OODA stands for Observe, Orient, Decide, and Act. It describes a continuous cycle that helps individuals or organisations make better, faster decisions:

1. Observe: Gather data about your environment, customers, competitors, and internal performance.
2. Orient: Make sense of what you’ve observed. Filter the data through your context, experience, and goals.
3. Decide: Choose a course of action based on your orientation.
4. Act: Execute quickly and decisively—then go back to observing the results.

This loop isn't linear—it's continuous and recursive. Speed and adaptability are the core advantages. The goal? Get inside your competitor's decision cycle and respond to change faster than they can.

Why It Works for Business

The OODA Loop has proven especially powerful in business environments where uncertainty, complexity, and competition are high—conditions that apply not only to startups but also to many small and medium-sized enterprises (SMEs). Originally developed to help fighter pilots make rapid decisions under pressure, the framework is equally useful for business leaders who must navigate shifting markets, evolving customer needs, and limited resources.

Here’s why it maps so well to SMEs:

• Agility beats size: SMEs may not have the resources or reach of larger competitors, but they do have the advantage of speed. With fewer layers of approval and closer proximity to the day-to-day operations, they can make decisions and implement changes more quickly. The OODA Loop gives structure to this agility, turning instinctive responsiveness into a repeatable strategic advantage.
• Speed matters: The ability to act quickly—based on current information rather than long planning cycles—can be the difference between capitalising on a new opportunity or falling behind. Research by McKinsey shows that companies that reallocate resources faster based on real-time insights outperform peers by up to 30% in total returns to shareholders. This highlights the importance of flexible, responsive decision-making in today’s business climate.
• Customer-centricity: The first two stages—Observe and Orient—encourage SMEs to focus not on what they think the customer wants, but on what customers are actually doing and saying. By grounding decisions in real-world data, frontline conversations, and customer behaviour, SMEs can avoid costly missteps and build stronger alignment between their offer and market demand.

In short, the OODA Loop enables SMEs to operate with strategic clarity even in uncertain conditions—not by guessing better, but by observing better, adapting faster, and learning continuously.

Real-World Examples: OODA in Action

While the OODA Loop originated in high-pressure combat, its principles are clearly visible in some of the world’s most agile and successful companies—often in ways that SMEs can adapt and emulate on a smaller scale.

Amazon: “Two-Way Door” Decisions for Speed

Amazon famously uses what it calls “two-way door” decisions—a principle closely aligned with the Decide and Act stages of the OODA Loop. The idea is simple: if a decision is reversible (a “two-way door”), make it fast. If it turns out to be wrong, step back, learn, and adjust. This approach prevents organisational paralysis and encourages experimentation.

Jeff Bezos has argued that many companies make decisions as if they’re one-way doors—slow, final, and risky—when in reality, most are reversible. This mindset enables Amazon to move quickly, test new ideas, and stay responsive to data.

SME takeaway: You don’t need enterprise-level infrastructure to apply this. Instead of overanalysing new ideas or changes, implement reversible decisions in short cycles. Treat most changes as temporary experiments rather than permanent commitments.

Toyota: Continuous Improvement Through Kaizen

Toyota’s famed Kaizen system (meaning “change for the better”) is a classic example of a structured OODA-like loop at scale. Teams across the organisation are encouraged to:

• Observe problems as they arise on the production floor.
• Orient using shared visual systems and team huddles.
• Decide on improvements collaboratively.
• Act with small changes that are tested and evaluated quickly.

Toyota doesn’t wait for leadership to dictate every move. Instead, it empowers staff on the frontlines to continuously improve systems—a decentralised, fast-loop decision-making model.

SME takeaway: Encourage a culture where problems aren’t hidden or deferred. Create space for team members to raise issues and test improvements. A whiteboard in a team room or a weekly “what’s not working” check-in can kickstart your own Kaizen mindset.

Slack: Pivoting Based on Customer Insight

Slack is often celebrated as a case study in agile strategy. Originally built as an internal tool for a now-defunct gaming company (Tiny Speck), Slack only came into existence because the team closely observed how internal communication tools weren’t serving them—and how much others outside the company wanted a better solution too.

By listening carefully to early testers and orienting around their feedback, they quickly decided to pivot, and acted on launching a completely different product. Today, Slack is used by millions and was acquired by Salesforce for over $27 billion.

SME takeaway: Just because something isn’t working doesn’t mean it’s wasted effort. Stay open to insights in failure. What users complain about, praise, or ignore could hold the seeds of your next big move.

Final Thought

In today’s business environment, speed and learning matter more than static planning. The OODA Loop gives founders and leaders a way to operate in uncertainty—not by trying to predict the future but by becoming better at responding to it. Whether you're launching a new product, refining your sales process, or responding to competitors, adopting an OODA mindset can help you stay ahead.