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Here’s how management accountants and other CPA\u2019s can use something called an OODA Loop to their advantage.<\/p>\n
A fighter pilot flying a 13-ton F-16 in combat must make rapid decisions in a fast-changing environment. The decisions faced by management\u00a0 accountants\u00a0 \u00a0<\/a>may typically be a little less stressful, but fighter pilots can still teach controllers, CFOs, and other CPA executives how to out maneuver the competition.<\/p>\n A key decision-making tool employed by fighter pilots, the OODA Loop, has made its way into the corporate world since it was developed in the 1970s by aviator John Boyd, a U.S. Air Force colonel who was an influential military strategist. OODA stands for \u201cobserve, orient, decide, act,\u201d and an OODA Loop is a rapid-response cycle that emphasizes brain over brawn.<\/p>\n \u201cBoyd\u2019s first big idea was operating inside the OODA Loop, which was basically being able to change the situation more rapidly than the other side can figure it out,\u201d said Chet Richards, a former Boyd colleague and author of Certain to Win: The Strategy of John Boyd, Applied to Business. \u201cSo when the other side thinks it\u2019s just about got a good mental model of what you’re doing, you\u2019re doing something else. And, furthermore, you can exploit the fact that he thinks he\u2019s figured out what you\u2019re doing when it\u2019s really not what you\u2019re doing, to continue to change the game.\u201d<\/p>\n Operating inside the OODA Loop is akin to treating a situation like a game of chess, always staying at least one step ahead of an opponent. The approach has proved to work with individuals (the original fighter pilot model) and large entities, whether military or corporate. Once you complete a cycle of the loop by acting, you observe any changes in the situation and your opponent\u2019s reaction, and then start the cycle again.<\/p>\n When I talk about this to people who are well-versed in the martial arts, they say, \u2018So what? That\u2019s what we do all the time,\u2019 \u201d Richards said. \u201cI say, \u2018Yeah, but you don\u2019t do it with a 100,000-person army!\u2019 That\u2019s the big difference.\u201d<\/p>\n Here\u2019s a look at each step of the OODA Loop and ways they might be applied to the work of a management accountant striving to give his company an edge on the competition:<\/p>\n Observe. Boyd\u2019s observation phase for pilots included taking in unfolding circumstances\u2014the constantly changing world around them. Experience helps them focus on what\u2019s important and tune out the rest.<\/p>\n \u201cBoyd called this steering process \u2018implicit guidance and control,\u2019 \u201d Richards said. No matter what else is going on, you\u2019re always observing, keeping your eyes open, especially to things that don\u2019t seem quite right.\u201d<\/p>\n Management accountants must have a strong working knowledge of various components of their business to make informed observations, according to Michael Rowe, CPA, CGMA, the COO of ING Source, a manufacturer of compression hose and sleeves.<\/p>\n \u201cIf you see a trend that\u2019s not happening in line with what your expectations are, you drill down and find out where it stems from, whether it\u2019s a tech, or a process, or a customer,\u201d he said. \u201cIt requires management accountantsto work with operations to understand their goals and aspirations and what they think is important. Then working with sales in the same vein. And then you bring that back to work with IT to create the feedback loop, capturing the information so you can monitor it.\u201d<\/p>\n Orient. Getting oriented involves consideration of multiple factors, including previous experiences and analysis and synthesis, according to Boyd\u2019s model. For a finance professional, the orientation stage of the OODA Loop may involve comparing current practices to an organization\u2019s standards. The side with the more accurate orientation can make better predictions and is going to have an advantage,\u201d Richards said.<\/p>\n James B. Jordan, CPA, CGMA, has worked for large corporations such as IBM and Accenture. His recent work as an independent consultant has found him teaching business principles to religious organizations. Here are the questions such an organization might ask itself during the orient phase: \u201cWhat is the process that\u2019s supposed to occur when we count the money in the church and eventually get it into the bank?\u201d he said. \u201cWhat is the process for receiving invoices and getting them approved, and getting the checks cut, and getting them posted and getting them reconciled?<\/p>\n Decide. Threats come at fighter pilots and martial artists too rapidly to allow for exhaustive analysis and careful decision-making. Experience guides their choices during the orientation phase. CPA\u2019s have more time to test hypotheses and choose a course of action informed by their intuition and expertise.<\/p>\n \u201cYou\u2019ve got to be able to get to the details and understand them, but then you\u2019ve got to be able to pull up quickly and see the big picture and connect the dots,\u201d Rowe said. \u201cIt\u2019s a way to ensure you\u2019re moving forward, you\u2019re not going backwards. It\u2019s all about seeing how the trends are going and then staying in line with what your wishes and plans were, as well as how you compare to where you were and where you want to go.\u201d<\/p>\n Act. Theory and the real world intersect in the action phase, particularly when a client implements your recommendations.<\/p>\n \u201cManagement Accountants could stop at this point, but the OODA loop model insists that you should keep learning by observing the results and refining your base of knowledge,\u201d Richards said.<\/p>\n For accountants, the action phase might mean going back to the department where an issue originated, making a recommendation to the manager, and following through to ensure implementation. \u201cWhen you decide, when you have that information, you don\u2019t just report\u2014you recommend,\u201d Rowe said. \u201cWhat do you recommend doing differently? Here\u2019s what I think we ought to do.\u2019 \u201d<\/p>\n\t\t\n\t\t\t\n\t\t\t\t\t\n\t\t\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t![\"expert](\"https:\/\/www.ibntech.com\/wp-content\/uploads\/2025\/05\/expert-operational-support-e1746703803613.webp\")
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