Control Loops with a Reinforcing Effect

If feedback signals act in a so-called positive feedback process, the output variable of the system moves in the same direction with each control process. This can lead to effects that either reinforce or reduce the output variable of the system more and more.

Many systems in business are designed according to this reinforcing or minimization principle. In practice, they lead, for example, to a drive for growth or to ever further cycles of savings. In the process, the structures become increasingly unstable and can collapse. Examples of this are the “bubbles” we saw around the turn of the last millennium in the area of Internet-based business models or observed in the credit markets in 2007.

Example 1: When action leads to success, it stimulates further or even increased similar action leading to even more success. However, this learning process can be limited. Limiting elements can be scarce resources, the limits of growth (no tree grows up to the sky) or changed framework conditions under which the same action no longer leads to success. Such limiting factors are often ignored by successful people.

Example 2: Exponential developments are only taken seriously at a late stage, although their patterns are sufficiently well known. If a lily pad is visible on a pond, and it is clear, for example, that the number of lily pads doubles every day and that all life in the pond will die when the pond surface is completely covered, the seriousness of the development often only becomes apparent on the day when the pond is half covered with lily pads. The situation is similar in environmental protection and in companies that are in crisis. Regulatory processes are lacking.


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