Feedback Processes: System dynamics modeling focuses on representing two main types of
feedback loops: positive (self-reinforcing) and negative (self-correcting) loops, which influence the
dynamics of a system.
Applications: Successful organizations have utilized system dynamics and management flight
simulators to overcome policy resistance, leading to significant improvements and achieving
extraordinary results. System dynamics has been applied in areas such as market forecasts for
commercial aircraft, clinical trials for pharmaceuticals, management of large-scale projects in
software and aerospace, and strategy development in different industries.
(2010) Sterman – Business dynamics
chapter 5
(2010) Sterman - Business dynamics Chapter 5
§5.1 Causal Diagram Notation
Causal loop diagrams (CLDs) are an important tool for representing the feedback structure
of systems. They are excellent for:
Quickly capturing your hypotheses about the causes of dynamics
Eliciting and capturing the mental models of individuals or teams
Communicating the important feedbacks you believe are responsible for a problem
In a CLD, variables are connected by arrows (also called causal links) denoting the causal
influences among the variables. The important feedback loops are also identified in the
diagram.
A positive loop can also be called a reinforcing loop. When the cause is a rate of flow that
accumulates into a stock then it is also true that the cause adds to the stock. Example: Birth
rate is positively related to the population. An increase in birth rate is added to the stock
(population).
A negative loop can also be called a balancing loop.
An increase in a cause variable does not necessarily mean the effect will actually increase.
Two reasons:
1. A variable often has more than one input. To determine what actually happens you need
to know how all the inputs are changing.
2. Causal loop diagrams do not distinguish between stocks and flows.
Notation with a s or o instead of + and - mean different things. S means that variable X and Y
move in the Same direction, O means that variable X and Y move in Opposite directions.
§5.2 Guidelines for Causal Loop Diagrams
5.2.1 Causation versus Correlation
Every link in your diagram must represent causal relationshipd between the variables.
You must not include correlations between variables. Correlations do not represent
, the structure of the system. A dynamic model must imitate the structure of a real
system well enough that the model behaves the same way the real system would.
5.2.2 Labeling Link Polarity
All links are labelled with a + or - sign and loop polarity identifiers show which loops
are positive and which are negative (Reinforcing or Balancing).
5.2.3 Determining Loop Polarity
Two methods:
1. The fast way: counting the numbers of negative links. If the number of negative links
is even, the loop is positive, and if the number is odd, the loop is negative.
2. The right way: Trace the effect of a change around the loop.If the feedback effect
reinforces the original change, it is a positive loop. If the feedback effect balances the
original change, it is a negative loop.
In some cases, there is not only one polarity that can be assigned to a causal
relationship. When you have trouble assigning a clear and unambiguoug polarity to a
link it usually means there is more than one causal pathway connecting the two
variables.
5.2.4 Name Your Loops
Naming the loops helps your audience understand the function of each loop and
provides useful shorthande for discussion. Naming loops starts with R1, R2, B1 or B2
for example.
5.2.5 Indicate Important Delays in Causal Links
Delays are critical in creating dynamics. Your causal diagram should inclusde delays
that are important to the dynamic hypothesis or significant relative to your time
horizon. Delays always involve stock and flow structures.
5.2.6 Variable Names
Variable names should be nouns or noun phrases
Variable names must have a clear sense of direction
Choose variables whose normal sense of direction is positive
5.2.7 Tips for Causal Loop Diagram Layout
Some basis principles of graphic design to follow when making a causal loop diagram
1. Use curved lines for information feedback since it helps the reader visualize.
2. Make important loops follow circular paths
3. Organize your diagrams to minimize crossed lines
4. Don't put circles, hexagons, or other symbols around the variables in causal
diagrams.
5. Repeat. You often won't know what all the variables and loops will be when you
start, so you often have to start over when creating you causal loop diagram.
5.2.8 Choose the Right Level of Aggregation
feedback loops: positive (self-reinforcing) and negative (self-correcting) loops, which influence the
dynamics of a system.
Applications: Successful organizations have utilized system dynamics and management flight
simulators to overcome policy resistance, leading to significant improvements and achieving
extraordinary results. System dynamics has been applied in areas such as market forecasts for
commercial aircraft, clinical trials for pharmaceuticals, management of large-scale projects in
software and aerospace, and strategy development in different industries.
(2010) Sterman – Business dynamics
chapter 5
(2010) Sterman - Business dynamics Chapter 5
§5.1 Causal Diagram Notation
Causal loop diagrams (CLDs) are an important tool for representing the feedback structure
of systems. They are excellent for:
Quickly capturing your hypotheses about the causes of dynamics
Eliciting and capturing the mental models of individuals or teams
Communicating the important feedbacks you believe are responsible for a problem
In a CLD, variables are connected by arrows (also called causal links) denoting the causal
influences among the variables. The important feedback loops are also identified in the
diagram.
A positive loop can also be called a reinforcing loop. When the cause is a rate of flow that
accumulates into a stock then it is also true that the cause adds to the stock. Example: Birth
rate is positively related to the population. An increase in birth rate is added to the stock
(population).
A negative loop can also be called a balancing loop.
An increase in a cause variable does not necessarily mean the effect will actually increase.
Two reasons:
1. A variable often has more than one input. To determine what actually happens you need
to know how all the inputs are changing.
2. Causal loop diagrams do not distinguish between stocks and flows.
Notation with a s or o instead of + and - mean different things. S means that variable X and Y
move in the Same direction, O means that variable X and Y move in Opposite directions.
§5.2 Guidelines for Causal Loop Diagrams
5.2.1 Causation versus Correlation
Every link in your diagram must represent causal relationshipd between the variables.
You must not include correlations between variables. Correlations do not represent
, the structure of the system. A dynamic model must imitate the structure of a real
system well enough that the model behaves the same way the real system would.
5.2.2 Labeling Link Polarity
All links are labelled with a + or - sign and loop polarity identifiers show which loops
are positive and which are negative (Reinforcing or Balancing).
5.2.3 Determining Loop Polarity
Two methods:
1. The fast way: counting the numbers of negative links. If the number of negative links
is even, the loop is positive, and if the number is odd, the loop is negative.
2. The right way: Trace the effect of a change around the loop.If the feedback effect
reinforces the original change, it is a positive loop. If the feedback effect balances the
original change, it is a negative loop.
In some cases, there is not only one polarity that can be assigned to a causal
relationship. When you have trouble assigning a clear and unambiguoug polarity to a
link it usually means there is more than one causal pathway connecting the two
variables.
5.2.4 Name Your Loops
Naming the loops helps your audience understand the function of each loop and
provides useful shorthande for discussion. Naming loops starts with R1, R2, B1 or B2
for example.
5.2.5 Indicate Important Delays in Causal Links
Delays are critical in creating dynamics. Your causal diagram should inclusde delays
that are important to the dynamic hypothesis or significant relative to your time
horizon. Delays always involve stock and flow structures.
5.2.6 Variable Names
Variable names should be nouns or noun phrases
Variable names must have a clear sense of direction
Choose variables whose normal sense of direction is positive
5.2.7 Tips for Causal Loop Diagram Layout
Some basis principles of graphic design to follow when making a causal loop diagram
1. Use curved lines for information feedback since it helps the reader visualize.
2. Make important loops follow circular paths
3. Organize your diagrams to minimize crossed lines
4. Don't put circles, hexagons, or other symbols around the variables in causal
diagrams.
5. Repeat. You often won't know what all the variables and loops will be when you
start, so you often have to start over when creating you causal loop diagram.
5.2.8 Choose the Right Level of Aggregation
