by Dean Lenane, Managing Director/Geschaeftsfuehrer at Fisher Dynamics, Cologne

I had the privilege of working with Dr. W. Edwards Deming during the early 1980’s when he was reintroduced to the American business environment. Deming had of course become something of a celebrity due to his identification with the success of Japanese automotive juggernaut, which was making life difficult for the American automobile manufacturers by producing well equipped, high quality vehicles at very reasonable prices.

Teams of “experts” were sent to Japan to determine how the Japanese had managed this miracle and one of the things that they brought back was a newly re-minted Dr. Deming. Deming was consulted and cosseted, and sent for by many companies, one of which was Ford.  Here, I was introduced to the man as he was employed by Ford to go and sort out the quality systems of some of the major suppliers to Ford. One of these targeted companies was United Technologies Automotive, where I was employed as a quality and reliability engineer.

Deming proved to be one of the most important influences in my professional life and to this day I use some of the techniques and learning tools that I acquired from the master himself. However there was a problem with Dr. Deming and his methods.

The good doctor was brusque and intolerant of fools and this made him unpopular with American manufacturing managers. He would bore in using a very astringent version of the Socratic Method and expose errors of thought and approach in managers of all stripes and levels. After a couple of sessions with Dr. Deming, most of the more highly placed leaders in the companies he was visiting would wish never to see him again. Deming believed that American management was a chief source of the problems in American manufacturing and many of those managers were not happy to hear that they were the main problem.

But some of the good Doctors lessons stuck, and by far the most important and the most successful of these is the P-D-S-A, or Plan-Do-Study-Act cycle. This simple but effective tool has been used with great success by organizations, particularly manufacturing organizations, all over the world.

I consider the P-D-S-A cycle or “loop” if you will, to be a primary tool for driving organizational fitness. One of the underlying, and often neglected lessons which Deming taught us was economy. Deming was very concerned with getting the most out of a system and using inferential statistics as a guide and a measurement system to achieve this. The P-D-S-A loop provided both a data source and a yardstick to show how we were doing at “driving out waste”.

Using Deming’s systems, embracing his 14 points and seven deadly diseases, and using the P-D-S-A cycle as one of the primary data collection and analysis tools will make your organization a fitter, more efficient, and much more competitive organism. By recognizing the power of people, which was another of Dr. Deming’s major preoccupations, you will unleash their potential and you will have a happy ship, which is usually a good fighting ship.

So now we come to Colonel John Boyd.  I stumbled upon Boyd in around the end of the year 2000. I had been sent by a relatively small German company called CRH to run a newly established North American division. Upon taking this job, I immediately knew that our competitors were vastly larger than we were and were able to crush us at will if we were stupid enough to stand still long enough for them to get a good fix on our position. CRH was around $400 million in annual turnover and our competitors were companies that operated in the 12 to 17 billion dollar range.

I began to look for historical precedents where smaller organizations had beaten much larger organizations so that I could identify what, if any, were the organizational and managerial consistencies between smaller organizations that had been able to best larger ones.

Anyone who starts down this road of inquiry will rather quickly run into Colonel John Boyd.

John Boyd was one of the most important strategic thinkers produced by the United States since Alfred Thayer Mahan. Indeed it could be argued that Mahan and Boyd provide the strategic bookends for the 20th century.

Boyd started out as a fighter pilot and famously issued a standing wager to all comers that from an even start, he could gain a position at their “six” in 40 seconds or less and thus be in a position to shoot them down. He never lost.

As Boyd moved on in his career, he began to focus on what kind of aircraft would give its pilot an advantage in a dogfight. Out of this work he developed “energy-maneuverability” theories and tools which allowed him to describe and then to design, aircraft that could transition from one type of maneuver to another with a minimum loss of energy and momentum. The lower the loss of energy and momentum, the quicker the aircraft’s recovery and its ability to be redirected into a new and altered set of circumstances.

This premise then began to inform a huge body of work that is primarily concerned with documenting and explaining the necessity of creating organizations that are very sensitive to the environment, that are extremely cognizant of unfolding circumstances in that environment, and which can adapt in a fast and agile manner to those circumstances as they change.

Boyd used what he called the O-O-D-A loop, or Observe, Orient, Decide, Act loop to describe how an individual or an organization should react to changes in circumstances and take new actions as quickly as possible. If, Boyd’s theory states, you are able to turn a decision loop faster than your opponent and keep turning such a decision loop over and over again as the situation changes, you will gain an incremental advantage over your opponent that will eventually reduce him or her or it to a blubbering mass of confusion that is only sure of one thing, the inevitability of defeat. As Boyd’s great collaborator and promulgator, Dr. Chet Richards has pointed out; anybody who doesn’t believe this should play chess against an opponent who can make two moves to his one, see how long the game lasts

Boyd provided an intellectual proof for his theories in several fabulous presentations in which he would show how there are patterns in conflicts of various natures and how we can profit by studying these patterns and designing organization that are able to adapt faster than the other guy.

The similarities between Deming and Boyd were striking. Like Deming, Boyd did not suffer fools gladly and was known for his confrontational, take no prisoners, style.

Like Deming, Boyd believed in the power of people and famously stated that success in any conflict was predicated upon “people, ideas, and technology, IN THAT ORDER.”

But as they were often similar they were also different.

Some people who are familiar with the canon of both of these men’s work, often fall into the error of seeing the O-O-D-A loop as a function of the P-D-S-A loop or vice versa. I think this is a mistake.

The P-D-S-A cycle or loop is primarily an analytical approach that can be used with great success in a completely internal manner.  One does not need to consult the external environment or adjust to unfolding circumstances to make the P-D-S-A loop work. P-D-S-A can be used with great success on the shop floor with the data that is available. P-D-S-A relies mainly upon analysis, which involves the use of a more or less complete data set to reach a conclusion. We use as complete a data set as we can to make a decision about how to proceed, we then study the results, and proceed with actions to confirm or reject the hypothesis that our analysis has led us to.

O-O-D-A is more concerned with synthesizing an action out of an incomplete data set. Since we can never recognize all of the variables that we are forced to deal with in any environment, we must be able to make a decision that we believe will give us the highest probability for success. The synthesis of an action from the observation and orientation of a complex and mysterious environment, subject to frequent and unpredictable change, is the essence of the O-O-D-A loop.

My conclusion is that P-D-S-A is primarily involved with analysis perhaps using some synthesis and that O-O-D-A is primarily involved with synthesis using all of the analytical data points possible but recognizing that the data set will always be largely incomplete.

Seen this way these tools can be used to great effect in a complementary manner. When involved with either creating a new organization or turning around an existing one, the first thing the CEO should do is to get with the COO and make sure that they are on the same page.  It is advisable to make sure that the management team are supplied with five books; these are: “Out of the Crisis” by Deming, “The Goal” by Goldratt, “Warfighting” by the USMC, the “Maneuver Warfare Handbook” by Bill Lind, and “Certain to Win” by Chet Richards.

While most Deming practitioners will be familiar with the first two books the other three may not be known at all. “Warfighting” sounds perhaps inappropriate, but it is really less of a book on actual small unit tactics or campaign logistics than it is a primer on leadership. I cannot recommend it highly enough. If one turns to page 29 of “Warfighting, there is a simple Venn diagram that shows the three levels that are involved in conflict. I freely adapt this diagram to the basic organizational responsibilities in a business.

The Strategic element is related mainly to policy objectives and directions and is therefore concerned with external unfolding circumstances and is the natural province of the O-O-D-A loop as policy objectives may change should the environment require a changing response. We never have all of the data we need to make a perfect decision and so we must synthesize responses using incomplete data.

The tactical level involves the concepts and methods required to achieve a particular mission or result. In the business environment, this is the natural province of analysis and the P-D-S-A loop. The tactical level uses the art and science needed to solve problems and uses the technical application of analytical tools such as control charts or Ishikawa diagrams to keep the P-D-S-A loop churning.

Therefore, while the O-O-D-A loop is best suited to keep the organization responsive and the navigation of the organization through the complex and non-linear business environment, the P-D-S-A loop keeps the organization focused on addressing problems and keeps the team fit.

While the CEO handles the strategic circle, the COO is working the tactical circle and together they should try and push the circles together using all of the tools at their disposal so that they achieve compression and overlap between strategic, operational, and tactical levels.

Indeed the methods used by both Deming and Goldratt, including P-D-S-A and Kaizen, may be thought of as the major part of an organizational fitness program. While using these tools, the organization is exercising; it is developing strength and endurance. It is cutting out fat and focusing on efficiency and optimal use of resources.

However, even the fittest athlete needs a sensory apparatus in order to be able to navigate intelligently; a marathon runner without externally oriented senses, informing him or her of the position they are in will surely end up in the ditch rather quickly. Here is where the OODA loop makes its greatest contribution; by constant reference to the unfolding external circumstances and by intelligent course corrections, the business organization is in the best position to survive the vagaries of the ever changing environment.

Thus, the intelligent use of the two approaches, the Deming based analytical methods and the Boyd based synthesis of the most appropriate course on which to embark, will yield a solution that considers both the state of the organization and its relative level of health as well as the position of the organization and its ability to adapt to the changes required in order to intelligently respond to unfolding external circumstances.

It is interesting to note, in conclusion, that both Deming and Boyd insisted that the key to success was predicated upon unleashing the potential of people at all levels of the organization. This, I think is the key that binds the two systems and makes them necessarily compatible as well as eminently complementary.