👉 Act. Observe. Learn.

Systems are everywhere. A system is “a set of things working together as parts of a mechanism or an interconnecting network” (definition by Oxford Languages). Your hiring process, marketing, sales, and the whole business are all systems. So is how you date, how you stay healthy, etc.

Feedback loops are a fundamental concept of system theory. Feedback is information communicated in response to an action. When the output of a system becomes information that affects its behavior, we have a feedback loop at hand.

There are two types of feedback loops: positive (or re-enforcing) and negative (balancing). Positive loops continue to amplify and outputs grow larger and larger. They are unsustainable because at some point they will break the system. Negative feedback loops tend towards an equilibrium, towards balance.

You can find feedback loops almost everywhere. Feedback abounds, but the challenge is to figure out which feedback is important. Because feedback is so pervasive, you must learn to differentiate the relevant from the irrelevant feedback. Identifying feedback loops allows you to know what feedback to pay attention to. You need to filter the useful feedback from the noise.

Being aware of feedback loops allows you to listen and filter feedback better, learn better, and design effective systems.

Examples

Bank run

Imagine hearing about your bank in the news where claims have been made that it might not be as financially stable as you thought. Earlier in the same week, it was uncovered that one of the employees had conducted unauthorized trades. This forced the bank to adjust its half-year earnings downward by 12 percent. What effect does this information have on you? How might it affect other customers of that bank? And what effect might this have again on the bank itself?

This is the exact situation in which The Bank of East Asia (BEA) found itself in 2008. It resulted in a bank run where customers rushed to empty their bank accounts as fast as possible. This is called a bank run. If this goes too far, the bank won’t be able to pay out any more cash and goes bankrupt.

For a bank, it’s important to keep up the appearance of reliability and trust. Once this image is damaged, it might lead to a chain reaction, a reinforcing feedback loop, where customers lose trust in the bank and take out their money. This will lead to additional feedback for other customers of the bank. They start to think that maybe they should take out their money too. And on it goes, until there is a full-blown bank run.

The bank needs to win back the trust of its customers and stop the loop of trust impairing feedback. In the case of the BEA, they managed to avoid bankruptcy with reassurances in the press and the vocal support of the Hong Kong Monetary Authority.

Homeostasis

Your body is in many ways working like a balancing feedback loop. It adapts to a situation and finds a sort of equilibrium that maintains the current state. It’s like a thermostat that only exerts its influence when the balance is disturbed. This process is called homeostasis. It’s an energy saver from the days when resources were scarce and we only used our energy deliberately.

Nowadays, homeostasis is more of an obstacle that we need to overcome to grow and develop ourselves further. It’s the initial pain and discomfort that holds us back every time we leave our comfort zone. It’s the hunger you experience when you fast for a day. You’re not really hungry but homeostasis doesn’t like the disturbance in regularity. You’ve been eating three regular meals every day for a while after all. Homeostasis is the strong urge to stop and rest after running a couple of hundred meters even though your body is capable of much more. It’s there if you want to learn something new, hold a public speech, or start dating again.

If you want any type of change in your life, you need to overcome homeostasis first. Once you’ve adjusted your body’s feedback loop to a new equilibrium it becomes easy to maintain the desired behavior, because homeostasis once again steers you to keep that new balance.

Application

Design and influence your everyday systems

Being aware of feedback loops helps you design any type of sustainable system. This means a system that doesn’t break and systems that get you the outcome you desire.

Remember, everything in your life is a system. Your career is a system where you put in time and effort, while the outcome is money and recognition. The way you learn anything new is a system (see the next point). So are the things you do to stay healthy.

When thinking about designing the system that will get you the desired result be aware of two things. First, you have to avoid building in any type of reinforcing feedback loop that eventually gets out of bounds. If your primary mode of advancing your career is working harder, you’ll burn yourself out. At some point you’ll have to break this loop and find a different way or your body will do so.

At the same time, you can check your balancing loops and see, if the equilibrium is in your interest. If it isn’t, just readjust the information at the key points so that you reach a different balance that is more to your liking. For example, if you’re dating for a long time without meeting anyone that fits, you might want to adjust your inputs. Maybe try out new places to meet people. Maybe you misinterpret shyness for boringness. Learn some social skills to draw people out on the first date.

Learning fast through iteration

Learning is a four-part process.

  1. You learn new theoretical knowledge.
  2. You apply it in practice.
  3. You reflect on the result.
  4. You adapt and start anew.

Applying this loop deliberately to anything you want to learn will significantly boost your learning process. You will learn anything faster and better.

Pay attention to two things.

First, make sure that you get clear and useful feedback from your practice in step 3. If the information is ambiguous, you might get to false conclusions. In such cases, there’s the danger of learning the wrong lesson.

Second, the faster you can make this loop the faster you will learn. Faster feedback loops mean that you can integrate the information and make the appropriate changes faster.

Limitation

The challenge is often to get accurate feedback. Especially when people give it, you have to read between the lines and interpret their signals correctly. In addition, loops are often delayed and you’ll receive the feedback sometime after the action causing it has taken place. This makes it easy to misattribute the feedback. It’s the main reason why we tend to focus more on the short-term rather than on the usually much more relevant long-term feedback.

Image

A loop. Because of obvious reasons…

Further Material