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December 11, 2023

making better decisions - 20. Feedback Loops

Dealing with Difficult People

This email is one in a series on decision-making. The first one is an introduction to the series.

20. Feedback Loops

One of the biggest "aha" moments I had in the MBA came when we were learning about causal loop diagrams. This method of illustrating how different systems interact was enormously helpful to me in sharing with people how we understood a system to be working.

It starts out with a simple visual language. You can read a basic overview or persevere with this email and see how well I can explain it.

Key concepts are variables, balancing loops and reinforcing loops. Thinking of a Yes Minister episode about a hospital with no patients, we might want to think about the impact that patients may have on a hospital.

Causal loop diagram - admitted patients increases the number of medical staff, which in turn decrease the number of admitted patients
Causal loop diagram - admitted patients increases the number of medical staff, which in turn decrease the number of admitted patients

You can see here we have two variables: the number of admitted patients, and the number of medical staff. As the number of admitted patients increases, the number of medical staff increases. With the increase of medical staff, though, the number of admitted patients decrease. This is an example of a balancing loop.

Imagine the broader example: population changes based on births and deaths. The more births, the greater the population, and so the greater the number of births. The more deaths, the less the population.

Population - reinforcing loop around the number of births, and balancing loop around the number of deaths.
Population - reinforcing loop around the number of births, and balancing loop around the number of deaths. Simplified version of the one found in this paper.

To see some more examples of how you might use these diagrams, have a look at this article that uses the example of rabbits and foxes.

How could this help you with decision-making? By mapping out the systems involved in your decision using the causal loop diagram, you can see what elements of the wider system will be impacted.

Have you seen these diagrams before? What's your favourite one?

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