THE IDEA
The bathtub
Picture a bathtub. The water level is a stock - the amount of something accumulated at a point in time. The taps are inflows, adding water. The drain is an outflow, removing it. The water level only changes when the inflows and outflows are different. If water comes in faster than it drains, the level rises. If it drains faster, the level falls. If they’re equal, nothing changes - even though water is rushing through the system.
This is the most fundamental building block in systems thinking. Everything you can point to and measure at a moment in time is a stock: the money in a bank account, the number of people on a team, the trust between two friends, the CO2 in the atmosphere. The things that change those stocks - hiring, spending, emissions, conversations - are flows.
The reason this matters is simple but easy to miss: you can only change a stock by changing its flows. You can’t instantly fill a bathtub. You can’t instantly build trust. You can’t instantly reduce a backlog. Stocks have memory and momentum, which is why systems resist sudden change and why so many plans fail when they assume things can shift overnight.
IN PRACTICE
Taps, drains, and what people forget
A company’s headcount is a stock. Hiring is the inflow, attrition is the outflow. When attrition creeps up and hiring stays flat, the team shrinks - but slowly, month by month, in a way that’s easy to ignore until suddenly there aren’t enough people to do the work. The stock was draining the whole time. Nobody noticed because they were watching the tap, not the drain.
A reservoir is the classic physical example. Rain and river flows fill it; consumption and evaporation empty it. During a dry summer, water companies don’t run out of water because it stops raining - they run out because withdrawals exceed replenishment for long enough that the stock drops below usable levels. The crisis isn’t a single event. It’s a slow accumulation of small daily deficits.
Your energy is a stock too. Sleep, rest, and things you enjoy are inflows. Work, stress, and obligations are outflows. Most people manage this instinctively when the balance is roughly even. But when the outflows exceed the inflows for weeks or months - a tough project, a family crisis, a relentless schedule - the stock depletes in a way that a single good weekend can’t refill. Recovery is a flow, and flows take time.
WORKING WITH THIS
Watch the levels, not just the taps
When something feels stuck or out of control, ask: what’s the stock here, and what are its inflows and outflows? Draw it out, even roughly. A box for the stock, arrows in for inflows, arrows out for outflows. This alone often reveals why a situation isn’t responding to your efforts - you might be adjusting one flow while a bigger one is working against you.
Pay special attention to outflows. People naturally focus on inflows - hiring, revenue, new customers - because those feel active and positive. Outflows often happen quietly in the background: staff leaving, customers churning, goodwill eroding. If you only track what’s coming in, you can be adding hard and still losing ground.
The other thing to watch for is the difference between a stock and a flow. It sounds obvious, but people confuse them all the time. Revenue is a flow (money coming in per month). Cash in the bank is a stock (how much you have right now). A team can have strong revenue and still go broke if the outflows are bigger. Knowing which one you’re looking at changes what action makes sense.
THE INSIGHT
The level is what matters
You can’t see a stock by looking at a single flow. A rising income means nothing if spending is rising faster. A growing team means nothing if people are leaving just as quickly. The stock is the truth - the flows are just the forces acting on it.
RECOGNITION
Knowing it when you see it
You’re looking at a stocks and flows situation when something is gradually getting better or worse and nobody can point to a single cause. When a problem “crept up on us.” When efforts to improve something seem to make no difference - often because an outflow nobody’s tracking is cancelling out the inflow everyone’s focused on. When someone says “we’re investing heavily in X” but the results don’t show, the question is usually: what’s draining X at the same time?