Since it was developed in the 1950s, System Dynamics has grown from a niche tool used by business managers into an extremely versatile method that is used in many fields. We want to help you make the decision whether Systems Dynamics will benefit your organisation. There are plenty of online resources out there and we link to a few of the best below. The approach may not be so readily applied to poker.dk or sailing, but most working environments will benefit from the System Dynamics.
System dynamics can usually be properly applied whenever problems can be expressed as variable behaviors through time. Therefore, system dynamics has been applied in many fields, among them medicine, law, urban studies, global studies, environmental studies, information science, literature, history, economics, finance, chemistry, physics, etc. For present purposes we will illustrate system dynamics' roles in business, public policy, university administration, and K-12 education. We will do this by exposing you to a few illustrative websites or papers from each of these fields. Please follow the links from the websites. And be sure to download and read any papers you find that interest you. We think you will be impressed by the breadth and depth of system dynamics application in each individual field.
This section is intended to help you decide whether system dynamics may be useful in addressing any of the problems that your business experiences.
Forrester (1998) mentions four business areas in which system dynamics can address business problems:
"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." These models can be modified and adapted to address specific company problems in these areas.
John Sterman's new book, Business Dynamics: Systems Thinking and Modeling for a Complex World [http://web.mit.edu/jsterman/www/BusDyn2.html], illustrates the application of system dynamics to many business areas including:
Evaluating response to industry or competitor innovations
Improving large project management
Understanding the complex relationship between equipment maintenance and business results
Innovation diffusion, including the spread of of new ideas and market growth of new products.
The development of positive feedbacks that can cause a firm or industry to grow or decline, including, product awareness, unit development costs, price and production cost, network and complementary good effects, product differentiation, new product development, market power, mergers and acquisitions, workforce quality and loyalty, cost of capital, organization size and success, and ambition and aspirations.
achieving desired demographics in organizations, such as number of people in various job categories, skills, age, race, gender, etc.
Price setting in commodity industries and stock markets
Optimizing the mix of inputs to a production process
Handling increasing backlogs of work with existing capacity, in both manufacturing and service industries
Improving product development performance - reducing time to market
Improving ability to grow market share
Improving forecasts while reducing forecasting costs
Improving management of inventories and supply chains, not only in manufacturing industries, but also in industries such as real estate.
Reducing inventory/workforce oscillations
Better understanding your industry's business cycle, thus improving your organization's ability to deal with the cycle.
Understand, and thereby design policies to enable your organization to better deal with your industry's supply, demand, inventory, and price cycles.
Should you have business problems in any of the above listed areas, system dynamics may be an appropriate methodology for addressing them. Further, if you desire to build internal capacity to use system dynamics to solve other problems in the future, or to build management and leadership capacity within your organization, as well as to potentially improve education effectiveness in your local community, we hope you will investigate StewardshipModeling.com's offerings.
Following are consulting and education links illustrating the applicability of system dynamics to business.
1) McKinsey [http://www.businessdynamics.net/] and Company, Inc. maintains a listing of papers based on consulting engagements in which system dynamics was used.
2) Professor John Sterman [http://web.mit.edu/jsterman/www/], chair of the System Dynamics Group at the Sloan School of Management at MIT [http://web.mit.edu/sdg/www/], just released (2000) his new book, Business Dynamics: Systems Thinking and Modeling for a Complex World [http://web.mit.edu/jsterman/www/BusDyn2.html]. At this site you can learn more about system dynamics by reading the book's Preface and Table of Contents.
3) The Sloan School's System Dynamics Group also offers several forms of system dynamics coursework:
Executive education [mitsloan.mit.edu/execed/specialexec/courses/system-dynamics.htm] course (2 days)
Managers, planners and strategists [http://mitsloan.mit.edu/execed/specialexec/courses/org-learning.htm] course (one week)
Distance learning [http://caes.mit.edu/asp/off_campus/system_dynamics/index.html] course (Four courses, 1/2 semester each)
Regular on-campus [http://web.mit.edu/15.871/] course (may not be available to other than MIT students, but the syllabus here will give you some idea of course content, which may be of interest)
4) CUSA - System Dynamics Group [http://www.unipa.it/~bianchi/eng/sdg.htm] in Palermo, Italy directed by Professor Carmine Bianchi [http://www.unipa.it/~bianchi/eng/cb.htm]. CUSA SDG's web site contains the following:
http://www.unipa.it/~bianchi/eng/sd.htm for an overview of system dynamics using business examples
http://www.unipa.it/~bianchi/eng/sbgmfs.htm for an example of the integration of accounting with system dynamics models in family-owned businesses
http://www.unipa.it/~bianchi/eng/sdpro.htm for a seminar on dynamic modeling applied to small business growth management.
http://www.unipa.it/~bianchi/index.htm for more information about CUSA-SDG
The Department of Social Science and Policy Studies at Worcester Polytechnic Institute in Worcester, MA has an undergraduate major [http://www.wpi.edu/Academics/Depts/SSPS/Ugrad/sd.html] in system dynamics.
See Professor George Richardson's [http://www.albany.edu/gspa/pad/faculty/richardson/richardson.htm] site at the Rockefeller College of Public Affairs and Policy at the State University of New York at Albany. Also the Center for Policy Research at the Rockefeller College at SUNY Albany hosts the System Dynamics Society [http://www.albany.edu/cpr/int_soc.html]
The System Dynamics Society maintains a site listing system dynamics courses in universities [http://www.albany.edu/cpr/sds/sdcourses/] world-wide.
Michael Kennedy, of South Bank University in London, catalogues and classifies system dynamics work in university administration and teaching. The applications include Corporate Governance; Planning, Resourcing & Budgeting; Teaching Quality; Teaching Practice; Microworlds; and Enrollment Demand. Michael Kennedy organizes International events concerned with System Dynamics and Higher Education (University) Management.
System dynamics in education project at MIT [http://sysdyn.mit.edu/]
The Creative Learning Exchange [http://www.clexchange.org/cle_homepage.html]- contains most of the available papers on the use of systems thinking and dynamic modeling in K-12 education, and where K-12 teachers post instructional units they have created which use systems tools.
Waters Center for System Dynamics [http://www.trinityvt.edu/waters/]- "improving and expanding the use of system dynamics in educational settings: kindergarten through postgraduate education."
Maryland Virtual High School [http://mvhs1.mbhs.edu/mvhsproj/project2.html] at Montgomery Blair High School
Forrester, Jay (1998) Designing the Future. A presentation given at Universidad de Sevilla, Sevilla, Spain. and available for downloading from Professor Forrester's web site [http://sysdyn.mit.edu/people/jay-forrester.html].