Looking for a Sign: Loops and Labels

Before we go on to take a closer look at how balancing loops play a key role in systems, let’s take a moment to explore two helpful features of causal loop diagrams in general: arrow labels and loop labels. Throughout the rest of this volume, you’ll notice that the arrows in loop diagrams are labeled with an “s” or “o.” These labels show how one variable influences another: An “s” indicates that as one variable changes, the next variable changes in the same direction. (Or, the first variable adds to the second variable.) An “o” indicates that as one variable changes, the other changes in the opposite direction. (Or, the first variable subtracts from the second variable.)

For example, each arrow in our savings-account/interest-payment loop would be labeled with an “s,” because as savings go up (or down), so do interest payments. And as interest payments go up (or down), so do savings. Notice that the savings account diagram has an “R” in the middle, too. This means that the loop represents a reinforcing process.

Here’s another example, this time of a balancing process. Let’s say that whenever you get stressed out, you do some relaxation exercises, which brings your stress level down. In a diagram of this system, the arrow going from stress level to gap is labeled with an “s.” (As your stress increases, so does the gap between your actual and acceptable level.) The arrow going from gap to use of relaxation exercises is also labeled with an “s.” (The bigger the gap, the more you try to relax.) But the arrow going from use of relaxation exercises back to stress level is labeled with an “o.” (As your use of relaxation exercises increases, your stress decreases.) This diagram would have a “B” in the middle, to indicate that it represents a balancing process.

In classic system dynamics, a plus sign (+) is used instead of an “s,” and a minus sign (-) instead of an “o.” A plus sign indicates positive feedback; a minus sign, negative feedback.

One easy way to tell if you have a reinforcing or balancing loop is to count the number of “o’s.” If there are no “o’s” or an even number of “o’s,” the loop is reinforcing. If there is an odd number of “o’s,” the loop is balancing. However, even though this method is convenient, you should still doublecheck your reasoning by “walking” around the loop and telling the story of what it is depicting.

With these handy labels in mind, let’s take a closer look at balancing loops.

YOU TRY IT: BALANCING LOOPS

Here’s an opportunity to flex your general management skills by seeing your responsibilities in terms of balancing loops. Think of a business goal that is especially important to you. It may relate to employee development, sales, or quality. Try to identify these four critical variables: Actual Level, Desired Level (or Goal), Gap, and the Corrective Action you need to close the gap. You might find the template below helpful.