1. On the Foundations of System Dynamics
George P. Richardson
Rockefeller College of Public Affairs and Policy
University at Albany

2. Motivation Feedback loops Stocks and flows Behavior-over-time graphs
System archetypes
Computer simulation
STELLA, Vensim, PowerSim
Nonlinearity, loop dominance
Compensating feedback
Policy resistance
Dynamic complexity
What is really deeply important about systems thinking and system dynamics?
…in education?
…in corporate decision making and policy design?
…in public policy and governance?
…in theory building?

3. The deep foundation is the Endogenous Point of View
The Claim:
The deep foundation is the Endogenous Point of View

4. Forrester’s Stated Foundations: The four threads (1958)
Advances in computing technology
Growing experience with computer simulation
Improved understanding of strategic decision making
Developments in the understanding of the role of feedback in complex systems
But it took ten more years before Forrester published the deep foundation of the system dynamics approach

5. Forrester’s Four-Tiered Hierarchy Urban Dynamics, Market Growth as Influenced by Capital Investment
Closed boundary around the system
Feedback loops as the basic structural elements within the boundary
Level (stock) variables representing accumulations within the feedback loops
Rate (flow) variables representing activity within the feedback loops
Goal, Observed condition, Detection of discrepancy, Action based on discrepancy

6. Forrester’s Four-Tiered Hierarchy Urban Dynamics, Market Growth as Influenced by Capital Investment
“Closed boundary around the system”!
The “Closed boundary” signifies Forrester’s Endogenous Point of View.
It comes before feedback loops, stocks and flows, graphs over time, and all the rest of what we do.
It has top billing.
It is the deep foundation of systems thinking.

7. An Example Exogenous point of view Endogenous point of view
Sam is always mean to Pam.
It’s all his fault.
If he would be nicer, Pam’s life would be better.
Endogenous point of view
Maybe there is something Pam is doing …

8. Exogenous and Endogenous Points of View
“The fault, dear Brutus, is not in our stars, but in ourselves …” [Cassius, in Shakespeare’s Julius Caesar]

9. Exogenous and Endogenous Points of View
“The fault, dear Brutus, is not in our stars, but in ourselves …”
Cassius, in Shakespeare’s Julius Caesar (1599)

10. Exogenous and Endogenous Points of View
“We have met the enemy and He is Us.”
Walt Kelly’s Pogo, originally on an Earth Day poster, 1970.

11. Exogenous and Endogenous Points of View
Man is not the creature of circumstances. Circumstances are the creatures of men.
Benjamin Disraeli, Vivian Grey, 1827

12. Feedback Loops are a Consequence of the Endogenous Point of View

13. Expanding the Boundary to Enable an Endogenous Point of View

14. Endogeneity and Feedback
Feedback loops enable the endogenous point of view and give it structure.
[Richardson 1991]

15. Examples
Global Warming
Flood Damage
Terrorism

16. The Global Warming Discussion

17. 400,000 Years of Temperature Data

18. 100 Years of Temperature Data

19. CO2 Concentration

20. Methane

21. Yes, the peaks line up.
But if it’s been going on for 400,000 years, why do we now think humans are to blame?

22. [Source: http://en.wikipedia.org/wiki/Malankovitch_cycles]
Milankovitch Cycles (1,000,000 yrs) There are strong exogenous, structural effects on climate change.
[Source:

23. Both perspectives involve stock-and-flow / feedback dynamics
The water cycle
The carbon cycle
Heat trapping
Water vapor
Atmospheric CO2
Other GH gases
Cloud cover
Heat reflecting
- Ice albedo
- Cloud albedo
- Aerosols

24. Both may even acknowledge reinforcing feedback loops
Water vapor
Cloud cover
Ice albedo

25. The Global Warming Debate
Exogenous view: We are in the warm phase of a 100,000 year cycle caused by exogenous, structural characteristics
Policy implication: Adapt to the inevitable
Endogenous view: Human activity is exacerbating the natural cycle
Policy implication: Alter human habits to minimize the coming tragedies

26. Largely Exogenous Views of Terrorism (various internet sources; see paper)
Ethnicity, nationalism/separatism, poverty and economic disadvantage, globalization, (non)democracy, Western society, disaffected intelligentsia, dehumanization, and religion
Marginalization, ethnicity and nationalism, religion, cultism, free flow of weapons, training of non-military personnel, no pure democracy present
Belief causes terrorism.
Foreign domination and control of Muslim resources, the hatred of the Western way of life. alienation. poverty and illiteracy. moral decadence of the West. the West's support for Israel.
Economic deprivations, political injustices, foreign occupation and denial of fundamental rights including the right to self-determination

27. Terrorist Incidents Over Time (Source: http://www. start. umd

28. Endogenous View of Structure and Dynamics of Terrorist Cells
Peripheral support
Funding
(R)
(R)
Suppression activities
Terrorist actions
(R)
(B)
(R)
New recruits
Terrorist group
(R)
Losses
(B)
Zeal
(R)
(R)
Martyrs to the cause

29. Terrorism
Exogenous view: Violent forces exist that threaten others, and they are growing.
Policy implication: Defend to prevent harm; attack to weaken or eliminate the violent forces.
Endogenous view: Violent forces interact with defenses and attacks to create the rising tensions we observe.
Policy implication: Defend to prevent harm; minimize behaviors that create nasty reinforcing loops; maximize creation of beneficial reinforcing loops; work toward cross-cultural understandings.

30. An Exogenous View of Flood Damage
Flood frequency
Structural mitigation policies
Flood severity
Flood damage

31. Flood Damages (Deegan 2007, NOAA)
Increasing coastal populations?
Increasing severity of floods (global warming)?
1968 National Flood Insurance legislation?

32. A Model of Floods in which Identical Floods Do Not Cause Identical Damage

33. Underlying Causes of Damage: Evolution of Land Use and Natural Barriers

34. An Endogenous View of Flood Damage

35. Flood Damage
Exogenous view: Floods happen sometimes; the greater the flood, the worse the damage.
Policy implication: When floods happen to occur, recover and rebuild.
Endogenous view: Damage occurs when hazard meets vulnerability; vulnerability is a result of people policies
Policy implication: Recognize human role in damage. Work with stakeholders to minimize vulnerabilities.

36. Governing The great insight of servomechanisms engineering:
The act of trying to govern / manage / control generates system dynamics of its own.
“A closed-loop control system is thus an error-sensitive system and, being such, it acquires certain peculiarities and idiosyncrasies which, in large measure, are the reasons for this book” (Gordon Brown, 1948).

37. A Forrester Story Vividly Illustrating Control Generating Dynamics of its Own
One time we were making feedback control systems with some high-powered applications – I think it was a 10-horsepower motor with a hydraulic control system to drive probably some kind of military gun mount. I remember one night I was working with it, and something went wrong.
It had become unstable, and it began to go back and forth at the maximum speed that the 10-horsepower motor would drive it. Some of the hydraulic lines had broken, and it was spraying oil into the air, and I was trying to get it stopped.
As I rushed over to try to turn it off, I slipped in the oil on the floor. What I remember is seeing the rainbows in the oil spray up against the lights… which is a lesson on oscillatory behavior.

38. The “X/N” Matrix Striving for understanding and leverage, but failingJK
Achieving understanding and leverage
JJJ
Accepting fate, Predicting, Preparing KL
Confused, Misguided, Misguiding
LLL
Endogenous
Predominant Mode of Analysis
Exogenous
Exogenous
Endogenous
True (Predominant) State of Affairs

39. Is Endogeneity the Foundation of All Systems Approaches?
Suggested characterization: “Systems thinking is the mental effort to uncover endogenous sources of system behavior.”
Maybe.
But certainly, the Endogenous Point of View is fundamental to systems thinking in the system dynamics tradition.

40. The Foundation of System Dynamics
Suggested definition: “System dynamics is the use of informal maps and formal models with computer simulation to uncover and understand endogenous sources of system behavior.”

41. The Foundation of System Dynamics
What do systems thinkers and system dynamicists do?
We use systems thinking, management insights and computer simulation to
• hypothesize, test, and refine endogenous explanations of system change, and • to use those explanations to guide policy and decision making.