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Book : Business Dynamics: Systems Thinking and Modelling for a Complex World (2000)

Summary

From the publisher:

Accelerating economic, technological, social, and environmental change challenge managers and policy makers to learn at increasing rates, while at the same time the complexity of the systems in which we live is growing.  Many of the problems we now face arise as unanticipated side effects of our own past actions.  All too often the policies we implement to solve important problems fail, make the problem worse, or create new problems.

Effective decision making and learning in a world of growing dynamic complexity requires us to become systems thinkers to expand the boundaries of our mental models and develop tools to understand how the structure of complex systems creates their behavior.

This book introduces you to system dynamics modeling for the analysis of policy and strategy, with a focus on business and public policy applications.  System dynamics is a perspective and set of conceptual tools that enable us to understand the structure and dynamics of complex systems.  System dynamics is also a rigorous modeling method that enables us to build formal computer simulations of complex systems and use them to design more effective policies and organizations.  Together, these tools allow us to create management flight simulators–microworlds where space and time can be compressed and slowed so we can experience the long-term side effects of decisions, speed learning, develop our understanding of complex systems, and design structures and strategies for greater success.

Content / Structure

Part I Perspective and Process

1 Learning in and About Complex Systems

• 1.1 Introduction
• 1.2 Learning is a Feedback Process
• 1.3 Barriers to Learning
• 1.4 Requirements for Successful Learning in Complex Systems
• 1.5 Summary

2. System Dynamics in Action

• 2.1 Applications of System Dynamics
• 2.2 Automobile Leasing Strategy: Gone Today, Here Tomorrow
• 2.3 On Time and Under Budget: The Dynamics
• 2.4 Playing the Maintenance Game
• 2.5 Summary: Principles for Successful Use of System Dynamics

3 The Modeling Process

• 3.1 The Purpose of Modeling: Managers as Organization Designers
• 3.2 The Client and the Modeler
• 3.3 Steps of the Modeling Process
• 3.4 Modeling is Iterative
• 3.5 Overview of the Modeling Process
• 3.6 Summary

4 Structure and Behavior of Dynamic Systems

• 4.1 Fundamental Modes of Dynamic Behavior
• 4.2 Interactions of the Fundamental Modes
• 4.3 Other Modes of Behavior
• 4.4 Summary

Part II Tools for Systems Thinking

5 Causal Loop Diagrams

• 5.1 Causal Diagram Notation
• 5.2 Guidelines for Causal Loop Diagrams
• 5.3 Process Point: developing Causal Diagrams
• 5.4 Conceptualization Case Study: Managing Your Workload
• 5.5 Adam Smith's Invisible Invisible Hand and the Feedback Structure of Markets
• 5.6 Explaining Policy Resistance: Traffic Congestion
• 5.7 Summary

6 Stocks and Flows

• 6.1 Stocks, Flows and Accumulation
• 6.2 Identifying Stocks and Flows
• 6.3 Mapping Stocks and Flows
• 6.4 Summary

7 Dynamics of Stocks and Flows

• 7.1 Relationship Between Stocks and Flows
• 7.2 System Dynamics in Global Warming
• 7.3 System Dynamics in Action: The War on Drugs
• 7.4 Summary

8 Closing the Loop

• 8.1 First-Order Systems
• 8.2 Positive Feedback and Exponential Growth
• 8.4 Multiple Loop Systems
• 8.5 Non-Linear First Order Systems: S-Shaped Growth
• 8.6 Summary

Part III The Dynamics of Growth

9 S-Shaped Growth: Epidemics, Innovation Diffusion, and the Growth of New Products

• 9.1 Modeling S-Shaped Growth
• 9.2 Dynamics of Disease: Modeling Epidemics
• 9.3 Innovation Diffusion as Infection: Modeling New Ideas and New Products
• 9.4 Summary

10 Path Dependence and Positive Feedback

• 10.1 Path Depdendence
• 10.2 A SImple Model of Path Dependence: The Polya Process
• 10.3 Path Dependence in the Economy: VHS Versus Betamax
• 10.4 Positive Feedback: The Engine of Corporate Growth
• 10.5 Positive Feedback, Increasing Returns, and Economic Growth
• 10.6 Does the Economy Lock in to Inferior Technologies?
• 10.7 Limits to Lock In
• 10.8 Modeling Path Dependence and Standards Formation
• 10.9 Summary

Part IV Tools for Modelling Dynamic Systems

11 Delays

• 11.1 Delays: An Introduction
• 11.2 Material Delays: Structure and Behavior
• 11.3 Information Delays: Structure and Behavior
• 11.4 Respone to Variable Delay Times
• 11.5 Estimating the Duration and Distribution of Delays
• 11.6 System Dynamics in Action: Forecasting Semiconductor Demand
• 11.7 Mathematics of Delays: Koyck Lags and Erlang Distributions
• 11.8 Summary

12 Coflows and Aging Chains

• 12.1 Aging Chains
• 12.2 Coflows: Modeling the Attributes of a Stock
• 12.3 Summary

13 Modelling Decision Making

• 13.1 Principles for Modeling Decision Making
• 13.2 Formulating Rate Equations
• 13.3 Common Pitfalls
• 13.4 Summary

14 Formulating Nonlinear Relationships

• 14.1 Table Functions
• 14.2 Case Study: Cutting Corners Versus Overtime
• 14.3 Case Study: Estimating Nonlinear Functions with Qualitative and Numerical Data
• 14.4 Common Pitfalls
• 14.5 Eliciting Model Relationships Interactively

15 Modeling Human Behavior: Bounded Rationality or Rational Expectations

• 15.1 Human Decision Making: Bounded Rationality or Rational Expectations?
• 15.2 Cognitive Limitations
• 15.3 Individual and Organizational Responses to Bounded Rationality
• 15.4 Intended Rationality
• 15.5 Case Study: Modeling High-Tech Growth Firms
• 15.6 Summary

16 Forecasts and Fudge Factors: Modeling Expectation Formation

• 16.1 Modeling Expectation Formation
• 16.2 Case Study: Energy Consumption
• 16.3 Case Study: Commodity Prices
• 16.4 Case Study: Inflation
• 16.5 Implications for Forecast Consumers
• 16.6 Initialization and Steady State Response of the TREND Function
• 16.7 Summary

Part V Instability and Oscillation

17 Supply Chains and the Origin of Oscillations

• 17.1 Supply Chains in Business and Beyond
• 17.2 The Stock Management Problem
• 17.3 The Stock Management Structure
• 17.4 The Origin of Oscillations

18 The Manufacturing Supply Chain

• 18.1 The Policy Structure of Inventory and Production
• 18.2 Interactions Among Supply Chain Partners
• 18.3 System Dynamics in Action: Reengineering the Supply Chain in a High-Velocity Industry
• 18.4 Summary

19 The Labor Supply Chain and the Origin of Business Cycles

• 19.1 The Labor Supply Chain
• 19.2 Interactions of Labor and Inventory Management
• 19.3 Inventory-Workforce Interactions and the Business Cycle
• 19.4 Summary

20 The Invisible Hand Sometimes Shakes: Commodity Cycles

• 20.1 Commodity Cycles: From Aircraft to Zinc
• 20.2 A Generic Commodity Market Model
• 20.3 Application: Cycles in the Pulp and Paper Industry
• 20.4 Summary

Part VI Model Testing

21 Truth and beauty: Validation and Model Testing

• 21.1 Validation and Verification Are Impossible
• 21.1 Questions Model Users Should Ask - But Usually Don't
• 21.3 Pragmatics and Politics of Model Use
• 21.4 Model Testing In Practice
• 21.5 Summary

Part VII Commencement

22 Challenges for the Future

• 22.1 Theory
• 22.2 Technology
• 22.3 Implementation
• 22.4 Education
• 22.5 Applications

Appendix A Numerical Integration

Appendix B Noise

References

Index

Copyright 2000 by the McGraw-Hill Companies, Inc.

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