The main element of the systems and habits approach to improvement is to use systems thinking to gain a fresh perspective on something and then make steps to improve using the principles of systems.
One of the main components found in systems are feedback loops. There are two different types, the reinforcing feedback loop and the balancing feedback loop. This article will focus on the reinforcing feedback loop.
In The Fifth Discipline by Peter Senge, he states, “Reinforcing (or amplifying) feedback processes, are the engines of growth. Whenever you are in a situation where things are growing, you can be sure that reinforcing feedback is at work.”
Reinforcing feedback is when several elements work in a way that produces more and more growth (or decline).
Take the individual who takes their income and puts a large chunk into a rental property. Then they take that revenue and buy more rental properties. Over time they keep taking their profit and reinvesting it. After a while, they may find numerous assets producing revenue for them. The more they gain, the more they invest which means they will gain even more assets which then produce even more revenue etc. It forms a circle that keeps growing and growing.
Reinforcing feedback could be something growing or declining. If someone takes all of their money and uses it to buy a vacation home and soon finds that they are spending a lot more money maintaining the house and suddenly they start gaining more and more debt. The debt then starts to cause interest to accumulate and they grow their debt over time.
The different between a positive and negative feedback loop is often small. It is small because it is being leveraged by time.
If we save $1 per month and invest it in an account gaining 8% interest, in 50 years we would have around $7,400 (based on a simple investment calculator). If, instead of investing it, you just stuck it under your mattress, the same amount would be worth $600. So while the difference of investing $1 per month seems inconsequential, using time and a reinforcing feedback loop it becomes a difference of $6,800 in 50 years.
Now instead of $1, start using investment calculators such as the one on Dave Ramsey’s website to play out different scenarios. Try using $10 per month for 30 years, $100 per month for 60 years etc. Try using 2% interest instead of 8%. Try using 12%. You will start to see that time plays a major role in the value of the investment at the end of the period. We are leveraging time and creating a valuable feedback loop. But all of the factors (how much we save, the interest rate we get, the time we keep it in the account etc.) matter and can work together for greater success or work against each other for minimal success.
Unfortunately most of us understand the opposite of this. Instead of saving $1 per month we spend more than we make. As I started my first business years ago I learned this valuable lesson the hard way. I used my credit card to purchase equipment for the business while it was getting up and running. In time I started to build up quite a bit of debt. I would pay the minimum but the balance kept growing and growing. Again this is a feedback loop at work, just working to take more and more money from you instead of giving you more and more. Turning this around then meant changing the system, which took a lot of work and time.
So the difference between using a feedback loop to improve and having it take away from your future goals is small.
Senge emphasizes this point when he states, “If you are in a reinforcing feedback system, you may be blind to how small actions can grow into large consequences – for better or for worse. Seeing the system often allows you to influence how it works.”
The reality is that most people never see these systems but are constantly being impacted by them. They may just take money out of their paycheck automatically to put into a 401K. Or they may have the mindset that they always need more and always find a way to justify every purchase they make (as I did with equipment for the business).
Reinforcing loops are found all around us, not just with regards to money. If we decide to order a cheeseburger today for lunch or a veggie wrap it might not seem consequential. But because our actions start to build habits, if we do this over and over again we start to see major differences in someone’s health if they choose one over the other most of the time. The habit of choosing one over the other over time can be powerful.
If we decide to skip the gym today it might not mean anything. But if we build a habit of skipping the gym we might find out that this leads to a very unhealthy life because we skipped more and more days until we stopped going all together.
If we make a decision to do something unethical to look good for our boss it could easily turn into a habit that results in us doing more and more that eventually results in serious criminal charges. If you hear from someone that was caught up in a criminal case like this will likely say it started out as nothing and then soon started to grow. In time, it became something too powerful to escape.
You can see this with people that are prone to lying. They might lie to a friend but in order to keep the lie going they have to create more lies. Soon they get caught up in constantly lying and can’t seem to get away from it.
While much of the information may seem depressing, it really isn’t meant to be. In fact once you can identify the feedback loop you can then start to take action that will move the results in your favor. You might start to find ways to save an extra dollar here or there or a way to change how you order your lunch. Before these things didn’t seem to matter, but with systems thinking we realize how much they really do matter.
Reinforcing loops can be very powerful and can drastically help or hurt our improvement efforts. If we understand systems thinking we can find numerous small changes to make. We can focus on continued action that then results in new habits that eventually go on to work alongside other habits to help us reach our goals.