Amazon is a classic example of a company that has benefitted from positive feedback loops as they grew their market share of retail sales, their Prime customer base, their marketplace of third-party sellers, their advertising business, Prime Video, and warehousing/delivery logistics including fulfillment by Amazon. We can apply this idea of tension between positive and negative feedback to various industries that have been impacted by technological disruption over the last two to three decades. Sometimes hyper growth can go on for a VERY long time because the opportunity is so vast. Sometimes there’s no negative feedback loop to check the new variable’s growth, which leads to hyper growth and flame out. We’d argue that when a company comes into a large, existing market with a disruptive product or business model, it’s very similar to someone releasing a non-native Burmese python into the Everglades: a new variable in a complex system changes the nature of the overall system in a nonlinear fashion. Positive feedback sets things in motion through self-reinforcement, while negative feedback ensures stability against disruptions and excesses. In the world and in companies, we observe the same thing. As python numbers have grown, wildlife sightings have fallen some 90%. Their inclusion at the top of the food chain has significant nonlinear implications for the ecosystem. We see something similar happening with the invasion of non-native Burmese pythons in the Everglades. Then their population growth will come to a crashing halt. They will continue to prey on susceptible pine trees until there is literally no more food left. Due to the loss of extended cold winters (which normally act as the negative feedback loop), pine beetles find their growth unchecked. For example, the pine beetle ravaging the forests of the Rocky Mountains represents a classic positive feedback loop. In nature, we see positive and negative feedback loops with regularity. In our 2014 paper Complexity Investing we wrote: minivan etc.) are all real-world needs that push back on the obvious reasons for EV adoption. Take EVs for example: there is a steady growth in demand for electric vehicles however, people only buy new cars when they need them, and charging infrastructure, battery range, cost, lithium mining/refining capacity, and form factor requirements (sedan vs. This push-pull scenario is very common when industries go from analog to digital. Positive feedback cycles are the self-reinforcing attributes whereby growth begets more growth (e.g., network effects), while negative feedback is the stubborn, real-world challenges that offer resistance to unbounded growth. One of the ways that complex adaptive systems teach us to envision the world is through the ongoing opposition of positive and negative feedback loops. When Positive and Negative Feedback Loops Collide The following essay is from SITALWeek # 379:
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