All systems operate on feedback

A system uses ‘feedback’ as information on the effect of passed or present phenomenon to influence the same phenomenon in the present or future.

 

Depending on the system, feedback triggers conscious or automatic reactions (ex. ‘human ordered’ trading vs automatic trading, or  driving 'manually' vs cruise control)

Feedback is a process, part of a chain of cause-and-effect that forms a circuit or loop. It is characterized by the creation or not of a gap with the initial state of the system and by the ‘direction’ in which it sends the system (virtuous or vicious).

A positive/reinforcing feedback enhances or amplifies an effect (virtuous or vicious) and widens the gap with an initial state: A produces more of B which in turn produces more of A.

A negative/balancing feedback reduces or corrects an effect and narrows the gap with an initial or desired state: A produces less of B which in turn produces less of A.

 

Many of our systemic ailments are due to feedback issues.

 

Positive or reinforcing feedback & change in a system

When a change occurs in a system, positive/reinforcing feedback causes further change in the same direction, gaining momentum through self-reinforcing self multiplying loops.

Reinforcing feed-back increases the gain (or loss) from repetition. With accumulation of reinforcing feedback gaps get bigger. When the loop gain is positive and above 1, there will typically be exponential growth, increasing oscillations or divergences from equilibrium.  

Reinforcing feedback tends to cause system instability. System parameters will typically accelerate towards extreme values, which may damage or destroy the system by sending it into chaos, which may end with the system latched into a new stable state (ex: a totalitarian or more authoritarian regime such as described in Naomi Klein’s Shock Doctrine or Dave Snowden’s Cynefin model).

 

Negative or balancing feedback & change in a system

Negative or balancing feedback tends to make a system self-regulating or self-correcting; it can produce stability ‘at the edge of chaos’ and reduce the effect of damaging fluctuations.

Balancing feedback loops help to be responsive to new events and behaviors, and help maintain the health and thrivability of a system, and trajectories towards desired outcomes.

An airplane auto-pilot is an example of a constructed automatic self-correcting system. Nature (climate) and biology (homeostasis maintaining life) are self-organized ones. In management balanced scorecards provides feedback information for conscious decision making (choice between reinforcing or correction).

Both Adam Smith’s Invisible Hand and Schumpeter’s Creative Destruction are manifestations of the emergent non conscious or intentional self regulation of the system.