Feedback Loops occur when outputs of a process become inputs for the next cycle. This can amplify or counteract outcomes. For financial inclusion, Feedback Loops can help organisations align processes with their mission and goals.
Feedback Loops exist whenever the output of a process produces inputs for the next cycle of that process. Depending on the type of process, the feedback loops can vary.
As a result of the process, data is gathered
Collected data is stored and consolidated
Stored data is analysed
Information resulting from analysis is compiled into reporting
Based on the reports, decisions are made
Decision making is put into action through:
Amplify or reinforce changes in a system, creating a cycle where an initial change triggers additional changes in the same direction, often leading to exponential growth or decline in outcomes.
Counteract or stabilise changes, creating a self-regulating system that maintains equilibrium by pushing back against deviations.
Effective organisations strategically design Feedback Loops to align processes with the organisational mission.
It's crucial to understand how feedback loops work, how to spot them, and where they might be broken. Positive feedback loops can amplify both good and bad outcomes - they make the strong stronger and the weak weaker.
Negative feedback loops can act as guardrails, preventing problems from escalating, but they might also block innovation and progress. When designing financial services for underserved communities, we need robust systems to diagnose where these feedback mechanisms need adjustment.
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