Guiding Quote

“Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning.” Einstein

Thursday, April 12, 2012

O-O-D-A Loop - The Orientate Step Part 1

Orientate is the key step and the most complex in the OODA Loop. In Boyd’s analysis he stipulated that there are five interrelated elements that are at play when we orientate towards a problem, threat, or opportunity. They are as follows:

Genetic Heritage

Cultural Traditions

Past Experiences

Analysis and Synthesis

New Information

These five elements come into play in varying degrees depending upon the situation and also the individual involved. After all a twenty year old will have far less experience to guide or mislead her. All of these elements not only effect our orientation but also our opponents and competitors. One rule to remember is never, ever; assume that you are as smart as or smarter than your opponent or client. Never underestimate anyone.

The first category is:

Genetic Heritage

What do we mean by this?

My understanding of this concept is that on one level it relates to the behaviors that are inherent in us all; basically it is our emotions and psychological responses to situations. So it’s fight or flight, fear, greed, compassion, lust, anger, pride, arrogance, sloth. The seven deadly sins are a good starting point.

Now why are these important considerations? Because they drive behaviors: both our opponents and our own. Remember there are two people in this struggle and we need to know not only our opponent but also ourselves.

Sun Tzu has plenty of guidance on this matter. He says, ‘if your opponent is prone to fits of temper, then anger her’. If he is fearful, then make him fearful. If she is lazy then do nothing to arouse her.’

An example of these factors in business can be found in one of the causes of the 2008 financial crisis. Many pension fund and mutual fund managers needed to show to their investors that they could deliver good returns on investments. They where fearful that if they did not they would lose them and/or lose their jobs. Wall St Bankers played on this fear to sell them exotic derivatives with reputed high rates of return. So we had Fear on one side being trumped by Greed on the other.

The Madoff scandal was a similar scenario as far as fund managers were concerned. One could argue that from an individual investor viewpoint Pride also played a part in the Madoff scam. People actually begged to invest with him. It was a matter of Pride that they had been accepted by him as an investor. So he cultivated this air of exclusivity, which fed into the investor’s fear of being deemed unworthy and then proud of being accepted. Boy, was that ever a case of Pride cometh before the fall.

So, when orientating always evaluate the emotional context of the situation. Put yourself in their shoes. What are they feeling? Why are they feeling this way? How can I address, or use this? Look for evidence that will inform you of their state of mind. Don’t assume that they are in a particular state because it’s best for you if they are. Everyone gives off signals; you have to train yourself to Observe them.

The other level of our genetic heritage is that the brain is made of elements that have developed over time. The reptilian part deals with the fight or flight part. The frontal lobes, the newest part, deal with the rational thinking stuff. The problem with this part is that on average it can only hold seven, yes seven, pieces of information at the same time. We say on average because some people hold less, say five, and others more, say ten. No wonder we have problems with ten digit numbers that are shot at us at the end of a voice mail. We can’t hold a lot of information in our short term memory. This means that in a stressful situation we can be overwhelmed with information which results in paralysis in the decision making process.

So if you want to best an opponent bombard them, figuratively, with more and more information. No matter how good they are eventually they’ll stop processing the data.

An example was in the Vietnam War when US warplanes were fitted with warning devices to tell them of missile launches and enemy radar, trouble was the sensors were so sensitive they were picking up all signals, no matter how weak or faraway. These devices all had audible signals, but the information overload was so great that the pilots turned them down, if not off. They needed to pay attention to flying the plane and the mission.

Similar events occur in financial trading rooms when the market is frantic: Too much stuff going on, too much data, and no mental capacity to process it.

So don’t let the flood of data, particularly in a short space of time overwhelm your ability to process it. You need to filter out the meaningful from the noise. But as we’ll discover in Past Experiences filters can be good and bad.

Genetic Heritage is also an element in the latest research on cognitive intelligence detailed in the new book: Thinking, Fast and Slow, by Daniel Kahneman - founder of Behavioral Economics. When people say they can't help themselves when acting irrationally it's not just an excuse, there is some truth in their statement. The rational part of our mind is the newest kid on the cerebral block and the older, darker parts still have an enormous influence. But more on that in later posts.

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