OODA loop

The OODA loop is a key concept originally coined by Colonel John Boyd, to explain successfulnes of US fighter pilots. The generalized theory is now widely used for understanding both operational and strategic processes.

The cycle describes how the stages of observation, orientation, decision and action results in a restriction on how fast something can operate in a controlled manner.

The "controlled" aspect is a critical assumption, any agent can out of the loop by acting at random and side step the three first steps. Although this might yield success at few occasions it is not a controlled manner to steer any important process unless you know that you are at a fatal disadvantage and acting is more important than any other priority (see Cynefin Chaotic).

A simple analysis of the concept also gives some very interesting conclusions:

• Being a cycle it is of prime interest to keep going, halting at any step for too long will ruin at least one cycle. Eg: Avoid trying to solve a problem "once and for all", try instead to optimize the loop to be a consistently better performer.
• Having multiple steps to some degree enables parallelism as long as transfer of information between steps efficient and fast enough. Eg: Many persons can be orienting at the same time somebody else is deciding on the input from the previous cycle.
• If any of the steps are operating at a significantly lower pace compared to the others then there is an opportunity to optimize and also to avoid stress in the other steps (eg: if acting takes a year, you can probably take an extra day to orient and decide) 
• For many processes the loop makes sense and makes it easy to understand that in reality reasonable to have one decision and go for one action that will lead to another observation etc...  To vastly improve performance if possible simulate reality to in parallel be able to evaluate multiple variations of decisions and actions.

Just as some airplanes where frequently shot down due to a slower OODA loop the same is true in business, what might look like the result of a bad decision is often just an OODA loop to slow to enable relevant operations regardless of decision quality.

Reference: Wikipedia.org