short communications of progress or (more importantly) problems. Missions should all align with the ultimate schwerpunkt. Within different missions commanders should reinforce those that succeed and divert or abort those that fail, thus adding an exploratory component to the algorithm. There should generally be little top-down micromanagement. Activities at the top are primarily setting up the schwerpunkt strategy and assigning missions. Everything else is delegated to lower levels. This seems intuitively like it should be effective. I’d imagine it is very difficult to achieve uniformly in practice.
Chet prescribes this simple (but effective-sounding) recipe for effecting the cultural changes required. They are:
– 1.) Proclaim the change. Explain its justification and underlying ideas - i.e. basics of maneuver warfare, his book etc. – 2.) Setup cultural change as the schwerpunkt of the organisation for a while. Focus on it in all decisions and communications. – 3.) Set an example of the new culture repeatedly with both actions and deeds. – 4.) Enforce the new culture uniformly and without exception (after small allowance time for adjustment). Praise and promote those who adhere to the new culture. Dismiss those who do not, but do so generously. At all times adhere to what is right.
Basically this is a complete and rapid rewiring of incentives. The direct incentives are to follow the new culture. Enforcement is fair and uniform so there is minimal opportunity for lobbying or gaming to avoid it. Exit is easy so that those who are completely opposed will naturally leave rather than conform. Alignment of your own deeds and actions with the new culture builds trust that it will be lasting and sustainable, and so forces people to pay attention. Otherwise it is just the latest fad. Having never really managed anything, I’m unsure of how to do better than this. Largely, it seems that good management (not leadership) consists of doing fairly straightforward and obvious things, but maintaining them well in messy human reality.
As a final note, the book is quite dated to the late 90s and early 2000s, and is a fascinating look into the conventional wisdom and preoccupations of the time. Enron is a big name. IBM and Microsoft are the successful tech companies. Bell and Compaq are new and innovative. Silicon Valley generally does not register. The Japanese have basically mastered the art of business and are absolutely crushing the US. GE under Jack Welch is riding high. The Toyota production system is where it’s at. The Japanese are going to take over world commerce due to their maneuverability and kaizen and lean manufacturing. Chet is also strangely obsessed with the airline industry and how bad it is (except for Southwest who he loves). I’m not sure if this is a personal thing for him or a mainstay of business culture of the time.
Overall a fun book. Very good in the culture section and a clear exposition of Boyd’s theory. It falls apart a bit towards the end where it tries to go more into strategic matters due to the lack of a straightforward equivalence between military and business strategy.