OODA Loops and Online Business Revisited
A while back, I wrote about the OODA loop for copywriters. It was one of those articles where I get into overly niche ideas with quite specific details.
It’s time to widen that thought out.
The OODA loop, for those of you who can’t be bothered to click the link, is a military strategy template.
Observe. Orient. Decide. Act.
The theory of the OODA loop is that success in warfare will come from two things:
- Whoever can go through those loops quickest will win the engagement
- Therefore, if you can disrupt your enemy before they can complete a loop, you’ll throw them off
Now, I’m not a big fan of 48 Laws of Powers or any of those “Art of War for middle managers” type books. I think they’re stupid.
However, there’s something in the above that I glossed over the first time around.
Your success in business almost entirely depends on how quickly you can finish a “loop.”
Freelancing and the OODA Loop
A lot of my initial success as a freelance writing came from exactly this.
When you’re one of a million writers looking to build a portfolio with cheap $5 articles, it’s pretty tough to stand out. You can promise quality, but so can many others. (Although that kills 90% of the non-native speakers who are trying to win clients too.) Maybe you’re working in a specific niche, and that’ll help – but it means less clients.
Often, the key factor will be how quickly you can do the work to a high quality and that’s your competitive advantage. It was certainly mine for a long time.
This is exactly the same as the OODA loop – writing 500 word articles is a basic thing, regardless of the topic – but how well and how quickly you can do it will determine your success.
I recommend thinking in terms of systems and loops. If I asked you to write a 1,000 word article on London Real Estate opportunities, how would you go about doing this and how quickly could you do this?
The key thing here is whether you know the answer to those questions or not. It might take you an hour or three days, but if you don’t know, then you haven’t got an efficient system.
That’s ok and typical of the average creative freelancer or writer, but they’re all losing business to somebody who has got an efficient system.
This isn’t another article on OODA and writing though – so think about how being able to do the above task will help you in whatever other business venture you decide to try.
Business And The OODA Loop
There are a ton of fads in the online business world. In the past year or so, we’ve had FBA and dropshipping and we had the Teespring craze.
The thing with these business ideas – which aren’t bad in essence – is that they’re comprised of inefficient loops.
For instance, let’s say you want to dropship T-shirts. Everyone needs T-shirts.
You can go to the same online vendor that dropships T-shirts that everyone else is using.
It costs $19 to dropship a T-shirt with your design. Well, I say “your design” but really it’s the same 10cm by 10cm square that everyone else is using.
Fine. You go with that even though the margins are ridiculous (you have to charge at least $25 to make a profit – without advertising costs!) and the design isn’t great. The material – who knows about the material seeing as you’ve never seen it?!
There’s also a 10 day shipping window. That’ll put a dampener on last minute Christmas presents, but a business is a business, right?
You figure that nobody even knows about your T-shirts, so you Google “How to sell T-shirts with Facebook Ads” and it turns out that other people use Facebook Ads for T-shirts. But they’re bumping up the price of every click bid.
There’s no problem with selling T-shirts, so the business isn’t a “scam” like all the people who’ve gone before say. Other companies do it and they make a lot of money. Yet by piling into the same thing as everyone else, you’re going to run into the same problems as everyone else.
Find Efficient Systems
You can fix all of the problems above by addressing weaknesses in the loops. A T-shirt business has the following loops:
- Design of the shirt
- Manufacture of the shirt
- Advertising the shirt
- Selling the shirt (on a website or wherever)
- Distribution of the shirt
- Customer Retention/Funnels
With dropshipping or turnkey business ideas, the problem isn’t that you’re looking at a scam or whatever. It’s the fact that all of these things are sold to you as part of one “done for you” system.
You can improve on all of those things if you split and look at how to improve the systems. Examples:
- Getting design ideas based on what people want as opposed to cheap Fiverr designs
- Going straight to source/sourcing your materials/picking your materials and assembling them
- Buying in bulk to drop fees and reduce shipping time
- Advertising to the market you selected in the design process only until you’re cash flow positive
- Getting affiliates/selling wholesale to other retailers (or dropshippers!)
- Adding with each parcel a “20% Next Order” coupon
The average business guy won’t think of any of these things because they don’t split the process up, but each of these little logistical sections is a loop that can be improved.
Sure, having a quality product is paramount, but even if you can’t do anything with your product quality, you can improve the other loops separately.
If there are two businesses with an identical product and one is infinitely better at selling than the other, that one will survive and take the market share from the other. If you’re selling products from Aliexpress with a three week shipping window, eventually someone will buy the product in bulk and send it from the USA with next-day delivery and it’ll kill your business.
Final Thoughts
When you read, “Is X a Good Business Idea?” type questions, the real question is about the loops.
Is T-Shirt selling a good business?
If you can go through the above processes more efficiently than your competitors, then yes, it totally is.
Most entrepreneur forums are filled with people that are trying to do the same process as everyone else without any competitive advantages whatsoever. Those people will say, “Making money online is a scam” because they’ve read a $7 ebook and they might have even followed all the steps in the book…
… what they’ve done is created a less efficient system than the thing they’ve been reading about.
Whenever you read about a business model, start by thinking about what you can do more efficiently than everyone else. It probably won’t be everything but once you’ve identified a few key areas, you have something to work with.