Strategic Modelling and Business Dynamics: A Feedback Systems Approach

3.2. The Coordinating Network

Feedback loops are formed when stock and flow networks interact through causal links, in other words when the inflows and outflows of one asset stock depend, directly or indirectly, on the state or size of other asset stocks. In principle, all the stocks and flows in an organisation are mutually dependent because conditions in one area or function may cause or require changes elsewhere. For example, in BBC World Service the more staff employed, the more hours are available for programme making. This extra staff effort results in a gradual increase in programme quality. Better programmes eventually attract more listeners. In this case, the stock of staff affects the inflow to programme quality (an intangible asset) that in turn affects the inflow to the stock of listeners. Coordination is achieved through a network that relays the effect, direct or indirect, of particular stocks on a given flow. The symbols used for the coordinating network are shown on the left of Figure 3.6. A causal link is drawn as an arrow with a solid line, exactly the same as in a causal loop diagram. An information flow is drawn as an arrow with a dotted line. It too depicts an influence of one variable on another, though in a subtly different way.

A converter represents a process that converts inputs into an output and is depicted as a circle. Converters receive causal links or information flows and transform them according to whatever rules, physical laws or operating policies ...