What makes learning about systems worthwhile is this key insight by Donella Meadows in Thinking in Systems:

Systems with similar feedback structure produce similar dynamic behaviours

The determinant of a system’s behaviour is its function or purpose. As Charlie Munger would put it —

Show me the incentives, and I’ll show you the outcomes

Here’s a framework of systems. For a more complete introduction, check out Thinking in Systems. I can’t recommend this book enough!

The competing loops

In every case, we have two or more loops pulling our system in different directions, towards different goals.

Both balancing and reinforcing loops are goal-seeking. The difference is the type of goal. Both have goals in opposite directions, hence the competition.

At any point, the system is moving towards one goal, or is in equilibrium. The loop moving the entire system to its goal is the dominant loop.

Given enough time, the dominant loop keeps changing. This concept of changing loops is shifting dominance.

With the definitions out of the way, we can get into the interesting parts — actually exploring a system!

The Population cycle

Time for a thought experiment. How does population work?

What can you see affecting the size of the population?

Births and deaths.

More births leads to a higher population — which leads to even more births! A reinforcing loop.

More deaths lead to a smaller population — which leads to a smaller number of deaths! A balancing loop.

Together, they form the population cycle.

If the population is moving up, births are the dominant loop.

If the population is moving down, deaths are the dominant loop.

If the population is constant, the system is in equilibrium.

The Investment cycle

The legendary Ray Dalio explains how the economic machine works.

Can you see the loops involved?

Shifting dominance

The loop that’s dominant now, might not be dominant always.

It leads to complexities, since now you’re trying to understand the trend of the system. In money markets, it’s all about the loop dominance — is the market going up or down? When will the dominance change? When moon, when lambo?

Who is in control of the system? The better you understand the system, the better you can answer that. The better you know how the system behaves over time, the better off you’ll be.

Delays

What happens when the feedback is delayed?

Another thought experiment. Imagine you’re a car sales manager. You order new cars every week based on how many cars you need to make 30 total every week. That’s your balancing feedback loop.

You start with a 30 cars. Sell 20 the first week, order 20. Sell 5 the next week, order 5. Sell 15 the next week, order 15. You end up with 30 every week, your expected stock. All’s good.

Things don’t work that way in real life though. There’s a delay between when you order and when the cars come to you. Let’s say it takes a week for the cars to come to you. What happens then?

You start with 30 cars. Sell 20 the first week, order 20. Total cars at 10. Sell 5 the next week, order 25, since you only have 5 cars left. Your 20 order shipment comes in, total at 25. You sell 15, total goes down to 10 and you order 20. The next week, your shipment comes in for the 25 cars. Now you have 35 cars.

See the pattern? It’s an oscillation.

Image from Donella Meadows — Thinking in Systems

Does this help you see the systems now? Everything is a system.

Do you get frustrated with fixing the hot-cold level in the bath? That’s a system with delays. You’ve got to wait for the water to get from the geyser to the shower head before making the next decision.

Coming back to the system where it all began for me,

The weight loss system.

Your inputs to the system, the body, is what you eat and what you don’t eat.

The output is poop and sweat. Since that’s hard to measure, we use a proxy, the weight of the body as a metric for healthiness. I’ve been tracking my weight everyday for the past few months.

The numbers for days: day since birth

There are three ways I’m establishing root cause —

Thought experiments Medical research Real world experiments

The in-depth analysis, working through this feedback loop, how to understand a complex system, I’ll leave for another post.

I’m still figuring things out with my body — over the past year, I got a 4 pack, changed countries, went back to a family pack, and now, with a homely 2 pack — I think weight isn’t the best metric to judge health.