The real world is loaded with feedback loops. They’re a critical part of healthy, constructive systems. Your organization must build them, listen to them, and exploit them to out-perform the market and competitors.
Many of the greatest works of genius in the past 300 years are based on understanding feedback loops:
- James Watt – the steam engine
- Adam Smith – economics
- Charles Darwin – adaptation to environment
- Claude Hopkins – advertising
- Maria Montessori – education
- John Boyd – warfare (OODA loop)
- Edwards Deming – quality in manufacturing
- US Constitution framers – distribution of government power
You can readily observe the problems caused by feedback loop break-down. Cancer cells run amuck rather than growth limited by normal feedback signals. Blood sugar levels spike and stay high because a diabetic doesn’t have insulin levels to direct cells to pull sugar out of the bloodstream. Predator and prey cycles are amplified when humans take out the predators. Businesses over-stock inventory because the signals of decreasing demand aren’t received (and acted upon). Tyranny happens when a political leader has no countering feedback about his plans.
A common set of runaway problems are fundamentally about breaking feedback loops by introducing a 3rd party payer. Student loan debt soared in the US after Congress made federal student loans non-dischargeable (can’t use bankruptcy) and federalized all student loans. There is the related case of costs of college tuition skyrocketing because of 3rd party payment systems. Health care costs explode when an insurance company (or a government entity) pays instead of the patient. All began with sincere intentions. None have significantly changed because the bureaucracy won’t embrace feedback or change.
The greatest human-caused disasters have spun from a desire to rule through ideas absent any feedback loops: communism, socialism, fascism, crony capitalism (completely different than free-market economics). Ideology is considered much more powerful than reality.
Let me come down to your leadership, rather than the real-but-abstract that you don’t directly influence.
Your key question should be “Where best to put feedback loops into our business?”
The key principle: Put the responsibility for designing, collecting, and responding to feedback as low in the organization as possible.
Operations: Violate this rule and the operational parts of your organization will experience spiraling costs and inefficiencies because there is no feedback loop at levels where things are small and immediate. The CEO and board of directors getting feedback is much less useful because of the length of the cause and effect loops.
New products and services: Design feedback early and often is critical to success. It’s a foundation of Lean Startup methodology.
Leading professionals: People management and coaching for performance thrives on immediacy (time and space) of feedback. Professionals crave it.
Again, build feedback loops, listen to them, and exploit them to out-perform the market and competitors.
HT: This was inspired by comments from Perry Marshall and Tom Meloche.
