Complex Problems and OODA Loops

What do Rob May, Wayne Gretzky, David Maister, and a player to be named later in the post have in common? Read on!

Rob wonders if Paradox Is The New Paradigm.

"I think business in general is filled with instances of paradox. The most basic, obviously, is that the best way to maximize your profit is to make profit a secondary concern and focus primarily on your customer. There are other instances too. It is easiest to borrow money when you don't need it. A "good" strategy is actually defined in large part by your ability to execute it. Selling is really less about convincing customers to buy your product and more about identifying the customers that naturally want it.

After thinking through all of this I am left the question embodied in the title of this post. Is paradox the new paradigm? What I mean is, will future business success depend on the ability of managers and leaders to embrace paradox? Will they succeed by hold in their minds two contradictory ideas, each of which can be applied when necessary? I think so.

By embracing paradox, managers will lose the absolutist, half-truth thinking that ignores the context so pertinent to business decisions. These seeming paradoxes often exist in the first place only because we try to apply business rules across all contexts."

You should go read the whole thing; there's lots more cogent thought in Rob's post.

I agree with Rob's condemnation of ignoring context when applying new concepts, but there's more to the problem than that. In my recent Mr. T post, I discussed the difference between complex and complicated problems. In the book More Space, Johnnie Moore defines the two as follows:

"The wiring on an aircraft is complicated. To figure out where everything goes would take a long time. But if you studied it for long enough, you could know with (near) certainty what each electrical circuit does and how to control it. The system is ultimately knowable. If understanding it is important, the effort to study it and make a detailed diagram of it would be worthwhile.

So complicated = not simple, but ultimately knowable.

Now, put a crew and passengers in that aircraft and try to figure out what will happen on the flight. Suddenly we go from complicated to complex. You could study the lives of all these people for years, but you could never know all there is to know about how they will interact. You could make some guesses, but you can never know for sure. And the effort to study all the elements in more and more detail will never give you that certainty.

So complex = not simple and never fully knowable. Just too many variables interact.

Managing humans will never be complicated. It will always be complex. So no book or diagram or expert is ever going to reveal the truth about managing people.

But don’t panic. We can manage people if..."

(Yes, that's a tease to get you to read the rest!)

Henceforth here at Spooky Action, we will use these definitions for the terms complex and complicated. They define a profound and very useful difference between types of problems and systems.

The difference is important because you can't control complex systems. It's a mathematical impossibility. The Conant-Ashby Theorem: "Every good regulator of a system must have a model of that system." leads to the Law of Requisite Variety: "That the available control variety must be equal to or greater than the disturbance variety for control to be possible", which is to say, that the control mechanism of a thing must be more complex than the thing being controlled. To continue with Johnnie's airplane metaphor, the autopilot system has to have greater control variety than the plane itself.

The analogy to business is that managers often want to see new initiatives as complicated when they are in fact complex, and thus design complicated systems to manage the change. Which usually fail miserably in very short order when they encounter a circumstance outside of the control model.

The problem with designing control mechanisms for organizational change management is that the system being controlled consists of the entire contents of the minds of the effected group! That is the epitome of a complex system.

Of course, as Johnnie notes, if we abandon the idea of controlling complex systems and focus on intelligently influencing them, we'll have greater success.

One man who understood this well was Air Force Col. John Boyd, the father of the Observe-Orient-Decide-Act (OODA) loop. His essay, Destruction and Creation weaves together Godel's Incompletess Theorem, Heisenberg's Indeterminacy Principle, and the Second Law of Thermodynamics (tendency to entropy) to show that the only way to deal with complex system is one of constant observation and reaction to that system. A diagram of the OODA loop looks like this:



The first step, observation, comprises collection of data. For us people, that comes through our senses.

The second step, orientation, involves analyzing the observed data and integrating it into our mental model(s). The diagram's model of orientation is oversimplified, but the concept of needing to synthesize the new data into all of our existing models is a key one.

The third step, decision making, includes forming alternative courses of action and then selecting one or more to act upon, which leads to the final step...

Acting, in which we do something and then go back to step one to observe resulting changes. With lots of feedback and feed forward.

Hopefully you're not sitting there thinking "Um...okay...so what?", because we can do all kinds of fun things with this model. Boyd did all kinds of fun things by destroying his opponents' OODA loops. There's an old saying that "no battle plan survives first contact with the enemy". Once engaged, everyone involved, from lowly private to five-star general, is running their own OODA loop. There are lots of ways to disrupt OODA loops. You could use stealth technology to disrupt your opponent's observation capabilities, or you could use terrain to restrict your opponent's ability to act. What Boyd taught was that an inferior force could triumph by "getting inside" its enemy's OODA loop; you exploit your opponent's orientation capabilities.

Well-disciplined armies have well-instilled standard tactics and orientation/decision models to go with them. Traditionally, the lower level the unit the simpler the model - with orders to escalate decision-making to the next level of command whenever a situation outside the model is encountered. Of course, this escalation has a time and communcation cost, so if you can keep changing the situation faster than the enemy can orient, you effectively cut off their ability to act in a coherent manner. Cognitive dissonance leads to panic and chaos and surrender. Too bad this is the effect many management initiatives have on the employees!

Getting inside OODA loops works in all walks of life:









"A good hockey player plays where the puck is, a great hockey player plays where the puck is going to be".

Wayne Gretzky










Want to try disrupting someone's OODA loop yourself? Try Maister' Exaggeration Ploy:

"I have noticed something very strange about engaging in discussions (and even disagreements) with people.

The more you disagree with them, taking the other side in an argument, the more vehemently they push their original point of view. However, if you don't disagree, but restate their point in an exaggerated form, they often back down, or at least tone down their original statement."

Try it. It works! Of course, you don't want to abuse other people's OODA loops, but people have been doing it for centuries. Several years ago Robert Cialdini wrote a fascinating book entitled "Influence: The Psychology of Persuasion". You need to read this book. Cialdini spent time infiltrating different groups of swindlers, peddlers, and con artists to see if they used a common set of principles to unduly influence people. He found that they use six. He then discusses experiments testing these principles that are truly shocking. In one:

"Researchers asked some residents of an area to accept and display a small 3-inch sign that said “BE A SAFE DRIVER”. Almost all did. Two weeks later, the researchers sent another representative around to ask both this group and another group of residents that had not received the first contact to allow a large billboard saying “DRIVE CAREFULLY” on their front lawns. As part of the request, they were shown a picture of a nice house almost completely obscured by a very large, poorly lettered sign with that message. Eighty-three percent of the residents who had not received the first request refused, but 76% of those who had accepted the small sign agreed to placement of the large one!"

What's funniest about the book is that people reading it can invariably recall times when they themselves fell prey to the same ploys. Many of the models we use to orient ourselves in the world are hard-wired, such as Cialdini's principles and 400 other Human Universals, but many others (as indicated in Boyd's diagram) are cultural or results of previous experiences. We all have our own unique collections of models, or as Charlie Munger more eloquently called it: a lattice of models.

Who is Charlie Munger? He's Warren Buffett's partner and alter ego. Years ago he coined the term "lattice of models" to describe how superior investment decisions came from applying principles created in other areas, such as the hard sciences. It's hard to argue with his results; he's made billions with the approach.

I think this approach applies generally to innovation. Fouro recently asked me to define the difference between change and innovation for our upcoming book. Since I had OODA on the brain, I posited this:

Change is doing something different, but known in the current context. Innovation is doing something different, but unknown in the specific context.

If my competitors are all using some "rest practice", and I decide to implement it, that's change. If I decide to start an "OilChangeMobile" service for third-shift workers, because all the oil change shop are closed during their lunch breaks, that's innovating (it might be a good innovation or a bad one, but it's more than just change).

Does that seem like an insightful distinction?

Back to Rob's "Paradox is the New Paradigm". Paradox will always be the paradigm for innovators, the people willing to do the extra work in observing their circumstances and orienting themselves using the fullest context. But there will always be a large crowd that for expediency's sake will not do the extra work, and thus there will always be a ready market for consultants selling the "next big thing".