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The Strategy Loop

It goes without saying that being overconfident has consequences. Matching the challenges you accept to the skills you have is a skill that requires constant honing.

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The Strategy Loop is a mental framework that provides structure to strategic thinking. It merges timeless concepts from Sun Tzu, John Boyd, and a touch of wisdom from Simon Wardley. Here's a breakdown of these concepts:

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  1. John Boyd's Observe, Orient, Decide, Act (OODA) Loop

    • Observe. : Continuously monitor your environment.

    • Orient: Interpret what you observe and understand its significance.

    • Decide. Take your risks.

    • Act. Obvious.
       

  2. Sun Tzu’s Five Factors

    • Purpose: What motivates us to take action?

    • Landscape: What is the current environment?

    • Climate: What external forces are at play?

    • Doctrine: What principles guide our actions?

    • Leadership: Which actions will we take?
       

  3. The Two Whys

    • Why of Purpose: Why are we doing this?

    • Why of Movement: Why do we choose certain actions over others?

Simon's strategy loop graphic.

Figure 1: The original Strategy Loop as tweeted by Simon. The Red Arrow has sometimes a label 'Iterate Fast'.

How to apply the Strategy Loop?

Because it is a loop, you will have to go through the following steps iteratively. Worry do not, as over time it will become your second nature.

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1. Start with your Purpose: Why are we doing this?

You need to find your "why." This isn't just a philosophical question; it’s about understanding why you're going on this expedition. Is it to find new opportunities, outsmart competitors, or just because you love the thrill of the unknown? Remember, even Indiana Jones had a purpose!

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2. Analyse Landscape: What are the big things that I cannot control?

Identify your resources, capabilities, and the various elements that make up your business environment. Think of this as drawing a treasure map, but instead of X marking the spot, you’re looking for value streams and customer needs.

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3. Analyse Climate: What’s the Weather Like? 

Just like real explorers, you need to know the climate—market conditions, trends, and forces acting on your map. Are you navigating through a stormy market or sailing on calm seas? Adjust your plans accordingly, because nobody likes getting caught in a business hurricane without an umbrella.

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Landscape & Climate can be considered to be a situation diagnosis - those are the things beyond your control, and you must either adapt to them or try to influence them.

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4. Doctrine: Set Your Navigation Rules 

Now, establish some ground rules. These are your guiding principles, the do’s and don’ts of your strategy journey. Think of them as your compass, keeping you on track and ensuring you don’t end up in a strategy Bermuda Triangle.

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Some people call Doctrine a guiding policy - a set of business best practices that are always useful.

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5. Gameplay: Time to Play the Game

Finally, it’s game time. Deploy your resources, make your moves, and outmaneuver your competition. It’s like a chess match, but with higher stakes and fewer funny hats. Remember, strategy is all about timing, positioning, and occasionally, a bit of strategic trickery.

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Actions undertaken in Gameplay should be coherent with your purpose. It does not hurt to use MECE.

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It is important to remember that it is not a strict loop. In practice, you may find that applying best practices (Step 4) leads you to rethink your assumptions about the world (Step 2). This is normal and expected.

 

The greatest risk lies in getting stuck in Gameplay phase - taking multiple, expensive actions without reassessing the situation or own assumptions.

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Just remember to stop and think now and then.

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