[quoted from Forrester, Jay (1998) Designing the Future. A presentation given at Universidad de Sevilla, Sevilla, Spain. and available from Professor Forrester's web site. [http://sysdyn.mit.edu/people/jay-forrester.html]]
"Several decades of progress in system dynamics point to a new kind of management education. Such a future education will train a new kind of manager for the future. I anticipate future management schools devoted to 'enterprise design.' Such business schools would train 'enterprise designers.'
"A
fundamental difference exists between an enterprise operator and an enterprise
designer. To illustrate, consider the two most important people in successful
operation of an airplane. One is the airplane designer and the other is the
airplane pilot. The designer creates an airplane that ordinary pilots can fly
successfully. Is not the usual manager more a pilot than a designer? A manager
runs an organization, just as a pilot runs an airplane. Success of a pilot
depends on an aircraft designer who created a successful airplane. On the other
hand, who designed the corporation that a manager runs? Almost never has anyone
intentionally and thoughtfully designed an organization to achieve planned
growth and stability.
"Education, in present management schools, trains operators of corporations. There is almost no attention to designing corporations. Corporate successes and failures seldom arise from functional specialties alone. Corporate performance grows out of the interactions among functional specialties. Present day management education fails to convey the importance of how parts of a business interact with one another and with the outside world. In the future, we must deal with the way policies determine the future of an organization.
"Enterprise
design will build on four major innovations that have occurred during the past
century:
first, beginning
around 1910, the Harvard Business School pioneered the case-study method of
management education,
second, in the
1930s and 1940s, the Bell Telephone Laboratories and MIT developed theory and
concepts related to dynamic behavior of feedback systems,
third, after
World War II, MIT, Carnegie and others focused on a more quantitative,
mathematical, and research-based approach to management education,
fourth, during
the last forty years, system dynamics has demonstrated the way to combine both
numerical and descriptive information into models that permit simulation of
systems that are too complex for mathematical analysis.
"The
first innovation, the case method of management education, has achieved a wide
following. Case studies address the problems of general management and the
interactions among parts of the corporate-market-competitor system. Case studies
draw strength from using descriptive information and managerial knowledge from
the working world. However, the case method, has a major weakness. Description
of a case captures policies and relationships within a system that is too
complex for intuitive understanding. Case studies often draw the wrong dynamic
conclusions. They fail to reveal why corporations in apparently similar
situations can behave so differently.
"The second innovation, the understanding of feedback systems, now reaches beyond engineering to become also an organizing concept for human systems. Feedback processes govern all growth, fluctuation, and decay and are the fundamental basis for all change. The feedback viewpoint reveals new insights into managerial and economic system that have escaped past descriptive and statistical analysis.
"The
third innovation, the quantitative approach to management education, has brought
a more disciplined analysis of corporations. However, the past quantitative
approaches have failed to address the major challenges faced by top corporate
management. Early quantitative methods were limited to linear mathematical
analysis, and stressed optimum solutions rather than realistic practical
answers. They dealt with separate functional specialties of business. They did
not establish adequate linkages to the mental database used by practicing
managers. Traditional quantitative methods have not incorporated the feedback
structure surrounding decision-making. Nevertheless, the idea of a quantitative
approach to management opened the door to more powerful methodologies that are
now emerging.
"The
fourth innovation, system dynamics, now allows going beyond case studies and
descriptive theories. System dynamics is not restricted to linear systems; it
can make full use of nonlinear features of systems. Most real-life dynamic
behavior depends on nonlinearities in systems. System dynamics models, combined
with desktop computers, allow efficient simulation of complex systems. Such
simulation is the only way to determine behavior in complicated nonlinear
systems.
"Bringing
these four innovations together permits a major breakthrough in management
education. The combination will go far beyond the case-study method of
management education. System dynamics adds a rigorous dynamic framework for
organizing the rich policy and structural knowledge possessed by managers.
"The
difference between present management schools and those in the future will be as
great as the difference between a trade school that trains airplane pilots and a
university engineering department that trains aircraft designers. Pilots will
continue to be needed. So also, operating managers will be needed. However, just
as successful aircraft are possible only through skilled designers, so in the
future will successful corporations, countries and social systems be possible
through enterprise designers.
"Enterprise designers will be able to reduce the number of mistakes in the structure and policies of social institutions. Correct design can make a corporation less vulnerable. Design can distinguish between a corporation that is vulnerable to changes in the outside business environment and one having a high degree of independence from outside forces. Correct design can improve the stability of employment and production. Correct design, by balancing policies for pricing, capital plant acquisition, and sales force, can make the difference between growth burdened by debt and growth out of earnings. Correct design can avoid the adoption of policies offering short-term advantage at the expense of long-term failure. Correct design can prevent expenditure of managerial time in debating policies that have low leverage and are therefore unimportant. Correct design can help identify the very small number of high-leverage policies capable of yielding desirable change.
"Future
training in enterprise design will include study of a library of models of
generic management situations. Generic models are those that apply in many
different settings; they can be moved from one industry to another, and backward
and forward in time. Each model would combine descriptive case studies with
dynamic simulations applicable to a variety of businesses. I estimate that about
20 such general, transferable, computerized cases would cover 90 percent of the
situations that managers ordinarily encounter.
"Several
powerful examples of generic models already exist:
stability and
fluctuation in distribution systems,
pricing and
capital investment as they determine growth,
promotion chains
showing evolution into a top-heavy distribution of management personnel when
growth slows,
Imbalances
between design, production, marketing, and service as they influence market
share.
"Each such model manifests many modes of behavior ranging from troublesome to successful depending on the policies employed within it."