In order to understand Boyd’s model for operations, we must understand his premise that there is a fundamental need for decisions. He states, “Against such a background, actions and decisions become critically important. Actions must be taken over and over again and in many different ways. Decisions must be rendered to monitor and determine the precise nature of the actions needed that will be compatible with the goal. To make these timely decisions implies that we must be able to form mental concepts of observed reality, as we perceive it, and be able to change these concepts as reality itself appears to change. The concepts can then be used as decision-models for improving our capacity for independent action. Such a demand for decisions that literally impact our survival causes one to wonder: How do we generate or create the mental concepts to support this decision-making activity?” [see Boyd, Destruction and Creation]. This quote highlights the basic contribution that Boyd provided. He developed a model that can be extrapolated into a process for decision-making. Boyd called the model he developed the O-O-D-A loop. Continue reading →

Post the end Vietnam War and the entrance of America in the 1970s, it seemed that America had lost their way. The mathematicians and hard science was again in decline and the philosophical and social sciences came to the fore. It would be in the 1990s, that hard science and mathematics would once again gain a dominant position in thought leadership. Out of the counterforce debacle in Vietnam and the dominance of defense and public policy by neoclassical theories, emerged John Boyd who developed a philosophy and process that formulates strategy based on all data and uses dynamic analytics to continuously evolve strategy to achieve objectives. This is not a game theory strategy that mathematically outlines various outcomes based on strategies employed. It is not a precise mathematical formula that defines risk. Boyd believed that strategy is an ever evolving and highly iterative process designed to achieve victory. It requires assumptions of risk with constant analytics of the operating environment. Boyd believed that the real target was your enemy’s perception for it is enemy who decides when they are defeated – not you. Keynes would describe this as the participants in the financial market who decide when you have won or lost – it is the not the companies. In the business market it is the companies competing for market share who decide when they have lost. Continue reading →

In 1928 a young, brilliant mathematician named John van Neumann, devised a theory that would affect economic and military thought for many years to come. The theory that Neumann developed was based upon several observations he made during a game of poker. The first observation was that wining and losing was the interdependent on all players. A wining strategy was not solely based upon a single player’s strategy – but rather the product of all the player’s strategies. In order to devise a winning strategy, Neumann had to account for other player’s strategies, assuming that each player’s objective was to win the game. From these observations Neumann developed what became known as game theory and he applied the theory to economic markets. Previous economic models used traditional neoclassical economic assumptions that a seller and buyer acted solely on the mission to maximize their gains. A seller is looking to maximize profit and a buyer wants the maximum value for capital spent. The contribution that Neumann made was to define a seller and buyer as a transactional unit that was dependent upon each other, but not necessarily to achieve maximize profits and value for capital. Continue reading →