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Better Decisions are the key to Economic Prosperity

In The American Way, I found that economic decision making is the key to economic prosperity.

For those of you interested in finding out more, here’s some more detail on why decision making matters so much.  It’s from some writing I did on warfare and conflict a handful of years ago.

How to Win any Conflict

How do you win a conflict?  To answer this question, let’s start with a theory of conflict developed by the late great John Boyd, America’s best military thinker.

It’s a bit of a journey, but trust me, it’s worth the effort.

Boyd’s theory is based on the assumption that conflict can be reduced to a contest of minds.  It’s Mind vs. Mind. It doesn’t matter:

  • whether a conflict is person vs. person or army vs. army or corporation vs. corporation (i.e. Toyota vs. GM), or
  • what the weapons or technology used in the conflict are, or
  • where the conflict takes place.

For Boyd, all conflict boils down to a contest of one mind against another (Sun Tzu implies the same thing but didn’t do as good a job pointing this out).

So far, so good. Let’s dig a little deeper.

Question: how does a mind “fight”? Boyd concluded that a mind fights by adapting.   This leads us to a Better Question: how do we adapt?

Answer: by making decisions. The better/faster our decisions the greater our chances of success/survival.  This then leads us to the next step. How do we make decisions? Basically, all organisms follow a simple process. Boyd put this process into a simple decision making model. It has four steps (called the OODA loop for short,):

Observe: Gather data. What’s changed? Objectivity is paramount.
Orient: Make sense of this data. Reference all experience/insight. What does this observation mean?
Decide: What should be done. Given what has changed, what should be done next.
Act: Make the decision real.

Ok. So, what does this all of this decision making stuff mean?

I’m Inside Your OODA Loop

How does all of this apply to conflict? The simple answer is that conflict, in its most basic form, is a contest between decision making loops. The side with the FASTER and BETTER decision making loop wins any conflict. Why?

They adapt quicker. Here’s some more detail:

A FASTER decision making loop means that you accomplish a successful OODA loop quicker than an opponent. If you can do this, you are inside your opponent’s OODA loop. This means that by the time your opponent responds to your last actions, you are already onto your next ones. Get far enough ahead and the opponent’s decision making process will collapse and victory is assured.

A BETTER decision making loop? That’s question that can lead to endless debates and theory crafting. My approach to improving a decision making loop?

Connectivity. The more connected a loop is, the better the decision loop is.  Why?  Connectivity improves the quality of the orientation step, and orientation is the most important step in the loop.

Connectivity falls into three categories:

  1. Mental — improves decisions by connections to a superior mental model of the current situation. A superior model/strategy is predictive of events. It can tell you what data is important and what isn’t. Weak strategies/tactics fall apart upon first contact w/enemy.
  2. Physical — improves observation through connections to better sources of data, cleaner w/less distortion — improves action by making it possible to actually accomplish the desired decision in the real world
  3. Moral — better orientation due to connections to strong traditions, extensive experience, and collected wisdom. Training can help here.

The opposite is true also.

Damage an opponents connectivity, and their decision making loops are less effective.

 

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