Strategy Posts

I just finished reading Certain to Win. It’s about the warfare strategy of John Boyd, as applied to business. In war, you build your team and dismantle the enemy. In business, you build your team, delight the customer, and incidentally dismantle the enemy.

You might know John Boyd as the OODA Loop guy. I never really “got” the OODA Loop so, based on Eric Ries’ recommendation, I read this book.

In a software startup, the OODA Loop looks like this: (1) Come up with an idea, (2) Code it, launch it, (3) Learn from usage data. Keep repeating the loop, each time using the Learnings to influence your next idea. This is the Idea-Code-Data loop.

As you eliminate waste in a lean startup, you can repeat the loop at a higher tempo than the competition; serve customers more effectively; and incidentally sow panic, paralysis, and surrender in the competition. For example, the Obama campaign used high tempo OODA Loops to win the most “market share” in the 2008 presidential election.

This might seem abstract or too obvious to be useful, so here are some of my favorite passages from the book—they should fill in some of the puzzle.

On agility and playing chess with half the pieces:

“Go find the best chess player you can and offer to play for $1,000 under the following conditions:

  • Your opponent moves first
  • You move twice for every move of his or hers.

“In fact, you can even offer to give up some pieces, to make it more fair. You will find that, unless you are playing somebody at the grandmaster level, you can give up practically everything and still win. Keep the knights and maybe a rook.

This is a graphic illustration of how the smaller side, using agility, can overcome a large disadvantage in numbers. Does it strike you as far-fetched and removed from what happens in the real world? Consider that Honda and Toyota can bring out a new model in roughly 2 years, with superb quality, while it still takes Detroit at least a year longer…

“The idea that operating at a quicker time pace than one’s opponent can product psychological effects offers a way out of the “bigger (or more expensive) is better” syndrome. An opponent who cannot make decisions to employ his forces effectively—his command and staff functions become paralyzed by bickering and bureaucracy, for example—is defeated before the engagement begins, no matter how many weapons sit in his inventory. In this way, one could truly achieve Sun Tzu’s goal of winning without fighting. [Ed: If you move fast enough, every enemy is effectively incompetent.]”

On shaping the market through agility:

“With a strategy this powerful, your aim is not to respond to but to create the market conditions that you want…

“Customers often want things because competitors have dangled them in their faces… such “discovery of customer wants” does not provide the basis for strategy; it represents a failure of strategy…

“The essence of Boyd’s strategy in business competition is to shape ourselves and the marketplace to improve our capacity… to survive on our terms—generally at the expense of our competitors.”

On planning and strategy:

“Strategy is merely a scheme for creating and managing plans…

“There is nothing wrong with planning… generate and discard many of them as you cycle within your OODA loops.”

On not following the rules:

“The Americans would be less dangerous if they had a regular army.” – British General Frederick Haldimand, Boston, 1776

On culture as a long-term competitive advantage:

“Herb Kelleher, chairman and recently retired CEO of Southwest Airlines, brags that competitors could copy the details of his sytem—direct (as opposed to hub-and-spoke) routings, no reserved seats or meals, one type of aircraft, etc.—but they couldn’t copy the culture, the vibrant esprit de corps, because “they can’t buy that.” So far his words have been prophetic, at least as far as the other US major airlines are concerned.”

Related: Mike Cassidy: Speed as THE primary business strategy

Mike Cassidy‘s talk on building companies fast is a must-read for all entrepreneurs:

(The slides are here if you don’t see them embedded above.)

Mike founded Stylus Innovation (sold 2 years after launch for $13M), Direct Hit (sold 500 days after launch for $500M), and Xfire (sold 2 years after launch for $110M). Mike is currently the CEO of travel guide and tour review site Ruba.

cassidy.jpgI originally saw Mike’s talk at Dave McClure’s Startup2Startup. The audio from that talk is not available, so I pieced together some clips of Mike on Tim Ferriss’ Art of Speed panel at SXSW: Mike on the Art of Speed (mp3).

You’ll learn a lot more from the slides if you listen to the audio too.