Chapter 3 of the primary core program text, Business Dynamics: Systems Thinking and Modeling for a Complex World [http://web.mit.edu/jsterman/www/BusDyn2.html], describes the system dynamics modeling process. Table 3-1, giving an overview of the process, is replicated here.
The note in brackets after each step documents the StewardshipModeling.com core course on which each step is focused.
1. Problem Articulation (Boundary Selection) [Focus of Core Course 1]
Theme selection: What is the problem? Why is it a problem?
Key variables: What are the key variables and concepts we must consider
Time horizon: How far in the future should we consider? How far back in the past lie the roots of the problem?
Dynamic problem definition (reference modes): What is the historical behavior of the key concepts and variables? What might their behavior be in the future?
2. Formulation of Dynamic Hypothesis [Focus of Core Course 1]
Initial hypothesis generation: What are the current theories of the problematic behavior?
Endogenous focus: Formulate a dynamic hypothesis that explains the dynamics as endogenous consequences of the feedback structure.
Mapping: Develop maps of causal structure based on initial hypotheses, key variables, reference modes, and other available data, using tools such as model boundary diagrams, subsystem diagrams, causal loop diagrams, stock and flow maps, policy structure diagrams, and other facilitation tools.
3. Formulation of a simulation model [Focus of Core Course 2 and Core Course 3]
Specification of structure, decision rules.
Estimation of parameters, behavioral relationships, and initial conditions.
Tests for consistency with the purpose and boundary
4. Testing [Focus of Core Course 4]
Comparison to reference modes: Does the model reproduce the problem behavior adequately for your purpose?
Robustness under extreme conditions: Does the model behave realistically when stressed by extreme conditions?
Sensitivity: How does the model behave given uncertainty in parameters, initial conditions, model boundary, and aggregation?
... Many other tests (see chapter 21)
5. Policy Design and Evaluation [Focus of Core Course 5]
Scenario specification: What environmental conditions might arise?
Policy design: What new decision rules, strategies, and structures might be tried in the real world? How can they be represented in the model?
"What if ..."analysis: What are the effects of the policies?
Sensitivity analysis: How robust are the policy recommendations under different scenarios and given uncertainties?
Interactions of policies: Do the policies interact? Are there synergies or compensatory responses?
Although the above would indicate that the modeling process is linear, it is, in fact, iterative as shown in the figure below from Sterman, Figure 3-1, "The modeling process is iterative." Business Dynamics: Systems Thinking and Modeling for a Complex World) "Results of any step can yield insights that lead to revisions in any earlier step (indicated by the links in the center of the diagram)."