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Under great success or great failure lies feedback loops

Improving Systems and Habits

Scott Miker is the author of several books that describe how to use systems and habits to improve.  This free blog provides articles that to help understand the principles related to building systems.  

Under great success or great failure lies feedback loops

Scott Miker

Studying systems thinking provides insight into areas of life that often seen confusing or unclear.  They give a better understanding of what is really going on.   

One element of systems thinking is the feedback loop.  Feedback loops come in many variations but simply put, feedback loops take outputs from the system and then put them back into the system as inputs.

Let’s look at an example to help understand this concept.  If I’m a manager and want my staff to get better overall, I might assume that yelling at them for mistakes is a good idea.   

But as I do this, I will probably create a negative work environment.  Over time I might find that this causes employees to feel disgruntled and ultimately leave for a better opportunity.

Then I might find that the best employees have the most opportunity outside of my company.  So the best employees are the first to leave.

That feedbacks back into the system by creating an environment where more mistakes are happening instead of less because the employees that stay are more prone to make mistakes.

There are a lot of factors, but in its simplest form I’m creating a feedback loop that degrades the system over time.  It starts with the level of mistakes made by current staff.  The action (yelling when mistakes are made) is creating an outcome (hostile work environment) that leads to another outcome (the best employees leave), which then creates another outcome (a staff that is more likely to make mistakes).  This ultimately results in a situation where the level of mistakes made by current staff goes up, not down.  My actions are producing the opposite of what I intend.

Sometimes there is a delay in the feedback loop.  If a manager tries this method of correction when the economy is poor, he or she might see positive results initially.  But over time as the economy improves and employees have more and more external opportunities, the feedback loop will follow the same path as I mentioned above.   

Delays can be dangerous because by the time we realize what is happening it is often too late. 

So far I’ve highlighted negative systems that could create great failure.  But feedback loops don’t care of good and bad, positive or negative. 

So let’s look at another feedback loop.  Let’s take a young professional working at his or her first job.  Let’s say he or she decides to save half of their salary since they are living at home and don’t spend much money.

They might get into the habit of saving, and then investing the money.  They learn more and more about investing and every month that goes by they add more and more money into their investment accounts.

This could create a habit that carries throughout their career.  They save a large portion of their income and only spend money on absolute necessities. 

There will be a delay in the outputs because initially the money will grow slowly and the understanding of how to invest will be minimal.  But as they add more and more money and then learn more and more, they will likely start to amass a pretty large sum of money. 

As they progress through their career they gain positions with more and more responsibility and therefore a higher salary.  As the salary increases, the amount that they invest also increases.   

Hopefully you can see that the money made from investments then gets put back into investments.  This produces even greater output, which immediately gets put back in as an input. 

Over time this will build and build and the higher it gets the faster it grows because it isn’t just growing from the money they save, it is also growing based on previous investment income that was put back into other investments.

I love systems thinking and specifically feedback loops because they give insight into some of these areas and provide understanding of many factors.  We can start to see someone who retires young and see the systems that were working for them for years without anyone paying attention.   

We can start to see a magnification of certain elements.  These elements are leverage points.  So yelling at employees might seem like a good way to correct an immediate problem.  But it could also be looked at as a leverage point that will result in the workforce degrading over time.   

The leverage points in the financial example are the ability to save a high percentage of income and the learning of better ways to invest. 

We all use feedback loops even if we don’t really pay attention to them.  If we went to college we are leveraging our time to learn now, which will result in more money later. 

If we decide to eat unhealthy because we enjoy eating fried foods, we will see that these ultimately hurt our health but also dull our taste buds.  So the more of it we eat, the more we want to eat.  Over time our health starts to degrade and this degradation starts magnifying over time.

Feedback loops are a key element to systems thinking.  Using the systems and habits approach to improvement focuses on finding these leverage points and then slowly changing them to provide the outcomes we desire.