For example, money in a savings account generates interest, which increases the balance in the savings account and earns more interest.īalancing loops, in contrast, counter change in one direction with change in the opposite direction. In a reinforcing loop, change in one direction is compounded by more change. In systems thinking, there are two basic types of causal loops: reinforcing and balancing. Once you have completed all of the links in the loop, you want to determine what type of behavior it will produce. For example, the HR team noticed that, as the resistance by middle managers increased, the number of TQM activities decreased, which would be indicated by an “o.”Īt this point, the causal “story” consists of two causal loops that are linked through the common variable “TQM Activities.” If variable B changes in a direction opposite of A (i.e., as A increases, B decreases), the link from A to B should be labeled with an “o” (or “-“). However, as TQM activities increased, the perceived threat of these activities also increased (another “s” link), which led to resistance by middle managers (another “s” link). Similarly, as training increased, it generated even more TQM activities-another “s” link. In the TQM story, the team noticed that in the beginning, TQM activities generated demand for TQM training-as activities went up, training went up (indicated by an “s” link). If variable B moves in the same direction as variable A, the link from variable A to B would be labeled with an “s”(or “+”). In the language of systems thinking, links are labeled with either an “s” or an “o.” Once you have identified the variables, the next step is to fill in the “verbs,” by linking the variables together and determining how one variable affects the other. Upon further conversation, the team also agreed that the “Perceived Threat” of the new program was an important element, as was the “Resistance by Middle Managers” and their willingness to change. In the TQM example, “TQM Activities” and demand for TQM Training” are important elements of the story. Remember, a variable is something that can vary over time. The first step in creating a causal “story” is to identify the nouns-or variables-that are important to the issue. But over time, the TQM programs seemed to produce diminishing results, and interest in TQM activities slacked. There were also some well-publicized successes in several local line teams. In the beginning, there was much enthusiasm around the program, and demand for training was high. Take the example of an HR team that has been responsible for integrating a Total Quality approach in an organization. By representing a problem or issue from a causal perspective, you can become more aware of the structural forces that produce puzzling behavior.īy linking together several loops, you can create a concise story about a particular problem or issue. By linking together several loops, you can create a concise story about a particular problem or issue.Ī causal loop diagram consists of four basic elements: the variables, the links between them, the signs on the links (which show how the variables are interconnected), and the sign of the loop (which shows what type of behavior the system will produce). Within that framework, causal loop diagrams can be thought of as sentences that are constructed by identifying the key variables in a system (the “nouns”) and indicating the causal relationships between them via links (the “verbs”). Systems thinking has been described as a language for talking about the complex, interdependent issues managers face every day.