The Good, the Bad, and the Ugly: A Close

The Good, the Bad, and the Ugly: A Closer Look at Balancing Loops

So far, the concept of a balancing loop might sound simple: These processes generally work to keep things stable. But beware: Balancing processes are actually pretty complex in real life. In many cases, we can think of them as a complicated blend of the “good” (the desired goal), the “bad” (the actual situation that we don’t want), and the “ugly” (our perception of the situation, which we hate to examine). This makes managing these loops a little tricky, because people often have many different perceptions of a situation—and these perceptions can strongly affect the situation itself.

Let’s take quality of a product or service as an example (see “On a Quest for Quality”). In our standard balancing loop structure, we have our desired quality level and the actual quality level. When our desired quality level increases, our internal quality gap also increases (note the “s” on the arrow). Whenever the gap itself increases, we increase our improvement efforts (again, note the “s”). When improvement efforts increase, we expect actual quality to increase (another “s”). Finally, when actual quality increases, our quality gap decreases (note the “o”). Once the gap decreases, we spin around the loop again: Improvement efforts also diminish, which in turn brings down actual quality. Once more, the gap increases.

ON A QUEST FOR QUALITY

We launch improvement efforts to close the gap between actual and desired quality levels.

Still with me? Good! But hold on: Even in this relatively basic examination of quality, there are many other important variables at work. For example, we often do not operate on the basis of what the actual quality is, but on our perceptions of what that quality is. In addition, our customers’ desired quality may not necessarily be the same as our own desired quality. And, in turn, customers don’t always act on what our actual quality is, but rather on their perceptions of what that quality is. Each of these variables introduces a new gap to worry about.

For example, when Hewlett-Packard first entered the portable personal computer business, they designed and built their units in line with their usual high standards of quality. Internally, they were proud of the fact that their computers were virtually indestructable, so rugged was their design. But this ruggedness came with a high price tag. As a company, HP had launched improvement efforts that were driven largely by their internal quality gap. Customers, on the other hand, wanted their computers to be “rugged enough”—but they also wanted them to be affordable. Hence, HP’s computers did not sell very well. It took some time for HP to shift their attention from their internal gap to their customers’ quality gap.

What’s the best way of managing these “good,” “bad,” and “ugly” balancing loops? Well, if you accept the premise that you are better able to manage things that are visible (rather than invisible) and relationships that are explicit (rather than implicit), then a good first step is to try mapping your issues onto causal loop diagrams (see “Why Draw a Diagram?”). Through this kind of systems thinking approach, you begin to make more visible and explicit the causal structures driving organizational behavior. Creating such a diagram together as a team can be especially powerful, because it leads you to ask questions that you might not have asked before, such as,

Which gaps are driving our system when, and by how much?
How accurately do we know what each of the gaps is?
How are we monitoring the gaps?
What are the different ways in which we can close the gaps?
How long does it take for perceptions to catch up to actual quality?

Addressing all these questions can uncover hidden assumptions and habitual practices that may be contributing to poor results.

WHY DRAW A DIAGRAM?

Systems thinkers work from a central premise: If you don’t know how you’re producing certain outcomes, you’ll have great difficulty determining how to produce better outcomes! Sound obvious? Well, because social systems are so complex, this is not as easy to grasp as it seems. Still, we tend to operate our organizations as if we really knew what implications our actions will have. Worse, we often do so without the benefit of both a diagram that shows us the “wiring” of our system and the proper tools with which to conduct the operation successfully.

A diagram of the reinforcing and balancing processes at work in the system we’re interested in can be an excellent first step to figuring out how the feedback is generating behavior that we want to change. And, it can help us address problems before breakdowns actually occur. Causal loop mapping is especially powerful when done in a group—because by sharing our understanding of how a system might work, we can get a fuller picture of reality and therefore arrive at much more powerful action plans.

So, whether it is our bodies, our cars, or our organizations, preventive maintenance is a worthwhile investment. There is a great deal of systemic truth in the old adage “an ounce of prevention is worth a pound of cure.” (Likewise, “an ounce of systems diagrams are worth a pound of quick fixes”!)