Feedback loops with a delay

There is something in systems thinking called a feedback loop.  Feedback loops are a structure where the output of something is fed back into the input.  Then it starts to magnify as it goes through the loop of output to input to output to input etc.

One example can be found by the classic saying, “the rich get richer and the poor get poorer.” 

The reality is that having extra money and then investing that money means that the money will grow.  Then, if you keep the income you make from the investments and put it back into more investments you can continue to grow you money over time.  The more you make, the more you reinvest.  The richer you get, the more you can put towards assets that make you more money.

If you find yourself constantly spending all of your income and then some, you will slowly start to accumulate debt.  The debt must then be paid back plus some more (interest).  This also means that you have less the next month for expenses.  Then you put more on credit adding to your debt.  This cycles and puts you further and further behind. 

While the first example may represent the rich and second example may represent the poor, what about everyone else?  What are we doing?

Because most people fall in the middle, they make enough where they aren’t increasing their debt every month or doing so slightly, but they don’t make enough to be able to invest large sums of money, they work hard to make enough to cover their needs and a little extra to invest in a retirement account.  They slowly pay off their mortgage and over time slowly increase their net worth.  They have ups and downs along the way but manage to adjust their spending to stay just below their income.

This gives us a great example to look at for feedback loops.  Feedback loops could go in a positive direction (rich) or a negative direction (poor).  They can be extreme or they can be subtle.  They can occur without much thought or be specifically created for a purpose. 

Another element of feedback loops is a delay.  Delays can be tricky because it may seem like nothing is happening or even that you are going in a different direction.  But this is temporary.

Going to school for a degree to earn more money might not feel like it is helping you when you are cramming for an exam and paying for tuition, but over time it will increase your ability to make money.  It delays the feedback loop from occurring momentarily. 

Most shortsighted decisions follow the feedback loop with a delay structure.  They sound great and promise immediate results but actually result in more problems down the road. 

When you begin to use systems thinking you start to see these structures form and it helps you to decide the best steps to take.  Something that might not seem like a big deal at the time could very well turn out to be a feedback loop with a delay that results in moving you further away from where you want to go.