Analyse Systems with Causal Loop Diagrams

Vithanco got a new diagram type. The Casual Loop Diagrams.

Why using Causal Loop Diagrams (CLDs)?

Causal Loop Diagrams (CLDs) are a way to capture systems, to analyse them and to plan how to influence them. CLDs explain long-term behaviour of systems which is otherwise difficult to understand based if you only look at the current as-is snapshot.

CLDs describe systems via “stocks” (nodes) and connections (edges). Much of the day-to-day world can be accurately described as such a system. Let’s look at a simple example: A bank account and the interest earned.

Banking Account as a simple Causal Loop Diagram
  • The amount of the Bank Balance (a stock) will affect the amount of the Earned Interest (another stock), as represented by the connection, pointing from Bank Balance to Earned Interest.
  • Since an increase in Bank balance results in an increase in Earned Interest, this link is of the same kind, meaning more results in more. Interestingly, this even works for a negative amount in your bank account.
  • The Earned interest gets added to the Bank balance, also a link of the same kind, represented by the bottom connection.
  • The causal effect between these nodes forms a positive reinforcing loop, represented by the icon in the middle containing an “R” and showing the loop direction (clockwise).

This system is obviously only a part of bigger system that would include salary payments and withdrawals to live. But if left alone, the reinforcing loop points out that this system would lead to an uninterrupted growth of the two stocks involved.

A CLD is very useful to identify the loops that affect the systems’ behaviour. Especially the separation between balancing and reinforcing loops provides meaningful insights into a system’s behaviour as shown in the following table.

Loop Type Description
Balancing Balancing loops have an odd number of opposite connections (negative links).
Balancing loops are associated with reaching a plateau.
Reinforcing Reinforcing loops have an even number of opposite connections (negative links, please note that zero also is even).
Reinforcing loops are associated with exponential increases/decreases.

The example above with the bank account and the interest earned has a reinforcing loop, which based on compound interest does indeed show an exponential increase.

Loops are automatically identified by Vithanco.

Background on CLDs

Extensive research was done regarding systems (see as a starting point: Donella Meadows’ Thinking in Systems) as part of a body of knowledge called systems thinking. One interesting way of accessing systems thinking knowledge is by learning about the so-called archetypes.

Learn more about Vithanco’s implementation of CLDs here.

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