Results of an ongoing study investigating the effect of different task feedback characteristics on human performance are reported. In a computer-assisted experiment, subjects were asked to perform a dynamic stock-adjustment control. A subject's control action enters the system in two ways: it effects the stock to be adjusted and it feeds back on the disturbance that impinges on the system. The latter effect is varied with respect to its strength and its delay. The major finding that emerges from the experiment is that increasing strength in the feedback link (in either a positive or negative direction) worsens performance. An effect of delay length on performance could not be shown.
The use of gaming to study contemporary warfare has evolved rapidly in recent years. Particularly important strides were taken during the 1960's and 1970's with advances in computer technology and the development of broader ranges of subject matter. The past two decades have seen a tremendous expansion in the role and influence of computer models as “policy assisting” devices – first in the analysis of national security issues, and now for the analysis of problems arising throughout the entire affairs of Government.
The costs associated with liability in the United States are rising dramatically and persistently. Escalating medical malpractice premiums threaten the scope and availability of health care in many states. Increasing costs for automobile insurance have led to public referenda to cap premiums, in turn driving insurers out of practice in some states. Runaway litigation costs prompting calls for major revisions in liability stautes and the whole tort liability system.Over the past two years, two independent system dynamics studies of the rising costs of liability insurance have been conducted. One study focused on forces driving rising settlement costs within a leading property and liability insurance provider. That study has resulted in a learning laboratory to help managers throughout the firm form a more systemic perspective on how established policies and practices within the firm might contribute to rising costs. The other study, done for the New York State Insurance Department looked at the problem of medical malpractice from a statewide regulatory perspective. It was designed to provide help to the state legislature in setting the state's policy on rates over the next three years.This paper assembles some of the work done in these two independent studies, reports on their findings, and discusses their policy implications. Of particular interest are implications of the internal and external system dynamics perspectives on the problem- where they agree, where they disagree and where they help illuminate each other.
Apparently the electricity sector of Argentina has suffered in the past from excessive capacity planning, owing to overoptimistic forecasts of demand growth rate. But because of the long delays involved and lack of financial backing this advantage has been progressively lost. The present official planning only provides for renovation and demographic growth, not allowing for economic growth. Therefore, the actual supply-demand balance of electricity can easily be worn away by technical obsolescence and aging process of the actual installed capacity of electricity production.The problem behaviour arises when the timing of new capacity investment is delayed, falling behind the programmed schedule of new plants, without being able to meet the electricity demand. This could happen mainly due to political prices well below costs because of the inflation and or social subsidization, which leads, in turn, to the discapitalization of the sector, that still remains nationalized. A system dynamics model is used to explore the trade-off between construction delays (which entails costs of unsatisfied demand) and construction speed up (which entails financial costs).
System dynamics models are typically created using multiple streams of information including quantitative data, written records, and information contained in mental models of both individuals and groups. While qualitative sources of information are widely recognized as important in all stages of the model building process, little systematic research has been completed how best to elicit and map this knowledge. In this paper, we survey the existing literature on mapping and eliciting knowledge for system dynamics modeling and also explore this literature in the broader fields of cognitive psychology and small group processes. Special attention is paid to new software advances to support these processes.
People of different nations often meet with the intent of destroying each other with the technology and techniques of modern warfare. This has come to be the reality of modern politics. Yet mass warfare has not been a permanent fixture throughout the history of mankind. In this paper, an attempt is made to gain a better understanding of what caused the transition from localized tribal feuding.
:The primary focus of the research reported in this paper was on the measurement of the value of information in the business firm. It involved development of a system dynamic model of a typical business firm and calibration of the model to an average firm in the can industry in the United States. The model has the five sectors of marketing, finance, production, research and development, and personnel. Data to calibrate the model came primarily from the Industrial Compustat data base. The model was used to test several propositions about the economic value of management information. This topic has been addressed by Morecroft (1977, 1979), Jones (1981) and others. The research extends work by them as well as demonstrating the multidimensional nature of information using the Gorry and Scott-Morton framework of typical information structure. A framework in which to assess information value is developed and discussed.The performance of the firm was assessed using cost, profitability and efficiency measures under various values for the information attributes of accuracy, timeliness, relevance and reliability at the strategic, managerial and operational levels of the firm. Several propositions about information value are offered given the results of the testing.
Initial testing is now complete on the TEMS instrument, the Technical Education Modeling and Simulation system. This research in the Industrial Education Department at Clemson University is a three phased project. The phases include developing an instrument (TEMS) similar to DYNAMO II (Pugh, 1970) for the modeling of socio-econ-educational systems, reducing world model concepts to a regional model for the state of South Carolina, and integrating technical education attributes and effects into the classical capital sector for this regional model.The TEMS system is developed in dBASE IV and ’C’. It has all the model definition building features and run characteristics of DYNAMO II. Written for an IBM AT class of equipment, TEMS will replicate the WORLD2 model (Forrester, 1971) results in 40 minutes for a 100 year run. TEMS supports both the real time graphic mappings of selected variables and post analysis graphics. It has both an integrated statistical interface to SPSS statistics and a reporting system for model runs, definitions, user created functions and run time statistics.Experimentation is in progress to calculate a CHAOS mapping for the class of level variable equations. Using this Verhulst equation mapping, TEMS should then dampen any wild ramping and explosiveness for these selected variables during the simulation.
This paper attempts to asses the impact of past and presently contemplated policies to maintain food self-sufficiency in a centrally-planned economy. The case of Vietnam is used as an illustration. Experimentation with a system dynamics model of the food production system incorporating relationships concerning soil ecology and agricultural land management policy serves as a basis for this assessment. Short-run policies to increase production are detrimental to maintaining food self-sufficiency in the long-run. A sustainable food production policy must incorporate soil conservation and improvement, control of population and possibly, finding food sources alternative to grain. Although difficult to implement in a market system, such a policy agenda may be feasible in a centrally-planned economy.
A system dynamics model of food grain storage, government procurement and release, and import in Bangladesh is presented. The simulation results of the model for govt. procurement and release, and import policies are also presented. Finally, the policy implications of the model are discussed.
The automobile fuel market in Italy is appreciably different from that in other European countries and even more unlike the American context.As a matter of fact, the alternative and available automobile fuels in this country are the following: -gasoline (petrol),-gas oil (diesel oil),-liquefied gas (LPG), plus a very small amount of natural gas, each with its own price. In addition, price differences are considerably greater than in other countries.In view of the fact that gasoline is the most expensive fuel and gas oil the least expensive, the Italian Government has adopted a peculiar tax called “Superbollo” meant to penalize car owners with diesel powered engines and those with both gasoline and LPG powered engines, but to a different degree.The alternatives access by drivers (car-users) to different fuel resources has influenced and countries to influence the automobile industry’s approach to the Italian market.On the other hand, the different fuel prices, plus the varying annual amount of the ‘Superbollo” tax, influences the motorist’s decision in buying and using differently powered cars.The decision is obviously affected by the consumption rate for each type of fuel and the driver’s expected mileage per year.This paper aims to underline and analyze the hypothesis on the mix of the three main fuels used in Italy, trying to give results principally on the basis of: -price-changing of each fuel, -tax-value of “Supperbollo”, -different driver-mileage taking into account the pollution-cost of each of the three fuel solutions. The system, which is the subject of the study, will be analyzed using System Dynamics methodology, with a dynamic model.
The close similarity between the Indian census, Government of India and U.N. population estimates and those from the Constrained Coalition and Logistic Model (CCLM) has been demonstrated which enhances the usage of differential equation modeling for studies on population growth processes. The CCLM incorporates the legitimate requirement of an upper bound for the aggregate population thereby implying the rate of natural increase to reach the zero level. The numerical value assumed for the upper bound is based on food supply - arable land availability, and accounts for advances in agriculture productivity. However, other factors such as quality of life, environmental degradation, per capita income, etc. can also be used to arrive at an upper bound. The model holds good promise for usage for other developing countries.
This paper presents results of extended experimentation with selected models of social phenomena widely used by the system dynamicists in their studies on deterministic chaos. The models selected include various versions of a simple model of migratory dynamics and a model of resource allocation in a firm, and a simple model of long-term economic fluctuations. Chaotic modes seem to appear in each of the experimented model, either due to non-robust or unrealistic rate formulation, or from unrealistic parameter or input specifications or both. Minor changes on the models experimented with, which improve their correspondence to reality, eliminate chaotic modes. The paper raises the issue of the relevance of the chaotic models to real-world phenomena and policy design for system improvement.
The use of computer tools to aid in decision-making and problem-solving activities suggests a view of negotiation in which parties collaborate to improve the quality of the information and knowledge on which they base their joint decisions. In this view, negotiation is characterized as a process of discovery and design. The effectiveness of negotiation is defined in three dimensions: legitimacy, feasibility, and efficiency. Computer tools are discussed in the context of information strategies, or ways in which negotiators use information in their efforts to ‘discover and design’ solutions.
Japanese old age population is gradually increasing and this tendency weakens economic conditions of Japanese welfare annuity system. Therefore it is important for us to study future conditions of this system.This model contains 4 sectors: Demography, total premium income, total pension expenditure and reserve of the welfare annuity system.The demographic sector covers populations of 5 three-year age groups under 14 years of age and 13 five-year age groups above 15 years of age. This sector was first formulated for a simulation model of dental diseases and is now applied to this model. Total premium income for the welfare annuity system is the sum of premiums of workers, employer contribution and government contribution, for which populations of five-year age groups are used. Total pension expenditure is the sum of base pensions and earning related pensions. Here is used population of 60-64 age group. Total premiums plus interest income of the reserves of the welfare annuity system minus total pension expenditures flow into the reserves of the welfare annuity system.The length of the simulation is 63 years from 1963 to 2025.This study is a research project of the Japan Productivity Center.
Advances in computer software allow modelers to design, with relative ease, sophisticated, realistic educational tools. With these advances, new issues arise about how to make this educational software productive and stimulating, without limiting the freedom of the user or creating simply a computerized workbook.Such simulation games have great educational potential for people who play video and home computer games, and sometimes for students in classrooms. The games must address three information levels: (1) real-world details, (2) simulation of model, and (3) conceptual understanding of structure and dynamics. The systems viewpoint on the particular model must be clearly explained; otherwise users will have much fun but learn little. Feedback during the game teaches this system understanding without requiring textbook readings. Such feedback requires new modes of “expert” computer analysis which need to be developed. Other tools need to be developed to help in creation of simulation games and to give the games abilities that they do not yet have, such as access to database of models, pictures, and text, and connections between simulation games.
The paper suggests a novel approach to policy design in system dynamics models. The approach is based on optimal control theory to evolve synthetic policy structures and then design realistic policies for the famous production - distribution model of Forrester. New policy sets have been presented for purchase decision rate at retail and distributor sectors and manufacturing decision rate at factory. It is shown that the suggested policy sets show a marked improvement of model behavior over that obtained by Forrester. The approach suggested here will enhance the art of policy design.
Eroding competitiveness, declining productivity growth, explosive technological, political and environmental change, and dissolution of market and national boundaries form the familiar litany of problems which threaten traditional organizational structures and management practices. In the turbulence at the close of the century it is widely argued that organizations must change more rapidly than ever before.
The last decade has been the accelerated development of what Yadav and Chand term “Organization Support Systems”- large scale, complex and extremely expensive computer based information systems (Yadav, 1989). The cost associated with such systems has increased the requirement for a sound methodology to evaluate the expected operational benefits and drawbacks resulting from their implementation, at as early a stage in the system life cycle as possible.An extensive survey of the literature in the field of information system evaluation, with a particular focus in the methodologies, tools and performance measures being used in practice, preceded the development of the methodology reported in this paper, and is presented in full elsewhere(Watts 1990).This paper comments on the findings from the review and reports on the development of a system dynamics based methodology for the assessment of proposed computer-based information systems (CIS), in terms of their potential to support organizational objectives.The methodology has been evaluated by application to two military CIS, at different stages in the system life cycle. These cases are reported separately(Watts and Wolstenholme, 1990; Henderson and Wolstenholme, 1990), but the indications are that the methodology can contribute throughout the system life cycle y providing a continuing reminder of the relevance of the CIS to the real-world system which is intended to support.
Inflation is one of the most troublesome problems China is recently faced with in the course of the economy reform. The inflation takes place in the form of general price rising. It becomes more serious and is greatly obstructing the healthy development of China’s economy. This situation results from many factors including the biased trend of the reform strategy, the deviations in implementation policies, the defects of the economic system, etc. The conventional theory about money amount has been used to analyze inflation before. This analytic method specially indicates the view point that inflation with no exception is a kind of money phenomenon by stressing the causal relationships between money amount and general price level, but it considers money supply as an exogenous variable controlled by the government’s policies and ignores the effect and restrictions from other economic factors. Therefore there are some limitations of this method in real uses. For this reason a new approach of system dynamic is put forward in the present paper. A dynamic model composed of a monetary market section, a commodity market section and a regulation section is developed. On the model a series of policy tests mainly concerning the two economy levers of price and interest rate are simulated with the consideration of china’s special situation. The cause and mechanism of suggestions are also made for elimination or controlling the inflation. The results of the paper may provide worthful references for China’s further economy reform.
In recent years, increased public awareness of the health and productivity costs associated with the use of cocaine and its potent derivative “crack” has served to heighten concern and renew debate over the most effective strategies for managing the drug problem. This paper presents a preliminary system dynamics model of the international cocaine trade. The initial model incorporates the various stages of the cocaine system from source country production to final consumption including: primary resource allocation and production; cocaine production; cocaine production and export; and U.S. demand, import, pricing, and consumption. The model is used to examine an ensemble of policies proposed by the National Strategy for Drug Control (White House 1989). Simulation results show the capacity of the system to exhibit a wide array of behavior modes depending on the type of intervention being applied and the aspect of the problem being targeted. Of particular interest from a policy standpoint is the implication of delays in physical and information flows for generating divergent short and long term policy results. Findings suggest a comprehensive approach combining demand and supply side policy leverage represents the most effective management strategy.
A System Dynamics model of an ecological system consisting of two patchily distributed populations is constructed to study the effects of inter-patch colonization on the persistence of the species. The model structure is primarily composed of the negative feedback loops dominant in local (within-patch) population regulation and a regional positive feedback loop coupled with two negative loops which regulate the inter-patch species colonization.The simulation results show that with colonization the population system always persists if at least one of the populations is larger that a minimum viable population size (MVP). If the species has sufficiently large colonizing ability, the populations are always able to reach the carrying capacity. Otherwise, the population with below MVP, there are two possibilities depending on the magnitude of species colonization ability: (1) both stabilize at the carrying capacity level and (2) both go extinct. The simulations also demonstrate that delays in colonization and population regulation may have distinctive impacts on species persistence and dynamics of the population system. The study may provide useful information for species conservation and design of nature reserves.
Innovation management is a special task in several respects. Its success is essential for the survival of the firm. It deals with highly dynamic processes, and it requires a viable strategy from the very outset. Analyses of innovation dynamics have shown that market forces usually do not allow the search for a gradual approach towards a successful strategy. Frequently technology advances rapidly and the market changes so fast that no second try is possible.In such a situation, the artificial reality of a management simulator provides a powerful environment to learn about the system under investigation. It allows deeper insights into the problem situation. In its virtual world, it alleviates the development of an improved understanding of the intrinsic aspects, and leads to a better feeling for possible reactions of the market.The paper presents the coarse structure of an Innovation Management Simulator (IMS). The players represent four competing companies. At the beginning of the simulation, all offer a comparable product, no firm holds a competitive advantage. Among other policies, they can -through resource allocation for research and development - create additional, non substituting products. The product life cycles with their time patterns of profits and sales, market shares, etc. are endogenous variables, influenced by the players’ actions.The decision to develop and launch a new product and the choice of the time for market entry are strategic variables of the players. Further decisions are required to budget product and process development, pricing and advertising, capacity allocation, personnel recruitment and financing. The game is played on a quarterly basis. The decisions are fed into a System Dynamics model, and the results provide the input for a new round of decision making.
The paper reports on a new approach for the building of Decision Support Systems based on System Dynamics and Expert Systems. The power of this approach is illustrated by using it to identify problems that exist within the production processes of a manufacturing company. System Dynamics was used to simulate the production processes and build the expert system. The simulation identifies the process where the problem exists, and the Expert System suggests possible causes to the problem and the solutions required to bring production back to normal.Stella was the System Dynamics tool used to gain a detailed understanding of the production processes and their interactions in order to build a simulation model. The influences from this simulation were used to structure the knowledge base of an expert system. While the expert system was an essential ingredient of the Decision Support System, the actual system that was used and its features were of secondary importance.This paper will benefit System Dynamic practitioners who are interested in: 1) simulating a process within an organisation., 2) the application of System Dynamics to solve a manufacturing problem.,3) the relationship between System Dynamics and building of Experts Systems., 4) the use of System Dynamics as a decision making/support tool in the manufacturing industry.
Energy dissipative systems are considered through a general approach. The one direction non-steady state equation for mass, heat and momentum transport shows that the energy used by system could be considered through “energy dissipation function”, comparable to the “wave function” used in Quantum Mechanics. A complex time scale is proposed. This permits to consider the fluctuations as being in a time scale which is different from our classical one. The non commutation of operators of the basic equation introduces quantification which supports the use of finite different equations instead of a differential equation. A discretized Chaotic Process is proposed as a model for actual systems. The example of a fluidized bed shows that quantum considerations through a ground dynamic state and an excited state could support the above proposal which is in agreement with the actual qualitative behaviour. The Chaotic Process can be put in agreement with the thermodynamics based principle when comparing the minimum energy dissipation of the actual system.
A cost structure is presented for the development projects based on two kinds of cost: base cost and progress cost. The base cost is necessary to keep a project alive and ready for real progress. The progress cost is to make physical progress in the project. A dynamic model is made and simulated to show the behavior of this cost structure. The model shows that when development budget is not sufficient to pay for all the required expenses of an ongoing development projects, total cost of development projects would increase and completion time of the projects would rise. Insufficiency of development budget occurs either by decline of government revenues or by start of too many new projects. In the face of insufficient budget, it becomes very crucial to decrease the starting rates of new projects. By decreasing the number of starting projects, the behavior of the model in terms of completion time and unit cost of the projects improves considerably when budget insufficiency appears.
To construct more public houses so that the low income population in the urban areas can have their own houses is one of the major efforts of the government of the Republic of China on the island of Taiwan . This good-will policy did solve some of the housing problems, yet remained some undesirable ones, such as, the large amount of unsold public houses. Those unsold public houses were primarily due to (1) delayed supply, (2) smaller sizes, and (3) unsuitable locations. This research attempts to study the “unsuitable location problem” and “too small size problem” in the city of Kaohsiung . The System Dynamics methodology is employed to study these problems through model building and policy testing. The model is composed of three sectors: (1) population and the zonal migration attractiveness, (2) housing supply, and (3) housing demand. All the three sectors are interacted with each other. The selection of the variables and the weight of variables are partly determined by field survey. By focusing on the structure of intra-urban migration, it is found that the intra-urban system has a very dynamic feature. The simulation results show that the behavior of the population flow is dominated by several feedbacks loops, some reinforce the growth of population, while others limit it. Through analyzing the simulation results of the model, some design principles of the public housing policy are suggested. From the demonstration of some policy tests, it shoes is the potential of the model to aid the formulation of a “dynamic” public housing policy design, that is, when to supply how much of a certain level public houses to which area of the city under a specific scenario. This preliminary study shows that system dynamics is not only a useful tool to have insights into this kind of complex socioeconomic problems, but also potential to deal with the spatial dimension of urban issues in addition to its mostly temporal applications.
The 21st century is already here (Drucker,1989). Many people predict the 21st century will be fundamentally different from the 20th century (Drucker, 1989; Niasbitt & Aburdene,1990). Looking back upon the past, Korea entered the 20thcentury lacking preparations in the midst of the nation’s internal and external conflicts and confusion. As a consequence, Korea went through several periods of stagnation and difficulty during the first half of the century. However, Korea began to demonstrate its remarkable potential for modernization and development since the early 1960’s. Within a quarter of a century, Korea has emerged as a developing nation rapidly approaching advanced status. Now, Korea is facing another turning point dividing the centuries. Her future depends on her determination and preparation today. The 1990’s is the time for her to make choices and decisions that will promote the prosperity of the nation and the unification of two Koreas. It’s the time to establish a more mature society. It’s the time we should consider the public's demand for quality of life. It’s the time to consider her natural environment deteriorating due to urbanization and industrialization. All this will be realized only through her devotion to the establishment of a society based on a vision of optimism.
Markov models and System Dynamics models are apparently applicable to two completely different kinds of problems. However, structurally, they can be proved to be equivalent to each other. This paper establishes this equivalence. Critical observation have been made with regard to similarity and aparent differences between the two methodologies. The paper has also proposed a procedure for converting Markov models into system dynamics models. Examples have been drawn for the Birth-Death process, M/M/1 Queue, Poisson Process and Yule Process to illustrate the method. It has been shown that such a framework makes the model for stochastic processes much more transparent and enables the system analyst to understand the behaviour better.
This paper presents a rural energy system dynamics (RESD) model in Beijing . The system covers a wide range of aspects, such as economy, energy, pollution, water, population, labour and farmland. RESD model contains 8 sectors: electric industry, coal industry, building material industry, other industry, the third occupation, capital, agricultural production and people’s life, from which 788 variables were attained with 48 levels equations. The present study puts forward 4 suggestions and how to realize the 4 suggestions to the development of this system.
The paper describes from a client point of view some experiences with system-dynamics during the first year of Nostradamus. Nostradamus is a project, which aims at simulating the senior management of a large Dutch governmental organization with an one action orientated engeneers approach to adopt a more outwardly-orientated, creative and flexible attitude. In the beginning of the project the use of system-dynamics was intended as a central guiding aid in the proces of organizational growth. The intended use proved considerably more extensive than the actual use. Insofar this regression is attributable to system-dynamics we, as a client of system-dynamics, see in this regression a possible challenge for system-dynamics. We think system-dynamics could have been a more central supporting aid in Nostradamus if we would have found well-documented experience with system-dynamics in comparable situations. We suggest the system-dynamics-society to develop certain activities in order to stimulate demand and to better link up demand and supply in the area of systems-thinking.
While nonlinear combinations of multiple modes existing in complex oscillatory systems may generate chaotic behavior in real systems, the studies of chaos attempted in system dynamics have often resorted to forcing simplistic models of systems to chaos. This paper illustrates how chaotic modes have been constructed through the creation of mis-specifications and anomalies in the model structure and parameters. This process has not only reduced the models to artifacts with little relevance to problem solving but has also invariably introduced a stiff structure that is susceptible to considerable building up error as numerical integration methods are used with long simulation times. The paper concludes that a model must qualify as an empirically valid system by meeting the requirements of the normal system dynamics practice if the chaotic modes it generates are to be of practical value.
Few real life case study examples exist concerning optimisation in system dynamics models. This study reports an attempt to estimate relevant parameters of an AIDS spread model in order to check whether the chosen model structure can be separately parameterised and thereby explain the course of the epidemic for more than one country. The UK and USA are the two countries selected and the parameter values derived are reported for each. The values obtained are not inconsistent with emerging knowledge about the epidemic and the subsequent optimised projections reveal that the peak of the homosexual epidemic has been or is about to be reached in both countries.
Since formal modelling requires having a model boundary encompassing finite complexity, so deductive logic is possible, complex problems must be partitioned into simpler parts before being analysed. There are many ways to slice a complex problem but not all create partitions that keep together processes contributing to effective policy design. This paper explore ways in which a complex problem may be appropriately sliced so the models of the partitions can serve as effective tools for policy design.
To the date, Budget Plan definition in Italian public companies is approached with insufficient deepness. We believe this is common to other countries too.Indeed, most public organizations develop the Budget Plan basing themselves only upon the available data and not upon knowledge acquired in years of experience. Balance sheet data are therefore obtained simply adding to the previous information, an amount estabilished, for example, on the expected inflation rate.This approach although “trivial” supports the budget responsible, because during the budget presentation, very few elements can be effectively criticized. It is commonly accepted that also public companies find themselves in turbulent environments. This is due to both the increased number of endogenous variables, and to the complexity of exogenous parameters. Therefore the Budget Plan definition becomes always more critical, and consequential difficulty of its evaluation assumes relevant importance.The paper describes an experiment carried out by an Italian Public company which is adopting a dynamic economic- financial model for both, Budget Plan definition and for its evaluation. The model is based upon System Dynamics approach and evaluates a series of scenarios providing support to the budget definition responsibles in taking strategic policy decisions, and better “explaining” the effects of decisions undertaken.
Organizational learning is intrinsically systemic, because it deals with changes in thinking and acting not only in individuals, or in teams, but organization-wide. Our ability to understand and improve organizational learning will depend on having an operational systems framework, which can both sharpen theoretical insights and address practical management concerns. Building on past work in organizational learning and system dynamics, the new Center for Organizational Learning at MIT is attempting to develop a rigorous foundation of systems principles and methods so that current interest in organizational learning and “ learning organizations” can lead to significant advances in management theory and practice.
System Dynamics has not achieved widespread recognition as a paradigm of substance in the business-related disciplines of Strategic Management, Organization Behavior, Organization Theory, or Operations Management. One reason for its slow acceptance by academicians in these fields and related social sciences may lie in the specialized meanings and usages attached to common words by the System Dynamics lexicon. Words such as “open,” “closed,” “feedback,” and “structure” -- used differently than established scientists might expect --may create perceptions that System Dynamicists simply don’t understand systems theory. Writers in the field need pay special attention to the semantic implications of their presentation.
This paper describes a case study of applying organizational learning principles to the strategic change of a large German automotive company which seems to be successful alternative to the usual top-down approaches. Different models of implementing change processes are discussed, and their adequacies are assessed regarding to the degree of supporting self-transformational processes within the organizational.
The Management Flight Simulator is now being established as a tool to facilitate experiential learning with both undergraduate and postgraduate management students, and managers within learning organisations. Existing MFS provide user-friendly reports and graphical representations of historical data, designed to the limits of human computer interface (HCI) good practice. Although, existing MFS make use of sophisticated quantitative databases and models, but lack the softer data: managers’ in-trays, meeting notes, employee feedback, interviews with customers, press and television news reports, industry observers, financial analysts, and so on. Managers in real life rarely make decisions without going to look at a problem for themselves. Using multimedia MFS, users will be able to do the same, by interrogating and making observations using electronic-based media.
The savings and loan industry has been the primary source of home mortgages for American families since 1932. Since 1984, however, 25 percent of the savings and loans, approximately 700 out of 2800, have failed. Although the total costs associated with these failed savings and loans have yet to be determined, estimates range from $300 billion to $1 trillion. This paper discusses a system dynamics model of the effects of interest rate risk and default risk focusing on the savings and loan industry. Using the model to test the effects of policy initiatives specific to the prime interest rate and the default risk on loans, the authors demonstrate that the savings and loan crisis might have been lessened or even avoided if the regulators had a better understanding of the system’s structure and the effect of that structure on system behavior.
In this paper we describe a modification of the Beer Distribution Game which we have used with MBA students and executives. In this version, we introduce a change in communication rules at the end of week 24. Our game debriefing addresses all of Senge’s five learning disciplines and stresses the basic question: how do we deal more effectively with underlying structure? This variation on the usual rules shows a way for designing experiments with the Beer Game to improve our understanding of how organizations learn.
The diffusion of new technologies into the market is a critical factor in the success of any technology based company. This paper describes a system dynamics model which integrates a number of key concepts presently used to understand the diffusion process (e.g. technical progress functions, cost-experience curves). It shows how these concepts, together with management decisions regarding R&D investment, marketing, and pricing, drive the evolution of diffusion between technologies. It then illustrates how simulation can be used to understand the critical success factors in technology diffusion, and what this means for the management of technology-based companies.
This paper describes the use of System Dynamics (SD) for making a claim for Disruption and Delay. The case concerns design management of a large development project. Extensive group workshops (GDSS) with the managers, based on the cognitive mapping technique and association software tope COPE, showed that the client-contractor interaction process had set up dynamic feedback loops creating Disruption and Delay to the project. In order to qualify the extent of the Disruption and Delay, the cognitive map was transformed into an "influence diagram" and thence through the acquisition of numeric data into a large SD model. The development of the two continued in parallel, informing and checking one another. As well as simply providing explanations of trends and behavior, the SD model had to reproduce the planned and actual out-turns explicitly for it to be a creditable explanatory tool. The paper will draw lessons from the case study on the process of moving from cognitive map to a SD model, and the mutual benefits of joint development, as well as more general lessons about combining soft and hard methods.
This paper describes the evaluations results from an unsuccessful case study. In this case study, system dynamics modeling was used to support the development of an implementation plan for a corporate strategy. Three modeling sessions were conducted with senior management, which were unsuccessful. A detailed analysis of the evaluations interviews with several of the participants had identified the main cause for this failure. These causes turn out to be threefold: Firstly, most of the participants were unwilling to discuss openly this politically sensitive issue, secondly several errors were made in project design and thirdly the scope of the strategic issue is at stake was too broad to tackle effectively within the time frame allotted to the project.
Busy lines are a persistent and persuasive problem common to all telephone systems, whether it counts with the most advanced digital technology and network management or no, there will always be a period during the day on the week where telephone calls cannot be completed due to busy line with the resultant loss of revenue. If expansion programs for telephone lines were not in accordance to actual demand growth telephone calls, this problemwill grow to the point where retrials would seriously impairthe telephone system operation. This paper describes the use of a system dynamics model for designing and evaluating expansion policies that respond to actual demand and ameliorate problem.
In a world of increasing complexity and turbulence organizations run the risk to loose effectiveness as well as efficiency when managed on the base of linear thinking and shortsighted decision making. System thinking and organizational learning instead will become a prerequisite for competitiveness and survival.
This paper presents a critique of the atomistic ontology and empiricist epistemology which inform most current definitions of the concepts information, systems and, hence, information systems in the Information System (IS) literature. The notion of information as an objectively given quantifiable 'force' emanating from the real world and endowed with the essential property of dissolving uncertainty; or as possessing the same essential property but as consisting of structured or processed data, i.e. atomistic ‘facts’, about the real world are argued to be unsustainable, on both philosophical and practical grounds. It is argued, furthermore, that the notion of systems as an ontology in respect of goal seeking cybernetic machines unproblematically specifiable in terms of their boundaries, of their input and output, and of their objectives is not inappropriate to the socially-based systems in terms of which an IS must be defined, but also fails to consider the ontological, and consequently epistemological, depth implied by this concept. In view of these arguments, an alternative conceptual practice is explored by suggesting that the concept system be taken as an epistemological tool to be deployed in respect of complex coherent 'whole-entities' characterized by their emergent properties and, in the case of socially-based systems, by the essential autopoietic nature of their modes of regulation and self-representation including, above all, language. It is also suggested that information should be considered as a set of fundamentally, arbitrary signs whose 'emergent' properties i.e. syntactic, semantic and pragmatic, are intersubjectively negotiated between international organizational agents and, as such, inseparable from the forms of social life which they sustain and in which they are generated. This alternative conceptualization, proceeds from an ontology which acknowledges the essential 'depth' of its key thought objects, by virtue of the emergent properties attributions to these objects, in contrast to the flat atomistic ontology currently dominant in the IS field. Such an alternative conceptual practice, we argue, provides an initial theoretical framework in which to ground the currently ill-defined, “emergent perspective”, on the relationship between ICT and organizational change, identifiable in the IS literature. While as regarded IS practice, this re-conceptualization is found to be congruent with the object oriented approach to IS development which is currently attracting increasing practical attention and which appears to provide the basis for a common and intuitively meaningful language with which to bridge the gap between IS end-users and developers.
This paper reports the finding of an internal McKinsey research and development project designed to test the value of applying System Dynamics thinking to the life insurance industry. The aim was to understand better how management decisions and actions can affect the success or failure of a typical direct sales life company. The study compared the evaluation over 20 yeas of two companies, Equitable Life and London Life. Starting out in 1975 from virtually identical competitive positions, Equitable has become the U.K.'s most successful life company, while London Life was rescued by the AMP Society from near insolvency in 1989. We found System Dynamics a powerful means of identifying which managerial actions had accounted for the extraordinary divergence of the two companies. The lessons learned include many counter-intuitive insights that have relevance for any life company manager. Through simulation we were able to isolate which management actions made the difference to long term performance. In particular, we show how attempts exceed the maximum sustainable growth rate specific to any individual company can lock it into a slow but relentless spiral of decline, from which there is little hope of escape. This growth ceiling can be quantified and we also identify a number of a long range early warnings signs. Consequently, we believe that our conclusions are likely to change the way life companies are managed in the future.
Management practitioners have always felt the need to understand organizational contexts and processes. Consequently many different theoretical bases have been used to facilitate the evaluation. However the focus on existing approaches has primarily been on the ‘formal’ aspects of the organization. This has often resulted in inadequate and poor analysis of various complex managerial situations. In viewing organizations as communications systems, this paper introduces the responsibility analysis approach which helps in presenting a comprehensive picture of an organization environment. At a very generic level, organizations are viewed in terms of three sub-systems; technical, formal and informal. When conducting a responsibility analysis, the endeavor is to identify the responsible agents and capture the norms associated with each action. In doing so, we seek to understand the underlying repertories of behavior. This produces a high level specification of the organization and its attendant responsibilities, thus allowing a comparison to be made with the implicit and explicit structures of responsibility. The paper demonstrates these concepts with examples drawn from a National Health Service case study.
This paper shows that viewing dyadic communication from the perspective of servomechanisms and system dynamics rather than the cybernetics perspective (see Richardson, 1991, 128) allows deeper insights into the complex process of human conversations. Instead of viewing feedback from the cybernetic perspectives as the influence of input back on the output (Richardson, 128) we view dyadic communication as a closed system, with positive and negative feedback loops. This point of view helps us to better understand how to use feedback to achieve one's communications goals. A case study based on the short story The Revolt of Mother by Mary Wilkins Freeman, illustrates the reciprocal (not linear) nature of dyadic communication, and the role of breakdowns in revealing its structures. This analysis has implications for managers who engage in conversations in which they create, take care of, and initiate new commitments within an organization (Winograd and Flores, 1991, 151).