Guiding Quote

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

Monday, March 10, 2014

Self sabotage and the OODA loop

I never underestimate the capability of executives to sabotage their own plans in the rush to meet some arbitrary financial target. Their inability to think holistically is systemic, if not genetic. If they used the OODA loop they might avoid it.

Two recent examples, one international in scope, the other more mundane, will illustrate the propensity to self harm. In the UK the leading supermarket chain declared a few years ago that it would use a profit margin of 5.6% as it's guide for all company planning and that it would coordinate all it's activities to maintain this high margin. The value was sacrosanct, had to be met, no matter what.

Well, why they were preoccupied with meeting and maintaining this target they took their collective eye off the market. In OODA terms they stopped observing. So when the market changed as the economic austerity caused by the Great Banker Cock Up of the mid 2000's made shoppers both more frugal and discerning they failed to orient to the new reality. Very difficult to re-orient the business if you don't pay attention to changing conditions because you are focused, anchored as it were, on a meaningless target. Like a sailor following the North Star and not looking out for reefs and rocks.
This fixation resulted in them losing market share to low cost provider at frugal end of their customer spectrum and to quality suppliers at the discerning end of their customers.

The second example is in the area of American cost cutting. In many companies the start of the new financial year heralds the season of the annual resource action - euphemism for job cuts. Well in this company the IT department was targeted for some blood letting. At the time they were in the midst of an internal audit, a big deal in their company. The auditors had stipulated that the department must use a specific tool to ensure uniformity of process, thereby making the auditors life easier.

So it was somewhat surprising, but knowing the managers not shocking, when they fired the only guys who knew how to use the tool. So the audit came to a screeching halt and a a panic of the "hair on fire" type ensued. Talk about not thinking things through, of not orienting correctly for the given situation. They could have kept the guys on until the audit was over, or kept one of them. Obviously no holistic thinking taking place. Totally fixated on reducing head count by a certain date and oblivious to the consequences.

In both cases lack of observing and orienting skills led to self sabotage. Bad enough when people are working against you, but it is really takes the biscuit when you do it to yourself. 

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