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SYSTEM DYNAMICS and Systems Thinking developed by James R. Burns.

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1 SYSTEM DYNAMICS and Systems Thinking developed by James R. Burns

2 Prepared by James R. Burns Why???? b Because of the frenetic increases in complexity—society is becoming increasing complex and we need tools to cope with it b This is certainly true in the IS/IT arena as well

3 Prepared by James R. Burns Coping tools b Causal modeling b Simulation Discrete stochastic (Promodel)Discrete stochastic (Promodel) Continuous deterministic (Vensim)Continuous deterministic (Vensim)

4 Prepared by James R. Burns System Dynamics and Vensim b A tutorial on Vensim is provided at the end of Chapter 6 in your copy packet, beginning on page 35 of that chapter

5 Prepared by James R. Burns Dynamic problems appropriate for Vensim (rather than promodel) b There is change over time b The changing character of the situation IS THE PROBLEM b The problem should be studied in aggregates b The problem does not have a significant stochastic component or complexion to it

6 Prepared by James R. Burns Start with descriptions of the following b PURPOSE b PERSPECTIVE b PROBLEM b MODE

7 Prepared by James R. Burns What are we doing here???? b Attempting to characterize, cope with and understand complexity Especially DYNAMIC complexityEspecially DYNAMIC complexity b Inventing a physics for a systems or processes for which there exists no physics You get to become a Newton, a Liebnitz, a Galileo, an Einstein, a ….You get to become a Newton, a Liebnitz, a Galileo, an Einstein, a ….

8 Prepared by James R. Burns Steps b Be problem-driven b Interview people familiar with the problem b Gather verbal descriptions of the problem b Formulate a list of variables b Develop a causal loop diagram b Develop a stock-and-flow diagram b Create a working simulation in VENSIM

9 Prepared by James R. Burns How many of you have used a model to solve a problem or make a decision? b You’ve been through this drill before! b All of you have….all of the time!

10 Prepared by James R. Burns

11 Uses to which these models can be put b What IF experiments—hands on experimentation b Decision making PlanningPlanning Problem solvingProblem solving CreativityCreativity Out of the box thinkingOut of the box thinking b Hypothesis testing b Finding leverage points, points of intervention b LEARNING

12 Prepared by James R. Burns Some notation-- b CLD – Causal Loop Diagram b SFD – Stock-and-Flow Diagram b BOT – Behavior Over Time Chart

13 Prepared by James R. Burns A CLD of the US energy system

14 Prepared by James R. Burns A roadmap for the U.S. energy system

15 Prepared by James R. Burns BOT—Behavior Over Time chart b For US energy market

16 Prepared by James R. Burns US energy consumption, by source, 1850-2000. (Units: quadrillion BTU) (Source: Energy use in the United States. Available from http://en.wikipedia.org/wiki/Energy_use_in_the_United_States) http://en.wikipedia.org/wiki/Energy_use_in_the_United_States

17 Prepared by James R. Burns From CLD to SFD A B + A B - vs.  System dynamics model  Causal loop diagram  Stock-and-flow diagram Mathematical representation for stock:

18 Extraordinary Organizations… b Are those that engage people’s commitment and capacity to learn at all levels in the organization b Will recognize that the only truly sustainable competitive advantage is the rate at which organizations learn b Nothing compares to the exhilaration that comes from working within learning orgs.

19 Ordinary Organizations…. b Learn slowly if at all b Characterize an organization that you are aware of…..

20 Disciplines of the Learning Organization b Personal Mastery b Mental Models b Shared Vision b Team (Organizational) Learning b Systems Thinking

21 Personal Mastery b Continually clarifying and deepening our personal vision b Getting better at what we do best

22 Mental Models b Deeply engrained assumptions, generalizations

23 Shared Vision b Where there is genuine vision, people excel b “Where there is no vision the people perish”

24 Team Learning b The synergy of teams is the ultimate exhilaration b Some people, having experienced it once, spend the rest of their lives looking for it

25 Systems Thinking b All human endeavors are systems

26 The Fifth Discipline b IS, OF COURSE, SYSTEMS THINKING b Subsumes and permeates all of the other disciplines b By enhancing the other disciplines, it continually reminds us that the whole can exceed the sum of its parts b But ST also needs the other four disciplines to realize its full potential

27 Metanoia--A shift of Mind b The recreation of ourselves through learning b Becoming able to do something we never were able to do b Re-perceiving the world and our relation to it b Extending our capacity to create b There is within each one of us a deep hunger for this type of learning

28 Putting the Ideas into Practice b SENGE: The greatest societal problem facing us today is the increased complexity of our systems b FORRESTER: Systems are counterintuitive. Consequently, naïve policy makers implement policies that have just the opposite of their intended effect

29 Senge’s Metanoia b Originally, he was interested only in public sector problems b But then corporate leaders came to him for help These were thoughtful people, deeply aware of the inadequacies of their own organizationsThese were thoughtful people, deeply aware of the inadequacies of their own organizations All shared a commitment and capacity to innovate that was lacking in the public sectorAll shared a commitment and capacity to innovate that was lacking in the public sector

30 Who were these people??? b William O’Brien of Hanover Insurance b Edward Simon from Herman Miller b Ray Stata, CEO of Analog Devices b Trammel Crow b Arie De Geus of Shell Oil Co b Leaders from Apple, Ford, Polaroid, b 4000 Managers who attended the Innovations Associates workshops over eleven years

31 “I am my Position” b We are trained to be loyal to our jobs—so much so that we confuse our job with our personal identity. b Most people see themselves within a system over which they can exercise little control b There is a kind of myopia in American organizations that causes individual workers to focus only on their small part rather than on the larger system as a whole b APICS is trying to address this problem b We need to see ourselves in the context of the larger system

32 “The Enemy is out There” b Generally, we tend to see the problem as outside us “no one can catch a ball in that darn field…”“no one can catch a ball in that darn field…” b “Thou shalt always find an external agent to blame” Marketing blames manufacturing—quality is poor, due dates are missed, etc.Marketing blames manufacturing—quality is poor, due dates are missed, etc. Manufacturing blames EngineeringManufacturing blames Engineering Engineering blames MarketingEngineering blames Marketing

33 “The Enemy is out there” is actually… b A byproduct of “I am my position…” Because of the non-systemic ways of looking at the world that it fostersBecause of the non-systemic ways of looking at the world that it fosters When we focus only on our position, we do not see how our actions extend beyond the boundary of that positionWhen we focus only on our position, we do not see how our actions extend beyond the boundary of that position When those actions have consequences that go beyond our position, they come back to hurt usWhen those actions have consequences that go beyond our position, they come back to hurt us

34 “The Enemy is out there” manifests itself with statements like.. b the Japanese are killing us b The labor unions are killing us b The government regulators are killing us b But this is always an incomplete story that fails to recognize that “out there” and “in here” are parts of the SAME SYSTEM

35 The Illusion of Taking Charge b Being proactive is in vogue Just ask Steven CoveyJust ask Steven Covey b This means face up to difficult problems, stop waiting for someone else to do something, solve problems before they grow into crises, etc. b We have a hooked on heroics culture—one that always looks for leadership from the top

36 The Illusion of Taking Charge b All too often pro-activeness is re- activeness in disguise b True pro-activeness comes from seeing how we contribute to our own problems

37 The Fixation of Events b We are conditioned to see life as a sequence of events b The situation unfolding in Kashmir is viewed as a sequence of escalating events b The situation in Israel/Palestine again is seen as a situation involving events which can be used to justify the position of either side

38 The Fixation of Events b The media reinforces the fixation on events b That is what they report b It is part of our programming b Distracts us from seeing the longer term patterns of change that underlie events and from understanding the causes that underlie the patterns

39 Today, the primary threats to our survival…\ b Stem not from events but from slow gradual processes The environmentThe environment The erosion of public educationThe erosion of public education Generative thinking cannot be sustained if people are focused on eventsGenerative thinking cannot be sustained if people are focused on events

40 The Parable of the Boiled Frog b What is it???

41 The Delusion of Learning from Experience b We learn from taking an action and observing the consequences of that actions What happens when we cannot observe the consequences of our action?What happens when we cannot observe the consequences of our action? We all have a learning horizon—a span in time and space within which we assess our effectivenessWe all have a learning horizon—a span in time and space within which we assess our effectiveness b We learn best from experience but we never directly experience the consequences of many of our most important decisions

42 The Delusion of Learning from Experience b Most people have short memories b If cycles last longer than a year or two, they are particularly hard to see and thus learn from b To reduce the breadth of impact organizations are decomposed into components b But the departments create stovepipes that reduce the observability of complex issues that cross functional boundaries.

43 Prepared by James R. Burns Reinforcing loops vs. Balancing loops

44 Prepared by James R. Burns Stock involving both reinforcing and balancing loops

45 Prepared by James R. Burns Stock-and-Flow Diagram Mathematical representation for Population: INTEGRAL ( ) function in the VENSIM model: Population = INTEGRAL (Births – Deaths, Population(t 0 ))

46 Prepared by James R. Burns The Methodology once problem is identified b Find substance b Delineate CLDs, BOT charts b Submit these for outside scrutiny b Delineate SFD b Implement simulation in VENSIM b Submit for outside scrutiny b Utilize model for policy experimentation

47 Prepared by James R. Burns Find substance b Written material BooksBooks ArticlesArticles Policy and procedure manualsPolicy and procedure manuals b People’s heads Order of magnitude more hereOrder of magnitude more here Must conduct interviews, build CLD’s, show them to the interviewee to capture thisMust conduct interviews, build CLD’s, show them to the interviewee to capture this

48 Prepared by James R. Burns Delineate CLDs, BOTs b CLD – Causal Loop Diagram b BOT – Behavior-over-Time chart b Collect info on the problem b List variables on post-it notes b Describe causality using a CLD b Describe behavior using a BOT diagram

49 Prepared by James R. Burns Submit these for outside scrutiny b We simply must get someone qualified to assess the substance of the model

50 Prepared by James R. Burns Delineate SFD b SFD – Stock and Flow Diagram b Translate CLD into SFD

51 Prepared by James R. Burns What are stocks and flows?? b A way to characterize systems as stocks and flows between stocks b Stocks are variables that accumulate the affects of other variables b Rates are variables that control the flows of material into and out of stocks b Auxiliaries are variables that modify information as it is passed from stocks to rates

52 Prepared by James R. Burns Stock and Flow Notation-- Quantities b STOCK b RATE b Auxiliary

53 Prepared by James R. Burns Stock and Flow Notation-- Quantities b Input/Parameter/Lookup –Have no edges directed toward them b Output –Have no edges directed away from them

54 Prepared by James R. Burns Inputs and Outputs b Inputs b Parameters b Lookups Inputs are controllable quantitiesInputs are controllable quantities Parameters are environmentally defined quantities over which the identified manager cannot exercise any controlParameters are environmentally defined quantities over which the identified manager cannot exercise any control Lookups are TABLES used to modify information as it is passed alongLookups are TABLES used to modify information as it is passed along b Outputs Have no edges directed away from themHave no edges directed away from them

55 Prepared by James R. Burns Stock and Flow Notation--edges b Information b Flow

56 Prepared by James R. Burns Some rules b There are two types of causal links in causal models InformationInformation FlowFlow b Information proceeds from stocks and parameters/inputs toward rates where it is used to control flows b Flow edges proceed from rates to states (stocks) in the causal diagram always

57 Prepared by James R. Burns Robust Loops b In any loop involving a pair of quantities/edges, b one quantity must be a rate b the other a state or stock, b one edge must be a flow edge b the other an information edge

58 Prepared by James R. Burns CONSISTENCY b All of the edges directed toward a quantity are of the same type b All of the edges directed away from a quantity are of the same type

59 Prepared by James R. Burns Population problem b Population has grown in the last 102 years from 1.65 billion persons to 6.2 billion persons on planet earth today b WHAT IS THE CARRYING CAPACITY OF THE PLANET?? Depends on what material standard living you assumeDepends on what material standard living you assume b Birth rates, due to improved health, and death rates are lower due again to improved health b Corresponding to each, there is a “normal” condition

60 Prepared by James R. Burns List VARIABLES b Population b Birth rate b Death rate b Death rate normal b Birth rate normal

61 Prepared by James R. Burns Draw Causal Loop Diagram

62 Prepared by James R. Burns Converting to a STOCK AND FLOW Diagram b What is a STOCK? b What is a FLOW? b What is a RATE? b What is a parameter?

63 Prepared by James R. Burns Convert CLD to SFD

64 Prepared by James R. Burns Determine equations b BRN =.04 b DRN =.028 b BR = BRN*P b DR = DRN*P b P(t + dt) = p(t) + dt*(BR – DR)

65 Prepared by James R. Burns The Sector Approach to SD model formulation-- b Begin by identifying the sectors A “sector” is all the structure associated with a single flowA “sector” is all the structure associated with a single flow There could be several states in a single sectorThere could be several states in a single sector

66 Prepared by James R. Burns The sector Approach, Continued b Determine the within-sector structure Reuse existing “molecules” where possibleReuse existing “molecules” where possible b Determine the between-sector information infrastructure There are no flows and therefore no stocks or rates hereThere are no flows and therefore no stocks or rates here

67 Prepared by James R. Burns A Single-sector Exponential goal-seeking Model b Sonya Magnova is a television retailer who wishes to maintain a desired inventory of DI television sets so that she doesn’t have to sell her demonstrator and show models. Sonya’s ordering policy is quite simple-- adjust actual inventory I toward desired inventory DI so as to force these to conform as closely as possible. The initial inventory is Io. The time required for ordered inventory to be received is AT.

68 Prepared by James R. Burns A Two-sector Housing/population Model b A resort community in Colorado has determined that population growth in the area depends on the availability of hoousing as well as the persistent natural attractiveness of the area. Abundant housing attracts people at a greater rate than under normal conditions. The opposite is true when housing is tight. Area Residents also leave the community at a certain rate due primarily to the availability of housing.

69 Prepared by James R. Burns Two-sector Population/housing Model, Continued b The housing construction iindustry, on the other hand, fluctuates depending on the land availability and housing desires. Abundant housing cuts back the construction of houses while the opposite is true when the housing situation is tight. Also, as land for residential development fills up (in this mountain valley), the construction rate decreases to the level of the demolition rate of houses.

70 Prepared by James R. Burns What are the main sectors and how do these interact? b Population b Housing

71 Prepared by James R. Burns What is the structure within each sector? b Determine state/rate interactions first b Determine necessary supportng infrastructure PARAMETERSPARAMETERS AUXILIARIESAUXILIARIES

72 Prepared by James R. Burns What does the structure within the population sector look like? b RATES: in-migration, out-migration, net death rate b STATES: population b PARAMETERS: in-migration normal, out- migration normal, net death-rate normal

73 Prepared by James R. Burns What does the structure within the housing sector look like? b RATES: construction rate, demolition rate b STATES: housing b AUXILIARIES: Land availability multiplier, land fraction occupied b PARAMETERS: normal housing construction, average lifetime of housing b PARAMETERS: land occupied by each unit, total residential land

74 Prepared by James R. Burns What is the structure between sectors? b There are only AUXILIARIES, PARAMETERS, INPUTS and OUTPUTS

75 Prepared by James R. Burns What are the between-sector auxiliaries? b Housing desired b Housing ratio b Housing construction multiplier b Attractiveness for in-migration multiplier b PARAMETER: Housing units required per person

76 Prepared by James R. Burns Can you construct the schematic model for this Causal model?

77 Prepared by James R. Burns We know what that is

78 Prepared by James R. Burns How about this one?

79 Prepared by James R. Burns We know what it is

80 Prepared by James R. Burns Some rules b There are two types of causal links in causal models InformationInformation FlowFlow b Information proceeds from stocks and parameters toward rates where it is used to control flows b Flow edges proceed from rates to states (stocks) in the causal diagram always

81 Prepared by James R. Burns Loops b In any loop involving a pair of quantities/edges, b one quantity must be a rate b the other a state or stock, b one edge must be a flow edge b the other an information edge

82 Prepared by James R. Burns CONSISTENCY b All of the edges directed toward a quantity are of the same type b All of the edges directed away from a quantity are of the same type

83 Prepared by James R. Burns Rates and their edges

84 Prepared by James R. Burns Parameters and their edges

85 Prepared by James R. Burns Stocks and their edges

86 Prepared by James R. Burns Auxiliaries and their edges

87 Prepared by James R. Burns Outputs and their edges

88 Prepared by James R. Burns STEP 1: Identify parameters/inputs b Parameters have no edges directed toward them

89 Prepared by James R. Burns STEP 2: Identify the edges directed from parameters b These are information edges always

90 Prepared by James R. Burns STEP 3: By consistency identify as many other edge types as you can

91 Prepared by James R. Burns STEP 4: Look for loops involving a pair of quantities only b Use the rules identified above

92 System Dynamics Software b STELLA and I think High Performance Systems, Inc.High Performance Systems, Inc. best fit for K-12 educationbest fit for K-12 education b Vensim Ventana systems, Inc.Ventana systems, Inc. Free from downloading off their web site: www.vensim.comFree from downloading off their web site: www.vensim.com Robust--including parametric data fitting and optimizationRobust--including parametric data fitting and optimization best fit for higher educationbest fit for higher education b Powersim What Arthur Andersen is usingWhat Arthur Andersen is using

93 What is system dynamics b A way to characterize systems as stocks and flows between stocks b Stocks are variables that accumulate the affects of other variables b Rates are variables the control the flows of material into andout of stocks b Auxiliaries are variables the modify information as it is passed from stocks to rates

94 A DEMO

95 Prepared by James R. Burns Nature’s Templates: the Archetypes b Structures of which we are unaware hold us prisoner –The swimmer scenario b Certain patterns of structure occur again and again: called ARCHETYPES

96 Prepared by James R. Burns We are creating a “language” b reinforcing feedback and balancing feedback are like the nouns and verbs b systems archetypes are the basic sentences b Behavior patterns appear again in all disciplines- -biology, psychology, family therapy, economics, political science, ecology and management b Can result in the unification of knowledge across all fields

97 Prepared by James R. Burns Recurring behavior patterns b Do we know how to recognize them? b Do we know how to describe them? b Do we know how to prescribe cures for them? b The ARCHETYPES describe these recurring behavior patterns

98 Prepared by James R. Burns The ARCHETYPES b provide leverage points, intervention junctures at which substantial change can be brought about b put the systems perspective into practice b About a dozen systems ARCHETYPES have been identified b All ARCHETYPES are made up of the systems building blocks: reinforcing processes, balancing processes, delays

99 Prepared by James R. Burns Before attacking the ARCHETYPES we need to understand simple structures b the reinforcing feedback loop b the balancing feedback loop b THE DEMO b Pages 520-525 in Austin/Burns--your handout

100 Prepared by James R. Burns ARCHETYPE 1: LIMITS TO GROWTH b A reinforcing process is set in motion to produce a desired result. It creates a spiral of success but also creates inadvertent secondary effects (manifested in a alancing process) that eventually slow down the success.

101 Prepared by James R. Burns Management Principle relative to ARCHETYPE 1 b Don’t push growth or success; remove the factors limiting growth

102 Prepared by James R. Burns ARCHETYPE 1: LIMITS TO GROWTH b Useful in all situations where growth bumps up against limits b Firms grow for a while, then plateau b Individuals get better for a while, then their personal growth slows. b Falling in love is kind of like this –The love begins to plateau as the couple get to know each other better

103 Prepared by James R. Burns Structure

104 Understanding the Structure b High-tech orgs grow rapidly because of ability to introduce new products b This growth plateaus as lead times become too long

105 Prepared by James R. Burns How to achieve Leverage b Most managers react to the slowing growth by puching harder on the reinforcing loop b Unfortunately, the more vigorously you push the familiar levels, the more strongly the balancing proces resists, and the more futile your efforts become. b Instead, concentrate on the balancing loop-- changing the limiting factor –This is akin to Goldratt’s Theory of Constraints--remove the bottleneck, the impediment

106 Prepared by James R. Burns Applications to Quality Circles and JIT b Quality circles work best when there is even- handed emphasis on both balancing and reinforcing loops b JIT has had to focus on recalcitrant suppliers b THERE WILL ALWAYS BE MORE LIMITING PROCESSES –When once source of limitatiin is removed, another will surface b Growth eventually WILL STOP

107 Prepared by James R. Burns Create your own LIMITS TO GROWTH story b Identify a limits to growth pattern in your own experience b Diagram it What is growingWhat is growing What might be limitationsWhat might be limitations Example--the COBA and University capital campaignsExample--the COBA and University capital campaigns NOW, LOOK FOR LEVERAGENOW, LOOK FOR LEVERAGE

108 Prepared by James R. Burns Test your LIMITS TO GROWTH model b Talk to others about your perception b Test your ideas about leverage in small real-life experiments b Run and re-run the simulation model b Approach possible resistance and seek WIN-WIN strategies with them

109 Prepared by James R. Burns ARCHETYPE 2: shifting the burden b An underlying problem generates symptoms that demand attention. But the underlying problem is difficult for people to address, either because it is obscure or costly to confront. So people “shift the burden” of their problem to other solutions--well- intentioned, easy fixes that seem extremely efficient. Unfortunately the easier solutions only ameliorate the symptoms; they leave the underlying problem unaltered. The underlying problem grows worse and the system loses whatever abilities it had to solve the underlying problem.

110 Prepared by James R. Burns The Stereotype Structure Symptiom-Correcting Process Problem-Correcting Process Addictioin Loop

111 Prepared by James R. Burns Special Case: Eroding Goals b Full employment meant 4% unemployment in the 60%, but 6 to 7% unemployment in the early 1980’s b Gramm-Rudman bill called for reaching a balanced budget by 1991, but this was shifted to 1993 and from 1993 to 1996 and from 1996 to 1998 b “If all else fails, lower your goals..”

112 Prepared by James R. Burns EXAMPLE

113 Another Example Costs of Higher Ed not funded by State Raise tuition, add course fees, etc. Lower enrollments Perceived cost to the student

114 Prepared by James R. Burns Still Another Example Symptom-correcting process Problem-correcting Process Addiction Loop

115 Prepared by James R. Burns “Shifting the Burden” is an insidious problem b Is has a subtle reinforcing cycle b This increases dependence on the symptomatic solution b But eventually, the system loses the ability to apply the fundamental solution b The system collapses

116 Prepared by James R. Burns Senge Says b Today’s problems are yesterday’s solutions b We tend to look for solutions where they are easiest to find

117 Prepared by James R. Burns HOW TO ACHIEVE LEVERAGE b Must strengthen the fundamental response Requires a long-term orientation and a shared visionRequires a long-term orientation and a shared vision b Must weaken the symptomatic response Requires a willingness to tell the truth about these “solutions”Requires a willingness to tell the truth about these “solutions”

118 Prepared by James R. Burns Create your own “Shifting the Burden” Story b Is there a problem that is getting gradually worse over the long term? b Is the overall health of the system gradually worsening? b Is there a growing feeling of helplessness? b Have short-term fixes been applied? –The Casa Olay problem of using cupouns to generate business and then can’t get away from using the coupons because their customer base is hucked on coupons

119 Prepared by James R. Burns To structure your problem b Identify the problem b Next, identify a fundamental solution b Then, identify one or several symptomatic solutions b Finally, identify the possible negative “side effects” of the symptomatic solution

120 Prepared by James R. Burns Review b We have now seen two of the basic systems archetypes. The Limits to Growth ArchetypeThe Limits to Growth Archetype The Shifting the Burden ArchetypeThe Shifting the Burden Archetype b As the archetypes are mastered, they become combined into more elaborate systemic descriptions. b The basic “sentences” become parts of paragraphs b The simple stories become integrated into more involved stories

121 Prepared by James R. Burns Seeing Structures, not just Trees b Helps us focus on what is important and what is not b Helps us determine what variables to focus on and which to play less attention to

122 Prepared by James R. Burns WonderTech: The Chapter 7 Scenario b A lesson in Growth and Underinvestment b What Senge gets out of this is the Growth and Underinvestment Archetype A combination of variants of the Limits to Growth Archetype and the Shifting the Burden ArchetypeA combination of variants of the Limits to Growth Archetype and the Shifting the Burden Archetype

123 Prepared by James R. Burns The WonderTech Scenario b WonderTech continues to invest in the growth side of the process. Sales grow but then plateau. Management puts more sales people into the field. Offers more incentives to sales force. But because of long lead times, customers wane. “Yes you have a great product, but you can’t deliver on your lead time promise of eight weeks. We know; we’ve heard from your other customers.” In fact, the company relaxed its lead-time standard out to twelve to sixteen weeks because of insufficient capacity.

124 The Reinforcing Loop

125 The Balancing Loop: Following the LTG Archetype

126 The Growth Curve: Page 117

127 What’s happened? b WT’s management did not pay much attention to their delivery service. They mainly tracked sales, profits, market share and return on investment. WT’s managers waited until demand fell off before getting concerned about delivery times. But this is too late. The slow delivery time has already begun to correct itself. The management was not very concerned about the relaxed delivery time standard of eight weeks.

128 The WonderTech Scenario b The firm decides to build a new manufacturing facility. But the facility comes on line at a time when sales are declining and lead times are coming back to the eight-week standard. b Of every 10 startup companies, 5 will disappear with five years, only 4 survive into their tenth year and only 3 into their fifteenth year.

129 The Shifting the Burden Component

130 Put the whole thing together

131 Comments on The Senge Methodology b Sees problems as conforming to a finite number of “archetypes” b Formulates models based on combinations of the archetypes b Addresses problem-driven situations What about situations and systems that are technology-driven, dynamics-driven, exogenously-driven, anything but problem- drivenWhat about situations and systems that are technology-driven, dynamics-driven, exogenously-driven, anything but problem- driven

132 More Comments on the Senge Methodology b But does this become sufficiently general to accommodate all dynamical “scenarios and situations”? b It is difficult to translate his archetypes and causal models into running system dynamics simulations A lot of variables (RATE VARIABLES, specifically) get left out in terms of connectionsA lot of variables (RATE VARIABLES, specifically) get left out in terms of connections

133 More Comments on the Senge Methodology b The focus is on characterizing the dynamics, not on how to capture that in terms of stocks, flows and information paths b He doesn’t label his edges with “+” or “-” signs

134 Another methodology: The Sector Approach to SD model formulation b Begin by identifying the sectors A “sector” is all the structure associated with a single flowA “sector” is all the structure associated with a single flow There could be several states in a single sectorThere could be several states in a single sector b Determine the within-sector structure Reuse existing “molecules” where possibleReuse existing “molecules” where possible b Determine the between-sector information infrastructure There are no flows and therefore no stocks or rates hereThere are no flows and therefore no stocks or rates here

135 Prepared by James R. Burns A Single-sector Exponential goal-seeking Model b Sonya Magnova is a television retailer who wishes to maintain a desired inventory of DI television sets so that she doesn’t have to sell her demonstrator and show models. Sonya’s ordering policy is quite simple-- adjust actual inventory I toward desired inventory DI so as to force these to conform as closely as possible. The initial inventory is Io. The time required for ordered inventory to be received is AT.

136 Prepared by James R. Burns A Two-sector Housing/population Model b A resort community in Colorado has determined that population growth in the area depends on the availability of hoousing as well as the persistent natural attractiveness of the area. Abundant housing attracts people at a greater rate than under normal conditions. The opposite is true when housing is tight. Area Residents also leave the community at a certain rate due primarily to the availability of housing.

137 Prepared by James R. Burns Two-sector Population/housing Model, Continued b The housing construction iindustry, on the other hand, fluctuates depending on the land availability and housing desires. Abundant housing cuts back the construction of houses while the opposite is true when the housing situation is tight. Also, as land for residential development fills up (in this mountain valley), the construction rate decreases to the level of the demolition rate of houses.

138 Prepared by James R. Burns What are the main sectors and how do these interact? b Population b Housing

139 Prepared by James R. Burns What is the structure within each sector? b Determine state/rate interactions first b Determine necessary supportng infrastructure PARAMETERSPARAMETERS AUXILIARIESAUXILIARIES

140 Prepared by James R. Burns What does the structure within the population sector look like? b RATES: in-migration, out-migration, net death rate b STATES: population b PARAMETERS: in-migration normal, out- migration normal, net death-rate normal

141 Prepared by James R. Burns What does the structure within the housing sector look like? b RATES: construction rate, demolition rate b STATES: housing b AUXILIARIES: Land availability multiplier, land fraction occupied b PARAMETERS: normal housing construction, average lifetime of housing b PARAMETERS: land occupied by each unit, total residential land

142 Prepared by James R. Burns What is the structure between sectors? b There are only AUXILIARIES, PARAMETERS, INPUTS and OUTPUTS

143 Prepared by James R. Burns What are the between-sector auxiliaries? b Housing desired b Housing ratio b Housing construction multiplier b Attractiveness for in-migration multiplier b PARAMETER: Housing units required per person

144 Prepared by James R. Burns

145

146 Experiments with growth models b Models with only one rate and one state b Average lifetime death rates b cohorts b Models in which the exiting rate is not a function of its adjacent state b Including effects from other variables ratios and table functionsratios and table functions


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