In his book, Strategic Modeling and Business Dynamics, John Morecroft (2015) uses the system of violent drug crime as a model to explain how a causal loop works. The focus of the scenario is on reducing drug-related crime and how the system of drugs, law enforcement, and those involved with the drugs perpetuate drug-related crimes in an escalating fashion.
The model begins with an increased call for police action in response to the increasing drug-related crimes. This call for police action leads to an increase in drug seizures, which leads to a decrease in supply. As the supply goes down and demand increases, the price goes up. Since the clientele for drugs are addicts, price does not necessarily deter individuals from purchasing drugs, it increases drug-related crimes in order to provide the resources for addicts to make the purchase. Morecroft’s (2015) use of a causal loop reveals how police action to seize drugs actually increases the problem of drug-related crimes.
Causal loops are a simple, yet powerful, tool for leaders to use to understand the systems that determine their success or failure. Causal loop diagrams are a powerful conceptual tool used to visualize interdependencies and take a strategic overview of operations (Morecroft, 2015) to make sense of complex systems. Using causal loop diagrams provide a language for articulating an understanding of the dynamic interconnected nature of the world that determines success (Kim, 1992). Too often what seems like an obvious fix to a problem, such as seizing the drugs, can actually perpetuate the problem. Only through a complete understanding of the systems at hand can leaders make sound decisions, and the causal loop diagram can provide such understanding.
Kim, D. H. (1992). Guidelines for Drawing Causal Loop Diagrams. The Systems Thinker, vol. 3(iss. 1), pp. 5–6.
Morecroft, J. D. W. (2015). Strategic modeling and business dynamics: a feedback systems approach (Second edition). Hoboken, New Jersey: John Wiley & Sons, Inc.