Description: The way of the world has been with open looped systems for almost as long as we have had computers. In an open looped system, a decision is made, is announced to the world at large, and the results take place in the market place. The results that have occurred in the market place are then measured by the open loop systems. There are many examples of open looped systems, such as
+ offering a new type of insurance policy for bicycle
riders
+ changing the price of Cherry Garcia at 31 Flavors
+ lowering interest rates for new home loans
+ restricting first class upgrades on United Airlines toemployees only, and so forth.
In an open looped system, a decision is made, and activity is undertaken, and the world reacts. The success or failure of the open looped system is measured by operational systems that record the subsequent interaction with the customer or consumer. There is no tight control of the sale or the customer as the results of the business decision are manifested in the market place. Business just happens “as usual” in an open loop system.
Closed loop systems are quite different from open loop systems. In a closed loop system, a decision is made, then the decision is disclosed to a mass of customers, typically (but not necessarily) through the Internet. In a closed loop system the organization making the decision is well aware of who the customer is and what reaction the customer has to the decision being made. There is very precise and immediate feedback from the customer to the business as a result of the closed loop.
