In the business world, negative feedback loops and positive feedback loops can be integral components of an effectively managed business. Feedback loops are a powerful concept for growing a business or improving personal effectiveness. In this article, we’ll look at what negative and positive feedback loops are and how you can use them to improve outcomes in your business.
What Is A Feedback Loop?
Before we go any further, let’s stop and ask: what is a feedback loop? Our feedback loop definition is this: a recurring process in a system where some of the system’s normal outputs are fed back into the system as inputs.
Still feeling confused? We don’t blame you. The basic concept of a feedback loop will become much clearer once we consider negative and positive feedback loops separately, alongside some examples. For now, consider a typical commercial exchange. A business produces a product that a customer buys. The output of this exchange is that the business gains money, while the customer gains the product and the benefits that comes with it.
If you ran your business based solely on this exchange, you would run into problems pretty quickly. What if the customer has a problem with the product? What if there’s a defect or design flaw? How can you change your business to create better outcomes in the future? You have to somehow feed the outcome/output back into the business operations. This may sound like an intuitive part of business. But as organizations grow, many find it appropriate to introduce systemic feedback loops so the flow of information back into the system is constant and reliable.
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Negative Feedback Loop
The negative feedback loop is a particular form of a feedback loop where negative outcomes are systematically rerouted into the operations. You might be surprised to learn that a negative feedback loop is not a bad thing. In fact, it is often extremely beneficial for organizations to have one. Let’s look at some negative feedback loop examples.
Negative Feedback Loop Example
One prominent example of the benefits of a negative feedback loop is Best Buy. As the 2000s drew to a close, Best Buy was contending with an onslaught of competition from online electronics retailers. As a result, Best Buy had to do everything possible to improve the in-person customer experience. This is especially true in retail electronics, where many customer interactions involve failing equipment (i.e., negative experiences), but where online service from Amazon et al is lacking. Best Buy made an internal research tool called VOCE, which stands for Voice of Consumers Through Employees. This is essentially a portal that loops negative feedback back into the business and service operations. This saved money, provided Best Buy with excellent market research, and improved Best Buy’s relationship with its customers.
Negative Feedback Mechanism
Best Buy’s VOCE is a particular proprietary negative feedback loop, but most every negative feedback loop has several features in common. The primary step is to actively collect the negative feedback. That information must then be routed back into the decision-making process at the appropriate stage/s of production. The most difficult part of establishing a negative feedback mechanism is to establish an internal culture that actively values – instead of shuns – negative feedback.
Positive Feedback Loop
Positive Feedback Loop Examples
It can be tempting for a business to primarily attend to negative feedback. Every business – maybe especially successful businesses – is vulnerable to overlooking what makes its product successful and unique. It’s important to be in touch with what you’re doing well, not only what you’re doing poorly. It may be obvious that it’s important to understand what customers like and then do more of it in the future. But what’s less obvious is the importance of understanding what is working well for your employees.
One positive feedback loop example focused on employees and the company itself is Microsoft. For most of its history as one of the world’s most profitable companies, Microsoft was known for a toxic internal culture of cutthroat competition and constant stress. In an effort to transform the company, Microsoft hired Satya Nadella as CEO in 2014. Nadella made a conscious effort to promote positive and pro-collective behaviors on the parts of individuals by installing a positive feedback loop. The company documented the shared goals, behaviors, and policies that motivated employees. Then, they tried to focus on increasing these elements of the organization. This helped bring solidarity and cohesion to the organization.
Difference Between Positive and Negative Feedback Loops
In a sense, positive and negative feedback loops are equivalent. Positive feedback loops actively reroute positive outcomes back into the process. Negative feedback loops actively reroute negative outcomes back into the process. In both instances, the system should adapt to the information to produce more/greater positive outcomes and fewer/less negative outcomes in the future.
But they are also different. A negative feedback loop causes a decrease in function, while a positive feedback loop causes an increase. In biology, when a human is hungry, the metabolism slows down, so one can make do with less energy and essentially live longer without food. That’s a negative feedback loop. Blood clotting is a positive feedback loop. More and more platelets are released until bleeding stops at the site of an injury.
What Is Haptic Feedback?
One more advanced way that some companies are exploring feedback loops is in the use of haptic feedback. Of course, you may be wondering: what is haptic feedback? Haptic feedback refers to the use of vibrations and other tactile information to communicate with device users. Have you ever had a premonition that your phone was dead as soon as you picked it up? This is because the battery is no longer powering all the haptic feedback a modern cell phone uses as part of the user experience. All the little vibrations your screen emits in response to your touch are ways your phone is telling you what it thinks you are telling it. This is a feedback loop. The outputs (what your touch tells your phone to do) are broadcast back to you by the phone so you and it are on the same page.
Feedback loops are woven into what it takes to run a successful business. The purpose of feedback loops is growth and increased efficiency – and any successful business owner or consultant knows the immense value of both of those things.
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