Systems Thinking Tools: The reinforcing loop in action

I recently encountered a perfect example of a negative reinforcing loop, also known as a vicious circle. When this phenomenon manifests itself in the business, it can have a huge impact on the functioning of processes.

A reinforcing loop is one in which the interactions are such that each action adds to the other. Any situation where an action produces a result which promotes more of the same action is representative of a reinforcing loop.Feedback loops 1

The figure above indicates what happens in a typical savings account. The principal in the savings account interacts positively with the interest rate. The Interest earned then adds to the principal, and this interacts positively with the interest rate again. This reinforcing action happens every time interest is computed and as the graph indicates, the growth of the principal is exponential. This is a positive reinforcing loop.

The scenario below shows the impact of Supervisor’s supportive (or lack thereof) behaviour on employee behaviour, and vice versa. If this effect manifests itself in a negative manner, the impact on the business can be devastating.Feedback loops 1

We need to identify the warning signs, where people revert to type and become fixed in their positions within the business. Increasing pressure cements the individual’s position rather than generating movement to a position of collaboration.

These positions can be turned around with the correct approach, otherwise they can degrade to a point where someone exits the business. Voluntary exit at this time very often means the loss of an individual who represents the future of the organization, something we can’t afford in these times.

To read more about supply chain and operations performance improvement, please follow Dave on LinkedIn and SA Coaching to get the notification of articles as they are published.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s