Reinforcing Feedback

REINFORCING FEEDBACK: DISCOVERING HOW SMALL CHANGES CAN GROW

If you are in a reinforcing feedback system, you may be blind to how small actions can grow into large consequences—for better or for worse. Seeing the system often allows you to influence how it works.

For example, managers frequently fail to appreciate the extent to which their own expectations influence subordinates’ performance. If I see a person as having high potential, I give him special attention to develop that potential. When he flowers, I feel that my original assessment was correct and I help him still further. Conversely, those I regard as having lower potential languish in disregard and inattention, perform in a disinterested manner, and further justify, in my mind, the lack of attention I give them.

Robert Merton identified this phenomenon as the “self-fulfilling prophecy.”8 It is also known as the “Pygmalion effect,” after the famous George Bernard Shaw play (later to become My Fair Lady). Shaw in turn had taken his title from Pygmalion, a character in Greek and Roman mythology, who believed so strongly in the beauty of the statue he had carved that it came to life.

Pygmalion effects have been shown to operate in countless situations.9 An example occurs in schools, where a teacher’s opinion of a student influences the behavior of that student. Jane is shy and does particularly poorly in her first semester at a new school (because her parents are fighting constantly). This leads her teacher to form an opinion that she is unmotivated. Next semester, the teacher pays less attention to Jane and she does poorly again, withdrawing further. Over time, Jane gets caught in an ever-worsening spiral of withdrawal, poor performance, labeling by her teachers, inattention, and further withdrawing. Thus, students are unintentionally “tracked” into a high self-image of their abilities, where they get personal attention, or a low self-image, where their poor classwork is reinforced in an ever-worsening spiral.

In reinforcing processes such as the Pygmalion effect, a small change builds on itself. Whatever movement occurs is amplified, producing more movement in the same direction. A small action snowballs, with more and more and still more of the same, resembling compounding interest. Some reinforcing (amplifying) processes are “vicious cycles,” in which things start off badly and grow worse. A “gas crisis” is a classic example. Once word that gasoline is becoming scarce gets out it sets off a spate of trips to local service stations, to fill up. Once people start seeing lines of cars, they are convinced that the crisis is here. Panic and hoarding then set in. Before long, everyone is “topping off” their tanks when they are only one-quarter empty, lest they be caught when the pumps go dry. The same thing happens when there is a run on food or water before a major storm and people expect power to be out and normal supplies to disappear. A run on a bank is another example, as is a panic to sell off a type of stock when the word gets out that values are falling. All are escalation structures where small moves in an undesirable direction set off a reinforcing spiral.

But there’s nothing inherently bad about reinforcing loops. There are also virtuous cycles—processes that reinforce in desired directions. For instance, physical exercise can lead to a reinforcing spiral; you feel better, thus you exercise more, thus you’re rewarded by feeling better and exercise still more. Reinforcing spirals can also contribute to the growth of a new product. For example, many products grow from “word of mouth.” Word of mouth about a product can reinforce a snowballing demand (as occurred with the Volkswagen Beetle and the iPod) as satisfied customers tell others who then become satisfied customers, who tell still others. Networked devices can add another reinforcing dynamic when sharing works best among people using compatible devices or services.

Here is how you might diagram the positive word-of-mouth process that drives growth in sales and satisfaction: