Kaplan and Norton propose a double-loop process that integrates the concepts of Balanced Scorecard and Strategy Map to support managers to define and implement the firm strategy more effectively. The BSC is a performance management system based on a set of few and critical indicators. These key performance indicators are linked together in a causal diagram that represents the hypotheses about the strategy. This approach supports what Argyris calls double-loop learning which facilitates the strategic learning of managers and leads to better performance. This type of learning produces changes in manager assumptions about cause-and-effect relationships and leads to a better understanding of the context, what means a process by which managers can explicit and improve their mental models about the business system. This article describes a simulation-based research for testing a system of hypotheses about the influence of the BSC approach on strategic learning and performance, which uses a System Dynamics-based micro world.
Society membership has grown by over 40% from 1999, but the representation of women has remained flat at 12%. Thus, in July 2004 the Policy Council unanimously approved the formation of a committee to work on tracking and improving the diversity of the System Dynamics Society. Last October, a pilot diversity survey was included in the annual membership renewals. In the course of developing the survey, members raised important questions about how diversity should be defined for the System Dynamics Society. More importantly, the initial results suggested potential solutions. Both issues raised questions that need to be discussed. How should diversity be defined with respect to the System Dynamics Society? How does diversity affect participation at conferences and in the society? What are some possible solutions? Please join us in this roundtable discussion on diversity in the System Dynamics Society.
Faced with new challenges in managing the cyclical and volatile business environment, management at a Commodity Plastic (COM-P) Company agreed to apply System Dynamics (SD) to support strategy development. A SD model of COM-P industry was built by adapting the Pulp and Paper Model. The structure of COM-P Index Price creation was mapped and added to the generic model. The following were investigated: a) The effect of current delays in adjusting prices on phantom demand, on capacity utilization and shipment rates; b) The phenomenon of Phantom demand or pre-buying when customers perceive that prices may be about to go up was modeled; c) By applying the model, the amount of margin lost or gained by the industry due to the price protection terms in the contracts was estimated; d) The risk in the top ten long term contracts under different supply and demand conditions and oil prices in order to support the sales organization with their negotiations; e) The model was applied to get guidance on capital investment timing and to assess the effect of different oil prices and supply & demand scenarios on the profitability of new investments. In many cases the results were counter-intuitive.
This paper takes a system dynamics perspective of the contemporary trend of Offshoring Knowledge Worker jobs from USA to gain a better and deeper understanding of the results and implications of the trend, its impact on the jobs and workforce dynamics. The results not only support the viewpoint of economists that offshoring is beneficial to the economy, but also highlight another impending phenomena just round the corner, namely the slow rate of growth of workforce. Net U.S. workforce growth is slowing because seventy-one million baby boomers are beginning to retire. In this context, model outputs suggest that offshoring is postponing the undesirable state of U.S. jobs outstripping the U.S. workforce by nearly five years. Thereby, policy-makers have longer to find effective solutions to tackle the impending shortage of workforce in decades to follow. The model suggests that offshoring could not have come at a better time for the US economy.
In this paper, we present a novel project management model that incorporates several features yet to be actively addressed in the literature and focuses on earned value management. The model utilizes the basic structures employed in building project dynamics models. The effects of time-varying project team size, of training and communication overload, and of change management are incorporated into our model. With the help of our model and a hypothetical software technology project, we demonstrate how our system dynamics model can contribute beyond basic project tools like MS Project, in generating the earned value management indicators required by project managers under different scenarios and starting assumptions. Results are consistent with well-known behavior of projects in that the later the changes arrive, the longer is the delay in completing the projects. These phenomena are propagated through the earned value measures to see the actual effects upon schedule and cost performance indices. The study also focuses on the use of earned value measures as well as critical chain concepts to understand how these separately impact project duration and cost.
The Department of Homeland Security (DHS) is funding the development of a Critical Infrastructure Protection Decision Support System (CIP DSS) that is intended to be used by DHS decision makers to assess the impacts of deliberate attacks or disruptions on the United States infrastructures and how they might be mitigated by investments in protective or recovery technologies. One of the 17 critical infrastructures is the Defense Industrial Base. The basic mechanisms of such a model are the flows, especially surge response flows, of war materiel from private sector defense industries to the Department of Defense (DoD). In order to capture surge flows, additional models of military logistics, especially deployment, and military missions are needed to drive the behavior of interest. Basic system dynamics models are being considered to provide this feedback to the basic mechanisms. With this consideration of military mission effectiveness, the models main output decision metric is an estimation of casualties, which presents its own system dynamics modeling challenges.
Capturing Project Dynamics with a New Project Management Tool: Project Management Simulation Model (PMSM)
Ali Afsin Bulbul
Portland State University
Systems Science Ph.D. Program
Harder House
1604 SW 10th Ave.
Portland, OR 97201
Phone: (503) 221-4576
Fax: (503) 725-8489
afsin@pdx.edu
In this research, traditional project management concepts, methods, and their deficiencies relative to increasing complexity of projects is discussed. System Dynamics (SD) modeling is proposed as a complementary project management tool to be used at the higher level to augment operational level project management methods. The potential usage of SD models to promote the learning from projects, both in individual and organizational dimensions, is discussed. Working as a project management laboratory, SD project models can be successfully used to improve understanding of the project process. They can be used to design the project in the project-planning phase, to monitor and control the project in the project-execution phase, and to learn from the project in the post-mortem phase working as a learning infrastructure. A generic SD project management simulation model (PMSM) is built to serve for this purpose. The model structure and the graphical user interface are explained briefly. Tests performed to validate the model revealed that the model is appropriately designed, works properly, and it is robust relative to the purpose of the model.
The objective of the paper is to show that the one of the main source of macroeconomic investment instability is similar to that which makes difficult managing supply line in famous Beer Game developed by the system dynamics group of MIT Sloan School of Management. It will be pointed out that ignoring production time delays causes instability not because economic agents simply ignore supply line delays, but because they adjust their expectations more rapidly than the delays involved in supply lines, whatever those delays could be. The paper is structured in three sections. In the first we present the classic Phillips argument about unintentional destabilizing effects of stabilization policy in modern dynamic system language, in order to show how to build a simplified macroeconomic supply line model for investment dynamics; in the second section, the macroeconomic model is developed and simulated. Third section concludes the paper suggesting that the inclusion of production time delays in macroeconomic models reopens the space to the control theory in stabilization policy debate
This paper introduces the notion of increasing returns to economic activity agglomeration and develops a formal system-dynamic model where this notion is used to explain the self-organizing nature of the spatial structure of industrial clusters. In this model, both pecuniary and external economies based on knowledge spillovers are considered.
Laboratory studies have shown that people cannot handle the time con-stants in dynamic tasks. Yet they obviously cope with such tasks with some success outside the laboratory. This study is one in a series of studies that examine the hypothesis that people cope by relying on heuristics that allow them to simplify the task. The heuristic studied here was that of relying on frequency differences, i.e., what Reason (1990) calls frequency gambling. It examines the effects of varying the relative frequency of scenarios that require different responding, and where relying on frequency rather than learning the actual time con-stants will lead to some success. The results show that the participants did not learn the time constants, that frequency had a strong effect on their decisions, but that their responding also seemed to be influenced by another heuristic identified in earlier studies, viz., that of rapid and massive responding. Implications of these findings for system dynamics modellers are discussed.