Feedback Loops

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What are Feedback Loops?

Feedback Loops are a characteristic challenge of complicated situations and problems in many management areas such as strategy, decision-making, investing and organizational development. They are a pattern of interacting processes where a change in one variable, through interaction with other variables in the system, either reinforces the original process (positive feedback loop) or suppresses the process (negative feedback loop). In this way, these kind of effects can cause a change in one element to multiply itself causing a stronger effect than expected or can indeed sometimes cancel itself out.

For example even a simple management decision to invest more in one particular region may lead to more local customers resulting in higher revenues, but may also lead to jealous managers in other regions, who leave the company, leading to decreased revenues in the other countries.

Also called complicatedness.

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Compare with: Systems Thinking  |  Bullwhip Effect  |  Paralysis by Analysis  |  Causal Ambiguity  |  Cognitive Bias  |  Analogical Strategic Reasoning  |  TRIZ  |  Lateral Thinking  |  Bounded Rationality  |  Strategy Dynamics  |  Behavioral Finance

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