But again, regarding SD in business, we shall see that it has had limited impact on serious, hard-core strategic decision making. Jørgen Randers, one of the authors of the Limits to Growth study, is professor at BI Norwegian Business School. I had in May 2015 the pleasure of attending a talk by John Stermann, Professor of System Dynamics and Engineering Systems at MIT, on “Interactive Simulations to Catalyze Science-Based Transformation” and the contribution of SD to “the implementation of sustainable improvement programs to climate change and the implementation of policies to promote a sustainable world.” And in Norway we have a local SD tools vendor, Powersim, and Dr. One could for example use it to predict industry end game structures, supply and demand cycles, or technology adoptions explore alternative policies for resource allocation across business functions or optimize supply chains all stuff that serious strategy reports are built of.īefore exploring this issue in more detail, I should say that it is not all bleak. Given the importance that for example McKinsey attaches to SD and Forrester’s work by republishing Forrester’s 1995 article, and given SD’s great predictive capabilities, also in in competitive situations, it is nevertheless a puzzle why SD is not more applied in the management consulting profession. (See the original article here:, and PA Consulting’s response here. Their heading was “We Have Met the Enemy and He Is PowerPoint”. It was also the basis for Limits to Growth, which was commissioned by the Club of Rome, and included a large number of quantitative simulations of a world with exponential economic and population growth in combination with finite resources.Ī most insightful and elegant attack on the complexity of SD was indeed delivered by NY Times in an April 2010 article about the same SD model as referred to above, though NY Times somewhat incorrectly framed the issue as a PowerPoint issue, rather than as an SD issue. It was the conceptual basis for Forrester’s book Urban Dynamics, which essentially and controversially stated that low-cost housing in certain areas in Boston increases poverty in same area, it does not reduce it. It nicely explains the Kondratieff cycle (in the National Model), though economists would claim that such cycles have been studied and explained by economists since 1925.
That said, SD has been and is controversial for a number of reasons: cross-disciplinary, sometimes obvious, sometimes counterintuitive (but correct), a technocrat’s solution to political issues, and often very complex.
On a personal note, I like many other engineering-minded MBAs have always been intrigued by SD: i) I am engineer, with a degree in technical cybernetics and systems theory, and believe in the practices of engineering ii) SD is just engineering practices applied to non-engineering phenomena and iii) SD has proven and robust predictive powers, also in non-engineering domains (properly applied), Such diagrams are generally seen as great pedagogical tools, though the one below is on the complex side. See a causal-loop diagram of the situation facing COIN in Afghanistan produced by PA Consulting Group, below and to right (source: ). It is in particular applied to systems with elements of human decision-making and long time delays. As said in the intro to the article, Forrester “extended from industrial operations to business strategy, employment cycles, social problems, and the fate of the world.”įor readers who are not familiar with the subject of system dynamics (hereinafter SD), SD is about modelling (typically non-technical systems) using the methods of ordinary differential equations. On December 9, McKinsey Quarterly did a reprint of a 1995 article by Jay Forrester, who died on November 16, about system dynamics.
0 kommentar(er)
