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1994 Proceedings with Abstract – Stirling, Scotland

The 12th International Conference

of the System Dynamics Society

1994 – Stirling, Scotland

The following papers were presented at the conference in parallel and plenary sessions. The original printed proceedings, edited by Clare Monaghan and Eric Wolstenholme, were printed in hardcopy and distributed at the conference. Below please find the Paper Index for these proceedings, including an abstract. Papers are listed alphabetically by the last name of the first author. To find a paper by an author who is not the first author, simply search on the author’s name. Available papers are Acrobat (.pdf) files and can be read using Acrobat Reader available from adobe.com.

For details about purchasing a copy of the printed proceedings, visit our website System Dynamics Society or send an email message to system.dynamics@albany.edu.

PAPER INDEX – listed alphabetically by first author:

Using Cognitive Mapping to Develop a Large System Dynamics Model

Fran Ackermann, Terry M. Williams, Colin Eden, Andrew J. Tate

This paper describes the use of System Dynamics (SD) for making a claim for Disruption and Delay.  The case concerns design management of a large development project.  Extensive group workshops (GDSS) with the managers, based on the cognitive mapping technique and association software tope COPE, showed that the client-contractor interaction process had set up dynamic feedback loops creating Disruption and Delay to the project.  In order to qualify the extent of the Disruption and Delay, the cognitive map was transformed into an “influence diagram” and thence through the acquisition of numeric data into a large SD model.  The development of the two continued in parallel, informing and checking one another.  As well as simply providing explanations of trends and behavior, the SD model had to reproduce the planned and actual out-turns explicitly for it to be a creditable explanatory tool.  The paper will draw lessons from the case study on the process of moving from cognitive map to a SD model, and the mutual benefits of joint development, as well as more general lessons about combining soft and hard methods.

Design Guidelines for Participative Business Modelling

Henk Akkermans, Jacqueline Bosker

This paper describes the evaluations results from an unsuccessful case study.  In this case study, system dynamics modeling was used to support the development of an implementation plan for a corporate strategy.  Three modeling sessions were conducted with senior management, which were unsuccessful.  A detailed analysis of the evaluations interviews with several of the participants had identified the main cause for this failure.  These causes turn out to be threefold:  Firstly, most of the participants were unwilling to discuss openly this politically sensitive issue, secondly several errors were made in project design and thirdly the scope of the strategic issue is at stake was too broad to tackle effectively within the time frame allotted to the project.

Several important lessons are drawn from this project.  These lessons are formulated as designs guidelines for future system dynamics modeling as such, but rather to underlying management consulting skills required to conduct any strategy support project with senior managers.

Feedback and Control in a Product Portfolio Management Model

Arthur W. Allaway, Giles D’Sousa

An optimal control-based decisions support model is developed which allows managers and future managers to gain hand-on experience with product portfolio management in a dynamic micro-world.  In this micro-world, they study one of the several scenarios, set objects and importance hierarchies, create action plans and control the system over time en route to their objectives.  The system is demonstrated with data from an actual product portfolio management case.

Using the system, a manager or player can gain sophistication with decision-making as well as assess the capabilities of dynamic models for decisions support.  Working with the models gives players a feel for such important insights, as the lag effects of response, the differential impact of various marketing tools, cross-elasticities, and the potential for cannibalization. A manager can devise promotional strategies to achieve specific sales results for a particular brand or product line, test those strategies, and learn as the system evolves.  Backing up the micro-environment is a discrete-time optimal control model which allows the system to be optimized from the perspective of a decision-maker.  Players can test their own strategies against those of the optimal control “Shadow Player”.

Used as an optimization-based simulations tool, the model allows flexibility in the testing of alternative strategies and scenarios which affect achievement of product portfolio objects.  The model focuses on the overall objectives of the portfolio while recognizing the objectives and dynamics of the products within it.

Managerial Conflicts in Social System: The Ignored Significance of Ethics and Values

Irma Alm

A social system is unlike a natural system, because its behavior is determined by ethics, values and purposes.  Yet it can be compared to a natural system in terms of self-maintenance.  To maintain itself, a social system reproduces roles, functions and authorities, not it’s basic components, individuals.  This is because, social system are purposely designed by human begins for human purposes. The ethics which guides management of social system is a kind of rule ethics relying on rules of behavior, laws, and taboos.  The rule ethics and its basic value, rational calculation, disables the possibility of social system to cope with rapid or serve environmental changes. It also creates managerial conflicts which are difficult to solve within the frame of reference of the rule ethics and its association values. These conflicts are results of the tension between: control and semiotic freedom, shared culture and diversity, and command hierarchy and self-organization. To diminish these tensions, we need another kind of ethics, an increased development of human consciousness.

Scripts for Groups Model Building

David F. Anderson, George P. Richardson

For the past seven years, the modeling group at the University at Albany has been experimenting with techniques for building system dynamics models directly with groups.  This paper extends the previously reported work by discussing specifics scripted techniques used to implement the group modeling building approach. 

Our purpose is to initiate a larger discussion of shared scripts and techniques for group model building.  The discussions is divided into planning for a group model building conference, scheduling the day, particular scripts and techniques for various group model building tasks, and closing a group modeling conference. 

Mental Models and Dynamic Decision Making in a Simulation of Welfare Reform

David F. Anderson, Terrence A. Maxwell, George P. Richardson, Thomas R. Stewart

This paper is the second in a pair presented in this volume. The first paper presents a theoretical view of mental models appropriate for carrying out empirically-based research on system dynamics modeling interventions. Mental models consist of three types of measurable sub-models – end models, means models, and means-ends models. The means-ends models may be thought as containing either detailed “design” logic or much more simple “operator” logic. This paper presents an empirical test of the impact of interventions intended to improve design versus operator logic for 53 participants in a dynamic learning laboratory with a task centering on implementing welfare reform over a simulated twenty year period. Results suggest that providing managers with high level heuristic results from modeling interventions is necessary condition for achieving improvement in system performance. Focusing on operator logic is key to improving managerial performance of dynamic tasks.

System Dynamics applied to Analysis Modeling and Simulation of Chain Growth Polymerization Process

Hugo Andrade S., Alvaro Ramirez G, Ana C. Uloa Q, Sofia Uloa Q

The problem to be addressed is the dynamics of the chain growth polymerizations process via free radicals.  The process consists in a series of chemical reactions by which a macromolecule is formed by the addition of many structural unites called mers.  The reactions taking place are initiation, propagation and terminations of the growing macromolecule or molecular chain. 

The problem was focused under the General Theory of Systems and the methodology of System Dynamics.  This work is an example of interdisciplinary interaction between Chemical Engineering and Systems Engineering through System Dynamics methodology.

The modeling of polimerization processes is an up to date topic of both scientific and industrial practice importance.  The developed model is based on the especies balance equations and also on an isomorphism with population models. 

The model is composed of a set of only sixteen, but very complex non-liner differential equations, whose solution is very restrictive with respect to the simulation time interval used, due to the great differences in order of magnitude of the characteristics time of occurrence of the various events taking place in the process. In this particular, the authors consider to have made a contribution to establish criteria to quantity what is called in the literature as the appropriate simulation time interval.

The proposed model is ahead of the traditional models of polimerization, in as much as the second ones predict only the behavior of the stable species and the chain lengths average, whereas the proposed model includes besides the dynamics of the unstable species. On the other hand, the proposed model excludes the seudo-stationary assumption, on which, according to our results, is not a completely valid.  As a general conclusion, the Dynamics System methodology appears to be an effective problem-solving tool in interdisciplinary environments.

ECOMAN – An Environmental Management Simulation Game

Paula Antunes, Rui Santos, Luis Jordao, Helder Alves, Joao Pedro Rodrigigues

Environmental management is a complex dynamic process, which involves taking decisions regarding different environmental components and socio-economic agents. Within in the contexts, simulations games are extremely powerful learning tool, allowing the decision maker (player) to formulate and test the results obtained with the implementation of alternative environmental managements strategies, which is often impossible to perform in real situations.

ECOMAN is a simulation game, where the players are environmental managers who are responsible for a region, trying to cope with the different agents, media and uses in order to achieve environmental quality, and social welfare objectives.  
The player has a limited budget to allocate to several environmental management tasks, which is dependent on the health of the economy of the region. Each year a score is computed taking into account environmental quality, service levels and economic activity.
The game is based on a system dynamics model developed in STELLA II, simulating the major interactions between the socio-economic and the environmental system.  The model was implemented with a multimedia interface integrating numerical, graphical and qualitative information using Supercard and Quicktime for the display of video images.

A Dynamic Model of Quality Cost and Benefits Systems for Design Quality

A K Bajpai, P C T Willey

The Importance of quality cost benefits is sometimes not fully recognised by industrial managers.  Quality cost money.  Industrial managers recognize this and tend to be afraid of spending on quality.  But quality also earns money.  Industrial managers do not seem to be fully convinced of this fact.  Unfortunately, even existing literature on the subject does not encourage investing for higher quality.  Most of the cost models about quality deal with the quality improvement and the costs associated in achieving the desired level of quality, but fail to incorporate the benefits of improved quality.
In this work, an attempt has been made to develop a quality costs model which incorporates the benefits.  The quality cost elements have been drawn from various standards sources such as British Standards and American Society for Quality Control publications on quality cost.  The benefits from investing for quality are taken from recently published case studies and reports as well as from our own experiences.  The elements of quality related activities of design department, such as design standards, training design staff and test equipment are identified. The contribution of each individual element, starting from estimation of looses due to poor design to preventions of poor design is isolated and linked dynamically so that costs and benefits are demonstrated through time. 
The quality costs and benefits model was developed using the System Dynamics Modelling approach and simulated using the computer software package “Professional DYNAMO Plus”. The simulated results demonstrate the extent to which prevention investment is justified by future earning.

It is felt that the model can be a significant addition to course material for training programmes of industrial managers.  It allows the user to explore the consequences of different quality management policies such as the amount of investment and the nature of investment on the profit performance and delay before profits are increased in and organization. It is hoped that the model will serve as a useful tool in the hand of decisions-makers, encouraging them to invest more in prevention activates.

Defining System Dynamics Education

Yaman Barlas

This is the second paper in a series that aims to start a debate on issues involved in university-level system dynamics education.  The first paper argues that the field has not experienced growth that one would expect from its potential and identifies several issues that need to be addressed by the system dynamic community, before the field can proliferate in universities.  The second paper tackles some of those problems.  More specifically, the paper discusses the academic definition of system dynamics:  What is the academic core of system dynamics?  What other objects are immediate relevance and importance with respect to this core. The paper offers answers to those questions.  The second issue that the paper deals with is the problem of terminology.  I discuss different types of terminology problems, the most significant being system dynamic, the very name of the field.  System dynamics having an established meaning in mathematical and engineering sciences, does not convey the specific meaning that we wish to attach it. I discuss various potential problems caused by this situation.  I then offer a short list of alternative, more specific names for the field. I conclude that, once the academic issues are rigorously tackled, the university-level system dynamics education should experience growth, which would be a major step toward activation an exponential growth process in the field in general.

Model Validation in System Dynamics

Yaman Barlas

Model validation constitutes an important step in system dynamics methodology. Validation is a prolonged and complicated process, involving both formal/quantitative tools and informal/qualitative ones.  This paper first provides a summary of the philosophical issues involved in model validation.  We then focus on the formal model validation. We offer a flowchart that describes the logical sequence in which various validations activities must be carried out.  We give examples of specific validity tests used in the three major categories of model validations:
Structural tests, structure-oriented behavior tests and behavior pattern tests.  Finally, we focus specifically on the logic of the behavior pattern validation and illustrate it on a mutli-step validation procedure. Currently, we are in the process of implementing this multi-step procedure on micro-computers, embedded in a friendly user-interface.

Introducing MIS: A Process of Directed Organization Change

Ronen Bar-Nahor, Chanoch Jacobsen

Despite the importance of computerized information system, many MISs are left idle or used only partially, having exceeded their budgets or time allocations.  The basic problem is that critical interactions between software engineers, users, and the organization have been neglected.  The reason for this neglect is the inter-disciplinary nature of the problem.  There is a basic conflict of interest between managers’ need for efficiency, users’ desire for quality of working life, and software engineers’ quest for sophisticated technical solutions.
We have developed an integrated theory of the detailed processes and transformed it into System Dynamics model.  Running the model against three time series of data from one organization that has introduced an MIS, we reproduced an average of 84% of the variances in the data.  Our tentative conclusion is that introducing MIS is a special case of directed organizational change that requires cooperation between software engineers and OB experts.

Scenario Modeling of Demand for Future Telecommunications Services

Jeremy Barnes, Fraser Burton, Ian Hawker, Michael H Lyons

It is widely believed that the world is entering the Information Age, and telecommunication companies must make critical investments decisions based on how much information customers will want to move in the future, Understanding and preparing for the range of possible customers demand scenarios is vital for long-term success in an increasingly competitive market.  However, detailed forecasts are impossible to make since the market is as yet undefined.  Scenario modelling is useful in developing the understanding telcos need to achieve success.
We have developed a system dynamics model to investigate the effects of different business and technological drivers on the demand for future telecommunications services, using the software tool iThink.  Drivers include the number of people teleworking and increasing computing powers.  These interact to produce usage dynamics for generic services covering conversation, messaging and data transfer, which are then used to calculate resulting network traffic. 
Our results suggest that the key uncertainties are the rate of improvement in general IT sophistications, and the extent of teleworking.  High growth in both of these produces rapid growth in peak traffic, whilst low teleworking delays that growth.  Slower improvement in IT sophistication severely limits growth, since increasing computing power could stimulate large volumes of traffic.  Small increases in the use of video applications also produce significant traffic growth, and these factors combine to give large uncertainties.  The behavior of this system is discussed with reference to individual business sectors, demonstrating system dynamics as a useful approach for investigating telecoms supply-demand systems.

Illusion and Reality: A Systemic Approach to Management Development Workshops

M A Barrett, B Crellin

We describe the development of a meta-level framework to be used as a structuring and controlling mechanism during management development workshops.
The framework is constructed around the use of system metaphors and methodologies within a microworld workshop environment.
Relevant elements from system methodologies are employed as transitional objects within these microworld environments, in order to provide a creative stimulus and reduce participant anxiety.

The Management of Urban Water Services – A study in Long – Term Institutional Dynamics

John Barton

The paper uses systems thinking to interpret the dynamic interplay between social, political, and institutional forces that have influenced the management of a large urban water authority.  This interpretation is used as a framework for assessing recent government initiatives to introduce competition into the water industry. The study is based on 100 years of history of the operation of Melbourne Water and current proposal to vertically disaggregate the business and to use a combination of industry regulation and yardstick competition to manage the industry.  The paper attempts to demonstrate the importance of adopting a systemic approach to understanding the complex array of issues involved and to record some of the practical difficulties encountered in using this approach within a highly turbulent environment.

The Introduction of Hospital Information System – The Necessity for Accommodation

P J Baugh, D M Walters

This paper examines the introduction of information system into the new environment of the National Health Service since restructuring in 1989.  Taking its approach from Soft Systems Methodology, it looks at cultural analysis in the context of the development of decision support systems for hospital managers and medical staff.  Drawing on the deeper cultural analysis developed by Schein, it examined the problems which face systems developers when attempting to seek an accommodation of views between groups which not only have different requirements but significantly different outlooks predicated by their roles in the hospital environment.  Particular attention is focused on the survival instincts of these two groups when faced with an environment which is changing rapidly.  The medical profession is seen as one which sees its former pre-eminence within the hospital threatened.  This may have adverse effects on the development of system for doctors and managers alike but, unless the cultural dimension is addressed, solutions to hospital information problems will, at best, be partial.

Investigation Software project Resource Planning: An outline of a Proposed Multiple Case Study Research Approach

G A Bell, J O Jenkins

The use of system dynamics (SD) is proposed to assist project managers in examining the consequences of their resources distribution plans.  Justification of the selection of this technique is given, in particular why it is purposed as an alternative to statistical forecasting techniques.  The focus of the research is to provide insights into how to reduce schedule slippages, which is thought to be a common dynamic behavioral problem.  One objective in reaching this goal is to identify common SD structures.
An overview of the original SD research contribution to the software engineering discipline is given.  A brief description of the problem tackled and the model findings are outlined.  Criticisms of the research process are developed to justify parts of our approach.  To ensure that this practical research investigations is both relevant to managers and scientifically rigorous, a selection of both qualitative and quantitative methods are suggested to assist with the first objective.  These are briefly justified and discussed in this paper.

Systems Thinking and its Influence on Operational Culture

J B Bentham, A G de Visscher

This paper reviews a recent period of change in traditional manufacturing environment of a large oil refinery, and the role of systems thinking techniques in this development process.  The focus in on how the gradual adoption of these methods as part of normal working practices has contributed to changes in attitudes, behavior and performance.  Attention is directed to the way the methods are themselves proving to be a vehicle for cultural development, as well as being of the toolkit used to analyse specific issues.

The paper describes the way several techniques have been introduced, applied and combined.  There is a commentary on how these approaches have helped to induce a shift from a rather intimidating fire-fighting mentality to a widespread embrace of the quest for structural improvements.  This shift and the adoptions of the techniques are, of course, mutually reinforcing.  What is of particular significance is the way the virtuous circle was initiated.  It is concluded that the approach was successful largely because it was consistent with the broader requirement of change-management and compatible with fundamental aspects of the predominant organizational culture.
While this is an ongoing process of transformation, the paper introduces a framework to conceptualize the insights which have emerged so far.  It is intended that this will facilitate their further application and hence support the broader learning process.

Dynamics of New York City Court System

Dan S Bernstien

For policy makers in New York City the functioning of the criminal justice system appears to be deteriorating.  During the last few years arrests by police have dropped.  However inmate population continued to increase for over a year after the drop in arrests.  In spite of the drop in court case, or case load per judge, the average length of time to dispose of a case continued to increase.  During this time, the total number of judges working in New York City increased, further dropping the average caseload.
The importance of this topic lies in the resistance of the criminal justice system to change and the high total cost of the system.  Recent policy goals of New York City management have been to reduce needed jail capacity by reducing both the intake of inmates and average lengths of stay.  New York City officials estimated that by reducing the inmate length of stay by ten days savings of $108 million could be realized.

A Pocket Model of Global Warming for Policy and Scientific Debate

Dan S. Bernstien, George P. Richardson, Thomas R Stewarts

The global climate is a large complicated system with many feedback loops connecting the different sub-systems.  In recent years there has been an increase in the public’s awareness of global warming and the greenhouse effect.  The public understands that there is some connection between the human emission of greenhouse gases and global climate change.  Experts in this field have been analyzing these connections for years and are still unable to give definitive answers to questions concerning the direct link between emissions and temperature change.  Policy makers have a desire to intervene in order to limit the amount of emissions.  At this point in time available answers are under debate and are unclear, or the model used by the scientific community are too complicated for policy makers to understand.
The purpose of this global warming model is to be small, conceptually clear, and accessible to nonscientists.  The model contains all of the feedback loops hypothesized in the scientific literature.  However, due to its small size it is aggregated to a global level.  This level of aggregation will help to make the model more understandable for policy makers.  The global aggregation will allow policy makers to focus upon the global effects rather than the details of the climate system.

A System Dynamics Model of Soybean Production in India

B S Bisht, K C Sahu, K Vizayakumar

An effort has been made to develop a system dynamics simulation model for soybean production in India.  Soybean has been a relatively new introduction to Indian agriculture as a cash crop.  Soybean industry in India is typified by high (1520\%) annual growth in area as well as production.  It is also capacity as compared to the annual productions. Soymeal has been a major earner of foreign exchange for the country with advancing years.  The model presented here analyses the mechanics of flow of area between various crops options, productivity of soybean and competing corps, annual production, prices and the benefitcost ratio.  The values of constants were determined through survey of farmers and expert opinion poll.  Policy options have been analysed with the objective of higher profitability for the growers in the long run.

Dynamics of Management Development and Enterprise In Eastern Europe

Andres Breiter, Edoardo Mollona

Privatization of most enterprises in Eastern Europe is considered essential for the democratic form of government to survive over an extended period.  The dynamics of the privatizations processes and of management development are very important but they have received very little attention.  They are crucial to the success of the attempted conversion of the system in that part of the world.  This is stunning because of the several billion ECU’s and U$S spent on economic and management advice to the countries in the area.
This paper explores the dynamics of management development to meet the needs as markets are freed and companies are privatized.  Particular attention is directed at the fact that many needed skills essential to success may not be taught in the normal management school programs.  From this observation emerges the need for a program of management development uniquely designed for recently privatized companies and for those soon to go through the process.  In addition the conclusions contribute insights to the current debate whether to privatize all corporations within a very short period or whether to proceed more gradually.

Strategic Cultural Interventions in Systems Science – Examining the Prospects for the Further Development of Methodological Complementarism

John Brocklesby

This paper contemplates the prospect of the complementary use of hard, soft, and critical systems methodologies, becoming a more established practice among the diverse company of operational researchers and management scientists in academic, commerce and government, who have been trained in systems thinking and apply its language and concepts in dealing with organizational problems.

The paper takes the line that because matters concerning methodology always embody deeper structures of meaning, and meanings are largely culturally determined, it is worthwhile drawing upon ideas from the literature on organizational culture to illustrate some of the key factors that are likely to obstruct this and other similar initiatives.  From a culture prospective, transitioning from the existing specializations of systems science towards methodological complementarism is conceptualised as requiring a form of organizational learning.  Learning is contingent upon the existence of a broad set of propitious circumstances; a scenario, it is argued, that is not met in this particular case.  Although the idea of complementarism is the principal focus of the paper, much of the argument applies equally to other attempts to deliberately intervene in the culture of systems science.

Efficient Parts Supply: Influence of Information Flows

S J Byrne, L Roberts

We investigate parts supply from one supplier to a manufacturer who operates a very variable final assembly schedule with kanbans for parts supply to the production line from suppliers.
The information flow includes kanbans for resupplying the line from the factory store and restocking the factory store from the supplier, one week ahead forecasts of parts requirements, 8-week ahead requirements and updates orders supplied weekly, and a six month MRP schedule supplied fortnightly.  The supplier uses these to schedule raw material preparation, initial assembly on a bottleneck machine, and finishing.  This is challenging given the conflicts between the pieces of information.
We investigate ways to improve total system performance, particularly inventory levels and easier production scheduling of critical machines, given the delays and structure of the system, using system dynamics models built in ithink!
Kanban numbers can be reduced without risking production interruptions.  The one week ahead forecasts offer little useful information to the supplier.  Shifting to a simpler scheduling mechanism for the initial assembly is helpful.
We have investigated two processes in the manufacturing logistics system, parts flow internal to the manufacturer and to the supplier, and the linkage between parts usage by the manufacturer and parts production by supplier.  They can be simplified and improved, reducing inventory holding and hence cost, without compromising the overall responsiveness of the manufacturer which is a distinctive competitive characteristic.  Simplified information flow processes allow for easier, better operation of total system.

The Paradox of Rational Policies and Irrational Outcomes: A Case of Unexpected Policy Performance Caused by Information Delay

IK Jae Chung, Dong Hwan Kim

The study analyzes the impact information network within the waste recycling market on the performance of public policies designed to develop the recycling market.  Two typical policies are reviewed with an experimental procedure of partial and whole model tests.  A system Dynamics model of waste recycling market is used as a laboratory setting for this study.  The research findings suggests that well-intentioned policies can inadvertently lead to dysfunctional performance within a localized information environment.  Delayed and distorted information feedback in the multi-stage structure of the recycling market further complicates problematic policy outcome, or market instability.  This study proposes an information policy of integrating vertically the information network in the recycling market in order to improve the performance of market development policies

A Policy Making Framework for the New Zealand Wine Industry

J F S Cooper, J O Chester, R Y Cavana

This paper discusses the dynamic simulation model of the New Zealand wine industry which is being developed at Victoria University to examine the impact of environmental and policy changes on the short and long term behavior of the industry.  It is highly aggregated model which includes sectors for: planting and harvesting of grapes; production, exports and imports of wine; stock movements and financial flows.  The model provides a policy making framework for the analysis of changes in grape yields, climatic conditions, excise duty on domestic consumptions, minimum grower returns, exchange rate movement and international competitiveness.

Integrating Archetypes and Generic Models into a Framework for Model Conceptualisation

David A Corben

Model conceptualisation is the most difficult system dynamics skill to acquire, practice and teach.  The advent of user friendly simulation tools; STELLA and ithink, have made the task of model constructions and use much easier.  Model conceptualizations by contrast remains as difficult server as ever.
Experiences in training managers in system dynamics show that it is a relatively simple task to turn complete beginners into competent and confident simulators.  The capability to recreate a model from ithink map and in a written description of operating policies is quickly acquired, as is the ability of modifying that model set to test out possible solution to problematic behavior.
The problem arises when these proficient simulators are asked to conceptualize a simple two loop model from a problem descriptions, presented in the form of a newspaper article.  This task is found very difficult by most course members.
The paper describes the development of a new technique to assist with the model conceptualisation process.  The method integrates archetypes and their corresponding generic Models into a framework that helps modellers move from a problem descriptions to a first past ithink model and/or casual map.
An application of the method, to aid conceptualisation of a model of Government funding of housing association is described.

Learning Maintenance Management through System Dynamics

A Continuous Improvement Process

Adolfo Crespo Marques, Ruiz Usano

Maintenance management has become a field of important development according to the operating needs of production planning systems and the impact of new technologies in the industry.  The processes of production flow creation and inventory control in the modern factories lead to a more sophisticated maintenance system to ensure low failure rates and reduce accordingly failures consequences, which is a must in these kinds of environments to meet the production schedules.
In this paper a maintenance system is modelled to study the effects of different policies that can be applied to reach above mentioned targets.  Moreover the conditions required to create a continuous improvement mechanism for the system are analyzed.  Model validation and simulation results are obtained and presented for a real problem in the Spanish industry.

Projecting Model Behavior in the Absence of a Model: Results of a survey

Brain Dangerfield, Carole Roberts

One of the advantages commonly put forward in support of the system dynamics methods is that managers find it difficult to trace dynamic consequences of cause and effect relationships even in simple systems.  While this may be intuitively appealing as one of the justifications for existence of system dynamics, there is a need to accumulate a body of evidence which results from putting this assertion to the test. The paper reports the findings from a questionnaire which has been administered to over one hundred undergraduates and postgraduates covering a range of business management specialisms.   Respondent were asked to decide between two manufacturing technologies, exhibiting quite dissimilar cost structures, with a view as to their future profitability under four different demand scenarios.  The questionnaires were administered twice with a three month gap between during which the answers to the first one were revealed, and on the second occasion the rubric was altered to incorporate feedback into the situation described.  The competing technologies and their associated cost structures reflect very real policy choices and so the outcome of the exercise has a message for manufacturing industry as well as the system dynamics community.

Perspectives on Teaching System Dynamics
Coupling structure and behavior, annotating simulations, and supporting Just In Time Open Learning (JITOL)

Pal Davidsen

In system dynamics we seek to understand the relationship between the structure and the behavior of dynamic systems.  In problem solving, for instance, we must identify the structure underlying problem behavior and find how the structure can be modified to create a more desirable systems behaviour.  To enhance such an understanding, we utilize the graphical techniques.  Whether in print or in software, however, there has been a significant gap between our representation of structure and behaviour.
In this paper, we first present a series of ways to link structure and behaviour such that behaviour can be more easily understood on the basis of the underlying structure.  These techniques are computerized using PowerSimTM.
Within the framework of an EEC research project on distance education for professionals, JITOL (Just In Time Open Learning), we have investigated how to facilitate System Dynamics distance education on electronic networks.  One of the main challenges consists of finding an effective way to present the results of a simulation. Such an interpretation of simulation results is normally partitioned in accordance with the various phases of the system development, portrayed by the simulation, and requires that references be made to the assumptions embodied in the underlying simulation model.
Consequently, the author or any other user of a model must be allowed to comment on the various phases of a specific dynamics development.  Moreover, these comments must be made available to any reader of the model, ie anyone who runs the model under the conditions specified by the author or user.  And these readers must be allowed to respond by adding their own comments to the same fragments of the model development.
This paper outlines a technique developed to, at runtime (ie as the model is running), link such annotations to graphs that represent simulation results, and to make such annotations available to readers at runtime when they inspect that specific simulations.

Der Rutli Management Simulator – a new concept in system dynamics based management fight simulators

Pal Davidsen, Magne Myrtveit

A new management institute, Der Rutli Fuhrungskrafteseminar, was established in Germany this year.  Its leadership is committed to the teaching of management based on the principles of System Dynamics.  As an element in the promotion of these ideas, a new System Dynamics management simulator has been developed.  There are several ways in which this simulator constitutes a new concept in management training.  In particular, we have addressed the issue of teaching policy design, supplemented by design making.
The properties of the simulator originate from the characteristics of the underlying software.  Consequently they can be applied generally to any system dynamics based management simulator.  In particular, the simulator;
(1) the simulator is a multi-group simulator utilizing any personal computer network that supports MS windows;
(2) The simulator allows the user not only to submit decisions to the server that calculates and returns a new state, but also to formulate and try out, on their local computer, their own strategies over any strategic horizon;
(3) the simulator gives the user access to;
-the underlying simulation model (to an extent determined by the administrator);
-The tool by which the simulation model was built, allowing the users to formulate and test their own dynamic hypotheses.
In this paper, we describe these characteristics of a new generation of simulators for management training, illustrated by Der Rutli Management Simulator, and we discuss the potential implications of taking advantage of these characteristic.

Possibilities and Challenges for System Dynamics Research and Education in Europe

Pal Davidsen

In October 1993, a group of 7 academic institutions submitted to the ERASMUS Office of the European Union (EU) in Brussels an application to establish an Inter-University Corporation Program (ICP), i.e. a student exchange program, in system dynamics. This initiative is coordinated by the Department of Information Science, University of Bergen, Norway. A first response is expected by the end May 1994 and the final decision will be known in July. The program will be implemented during the academic year 1994-95.

When the ICP is established, it will receive a grant to support a number of students visiting host institutions abroad in order to receive a formal training in the theory and practice of system dynamics. The program will also support the exchange of faculty and system dynamics curriculum development.

The system dynamics method has proven particularly useful in social sciences and in public and private management. A large number of enterprises currently apply system dynamics in their design of policies and in management training. The system dynamics method is taught and applied in prominent management schools, schools of social science and technological institutes in Europe, America, Asia and Australia. Although originating and partly dominated by American Universities (MIT in particular), there is a large numbers of courses in theory, applications, and software development taught in Europe. It is our purpose with this programme, by joining forces, to emphasize this European tradition of the field.

This paper describes some possibilities and challenges that arise from this program. It also indicates how we could initiate a research program in Europe, possibly an ESPRIT-program, based upon system dynamics.

The Applications of System Dynamics to Re-Engineering Career Plans

Andrew Davis

This paper demonstrates the use of system dynamics in the examination, evaluation and reformulation of business policy.  It describes the consultancy and modeling process used to examine the recruitment and promotion system of a large company.
The management felt that the short-term decisions they were making, particularly about how many graduates to recruit, were endangering their ability to manage the system in the longer term.  They were finding the there were too many staff at middle management grades, whilst they were doubtful that they were developing the senior management of the future.   They further believed that the system, as currently operated, gave them little ability to control the long-term availability of staff.  It was decided to initiate a study, using system dynamics, to understand the dynamics of the manpower system and study the policy options available for controlling the system.  The model enabled management to increase their understanding of the system and evaluate their current method of decision making.
The model demonstrated that the problems were indeed caused by the system, and that managers had adapted their decision making process close to the optimal, given the constraints in which they were operating.  A new system of recruitment and promotions was defined, tested and implemented, which overcomes many of the problems identified in this study,

Helping Not-for-Profit Enterprises Become More “Business-Like”: A Learning Organization Approach

Eric Deakins, Graham Winch

This paper describes the results to date of an investigation into the role of a system dynamics “microworld” model in helping a not-for-profit organization (charity) become more “business-like” in its strategic management, and more able to evaluate impacts and opportunities in its ever more competitive environment.  The organization- the local division of a relationship advisory service in the U.K. – in common with most other charities is facing a more turbulent environment with major uncertainties in government grants, greater competition for voluntary donations, and changes in its perceived role.  This requires the organization to put much greater emphasis on effective management, but this may be regarded as diverting, and even in conflict with deeply held beliefs, by Board members, paid managers, and counselors and volunteers.
This experience to date suggests that the development and utilization of a microworld model of the organization and its environment help its member to envision the full implications of possible strategic developments.  These developments include the impact and timing of direct advertising and the offering of contract advisory services to firms concerned that redundancies and other situations may put their employees under the sort of stress that could seriously effect their domestic relationships.  This approach clarifies and aids the reconciliation of “business” performance measures like client contributions, cash flow management and training investment with such core concerns as counselor moral and the service provided to it’s “clients”.

Information, System, Hence, Information System: The case for Ontological and Epistemological “depth”

Thierry Demay, Christian de Cock

This paper presents a critique of the atomistic ontology and empiricist epistemology which inform most current definitions of the concepts information, systems and, hence, information systems in the Information System (IS) literature.  The notion of information as an objectively given quantifiable ‘force’ emanating from the real world and endowed with the essential property of dissolving uncertainty; or as possessing the same essential property but as consisting of structured or processed data, i.e. atomistic ‘facts’, about the real world are argued to be unsustainable, on both philosophical and practical grounds.  It is argued, furthermore, that the notion of systems as an ontology in respect of goal seeking cybernetic machines unproblematically specifiable in terms of their boundaries, of their input and output, and of their objectives is not inappropriate to the socially-based systems in terms of which an IS must be defined, but also fails to consider the ontological, and consequently epistemological, depth implied by this concept.  In view of these arguments, an alternative conceptual practice is explored by suggesting that the concept system be taken as an epistemological tool to be deployed in respect of complex coherent ‘whole-entities’ characterized by their emergent properties and, in the case of socially-based systems, by the essential autopoietic nature of their modes of regulation and self-representation including, above all, language.  It is also suggested that information should be considered as a set of fundamentally, arbitrary signs whose ’emergent’ properties i.e. syntactic, semantic and pragmatic, are intersubjectively negotiated between international organizational agents and, as such, inseparable from the forms of social life which they sustain and in which they are generated.  This alternative conceptualization, proceeds from an ontology which acknowledges the essential ‘depth’ of its key thought objects, by virtue of the emergent properties attributions to these objects, in contrast to the flat atomistic ontology currently dominant in the IS field.  Such an alternative conceptual practice, we argue, provides an initial theoretical framework in which to ground the currently ill-defined, “emergent perspective”, on the relationship between ICT and organizational change, identifiable in the IS literature.  While as regarded IS practice, this re-conceptualization is found to be congruent with the object oriented approach to IS development which is currently attracting increasing practical attention and which appears to provide the basis for a common and intuitively meaningful language with which to bridge the gap between IS end-users and developers.

Responsibility Analysis: A Basis for Understanding Complex Managerial Situations

Gurpreet Dhillon, James Backhouse

Management practitioners have always felt the need to understand organizational contexts and processes.  Consequently many different theoretical bases have been used to facilitate the evaluation.  However the focus on existing approaches has primarily been on the ‘formal’ aspects of the organization.  This has often resulted in inadequate and poor analysis of various complex managerial situations.  In viewing organizations as communications systems, this paper introduces the responsibility analysis approach which helps in presenting a comprehensive picture of an organization environment.  At a very generic level, organizations are viewed in terms of three sub-systems; technical, formal and informal.  When conducting a responsibility analysis, the endeavor is to identify the responsible agents and capture the norms associated with each action.  In doing so, we seek to understand the underlying repertories of behavior.  This produces a high level specification of the organization and its attendant responsibilities, thus allowing a comparison to be made with the implicit and explicit structures of responsibility.  The paper demonstrates these concepts with examples drawn from a National Health Service case study.

Feedback and Breakdowns as Breakthroughs in Dyadic Communications

Julia M Di Stefano

This paper shows that viewing dyadic communication from the perspective of servomechanisms and system dynamics rather than the cybernetics perspective (see Richardson, 1991, 128) allows deeper insights into the complex process of human conversations.  Instead of viewing feedback from the cybernetic perspectives as the influence of input back on the output (Richardson, 128) we view dyadic communication as a closed system, with positive and negative feedback loops.  This point of view helps us to better understand how to use feedback to achieve one’s communications goals.  A case study based on the short story The Revolt of Mother by Mary Wilkins Freeman, illustrates the reciprocal (not linear) nature of dyadic communication, and the role of breakdowns in revealing its structures. This analysis has implications for managers who engage in conversations in which they create, take care of, and initiate new commitments within an organization (Winograd and Flores, 1991, 151)

The Dynamics of Managing a Life Insurance Company

Andrew Doman, Maurice Glucksman, Nathaniel Mass, Michael Sasportes

This paper reports the finding of an internal McKinsey research and development project designed to test the value of applying System Dynamics thinking to the life insurance industry.  The aim was to understand better how management decisions and actions can affect the success or failure of a typical direct sales life company.  The study compared the evaluation over 20 yeas of two companies, Equitable Life and London Life.  Starting out in 1975 from virtually identical competitive positions, Equitable has become the U.K.’s most successful life company, while London Life was rescued by the AMP Society from near insolvency in 1989.
We found System Dynamics a powerful means of identifying which managerial actions had accounted for the extraordinary divergence of the two companies.  The lessons learned include many counter-intuitive insights that have relevance for any life company manager.  Through simulation we were able to isolate which management actions made the difference to long term performance.  In particular, we show how attempts exceed the maximum sustainable growth rate specific to any individual company can lock it into a slow but relentless spiral of decline, from which there is little hope of escape.  This growth ceiling can be quantified and we also identify a number of a long range early warnings signs.  Consequently, we believe that our conclusions are likely to change the way life companies are managed in the future.

Systems for Modeling and Simulating in Schools

Hans-Ulrich Donhoff

This paper wants to report about an approach to make German pupils familiar with the problem of system dynamics, to promote the comprehension of complex system, to teach them something like “thinking in networks”.
To reach this aim we employed a tool for modeling and simulating, comparable with well-known systems as Ithink or POWERSIM, but able to run on simple PCs under MS-DOS.
Using this tool we have developed the following four units (the subject in parentheses):
-Ecosystem forest (ecological balance, biology)
-Flows of carbon dioxide (chemistry)
-Growth (mathematics)
-“Tycoon” (economy)
Two of these units, “forest” and “economy” are the basis of our research.  In 11 groups with 238 pupils we made pre-tests, video recording and final tests,
The results in the field “model thinking” were remarkably better then in a polite study, initiated two years ago, the semantic and the syntactic correctness of the models have increased as well.
This will be evaluation of several items, regarding the aspects
-prediction of behavior
-forms of presentation, and
-level of net structure.

Modeling Infrastructure Induced Development at National and Regional Levels

Donald R Drew

Infrastructure induced development is a process dominated by feedback in that it features the synthesis of demand and supply functions.  For the demand function, we are seeking the infrastructure improvement requirement to accommodate a certain socioeconomic need; for the supply function we want to know the level of service obtained for a certain infrastructure improvement.  The objectives of the project from which the paper is derived is to develop a methodology for generating models that can be used to by planners and decision makers as instrumentalities for making reliable estimates of the economic health and productivity benefits and of potential infrastructure investment, and for linking infrastructure investment, users benefits, and succeeding economics development to provide a basis for rational policy formation.  The results is a methodology that permits one to answer the question: What would be the economic impact A, the social impact B, the demographic impact C, and the land-use impact D, the environmental impact E, and the users benefits F over geographic scale G for an infrastructure investment H at time T?  The approach is illustrated at both the regional and national levels.

A System Dynamics Model to Evaluate Policies on Institutional Decentralization and Community Participation

Isaac Dyner, Antonio Quintero

The new Colombian construction makes heavy emphasis on issues related to decentralization and community participations.  It intends to incorporate in Government the appropriate social actors to accomplish more effective administration.
In this sense, definitions have to be made in relation to regional responsibilities in the area of Health, Education, Housing, Public Services, and Employment, in order to obtain the appropriate transferences of resources from the central Government to the communities.  Laws on these issues are now being discussed in Congress.
Preliminary results show how System Dynamics proves to be an appropriate methodology to evaluate resources needed, community participation and institutional performance.
The model developed may be used as a training tool to help community leaders to understand the complexities involved in the decentralization process.  The model incorporates behavioral patterns and at the same time provides system performance and effectiveness indications (Community participation and accomplishments).

The Dynamics of Capacity Constrained Supply Chains

G N Evans, M M Naim

The analysis of capacity levels and there location is of vital importance in the design and management of supply chains as it is commonly believed that capacity constraints exacerbate poor customer service levels.  The inventory and order Based Production Control System (IOBPCS), often associated with “real life” production control system, is used as “company” building blocks for the dynamic simulation of a supply chain.  Various combinations of capacity levels through the supply chain are implemented at each echelon in the form of a maximum order rate that can be placed on the production facilities.
A strategy of maintaining a record of unfilled orders (backlog) at the production facility highlights a number of notable dynamic characteristics over and above normal dynamics of an unconstrained IOBPCS.  There is an excess inventory build up even as production order backlog is being depleted.  This is simply dealt with by effectively re-engineering the total business via integrating the company’s overall inventory control policy with production.  The new system is used to analyze the effect of capacity constraints within a three echelon one player supply chain.  The inclusion of a non-linearity into the system leads to improved dynamic performance in some designs for the step change in sales and capacity constraint levels tested, but this does not mean improved consumer levels.
The strategy examined to improve dynamic performance is the holistic setting of system parameters to improve the non-linear systems.  The future direction for research and ideas for further improvement are also presented, where the simulation results indicate the need to closely monitor appropriate system variables such as inventory levels, and to incorporate them within more robust decision rules.

Teaching System Dynamics to Teachers and Students in 8-12 Environment

Diana M Fisher

System Dynamics at the pre-college level, its time has come.  English teachers have sufficient comfort with technology.  Tools such as STELLA II and PowerSim have provided the broad-based language for communication and understanding.
A recently awarded 3 year National Science Foundation grant, CC-STADUS (Cross-Curricular System Thinking and Dynamics Using STELL), is training 165 high school math, science, and social studies teachers in system modeling using STELLA II.  Teachers develop some models within their curricular areas.  Then Cross-curricular teacher teams are formed to design at least one large model and develop curricular materials around the model so it can be used immediately in their classes.  The training is done by high school teachers and by speakers from industry who use modeling in their work.  The teacher participants are responsible for sharing their knowledge and expertise with other faculty and with students in their classes.
High school students are using systems concepts at various levels.  At lower levels (especially with “at-risk” students) the teacher demonstrates how a model is designed and students manipulate the model and predict new behavior.  At the middle level, students develop a model as a class activity under the direct guidance of the teacher.  At the highest level, students select a topic of interest, formulate boundaries, work with an information resource person, and work with a modeling resource person to develop a model and present it to a class.

Using System Dynamics Technology to Improve Planning and Budgeting for Higher Education: Results in Arizona and Houston, Texas

Carol Frances, Marshall Van Alstyne, Art Ashton, Thomas Hochstettler

 

System Dynamics wee used for the first time to improve planning and budgeting in American higher education with a pioneering project launched in 1990 by staff of the Arizona Board of Regents to help the state of Arizona anticipate and prepare to meet rapidly growing enrollment demand over a twenty-years planning horizon.  Then, the University of Houston System, building on the experience of Arizona, chose to use System Dynamics to help meet their goal of achieving greater diversity among their students and serve the higher education needs of a dramatically changing population in their metropolitan area.
Though system dynamics was developed close to forty years ago at MIT and has widely used industry, it is new to the higher education.  This paper first briefly describes the actual experiences of Arizona and Houston in developing and using the system dynamics models for planning purposes, and then highlights special features built into the models.

An Archetype for Holistic Problem solving

F J Garlick, W Wynn

This paper discusses the nature of generalized problems solving and its algorithmic-like properties.  In the systems literature problem solving is usually discussed in relation to its methodological setting – for example, SSM may legitimately be regarded as a problem solving scheme.  This paper explores what we believe to be the five basic cognitive elements or strategies involved in problem solving.  An examination of these five strategies then suggests a way of understanding why particular methodologies have powerful problem solving power, and why explicit use of these five strategies within a methodology will result in an increased problem solving potential.
Some of the ideas discussed here arose from studies into how knowledge engineers solved the problem of knowledge elicitation and representation.  These studies were illuminating since the most common situation seemed to be that no real underlying strategy was employed and that the activity in essence was based on the chance plus experience.  In other words when practitioners were asked what strategy they were using the most common answer was that they did not know but they could do it anyway.  This form of knowledge is often called Tacit Knowledge – that is the sort of knowledge where we know what to do, but have no clear idea as to explaining how we do it.

Mathematical Simulation Model for the Study of the Transmission Dynamics of the Leishmaniasis Under a Systemic Approach

Lilia N Gelvez Pinto, Zandy C Muskus M, Hugo H Andrade S, Gerardo Munoz M

This article presents a model in System Dynamics, for the control of the Leishmaniasis.  This proposal presents the interactions among the five subsystems that intervene in the transmission dynamics of the Leishmaniasis: insect population, human population, animal population, the environment and the control strategies.  The parasite, the transmission personage, is defined as the element that determines the relationship among the subsystems that determines the epidemiological cycle.  The indicated subsystems are separated at different levels and its dynamics is modeled through a set of 120 different equations involving the different reported parameters in the scientific literature.  The resulting model permits to simulate the transmission with and without controls and to observe the efficiency by applying of those control policies.  The simulation is performed using a home made software called EVOLUTION, in two different conditions: natural conditions or without controls and with controls, obtaining quantitative and qualitative results which were considered plausible by the experts.  The set conformed by the software and then model could be considered a valuable tool for epidemiology research.

How to Use System Dynamic to Create Your Own Future: A Case Study of Worldwide Oil and Gas Exploration Group

Peter J Genta, David P Kreutzer, Gregg Anderson, Rusty Hinote, Williams C Hood, Kim McMillan

This paper describes the work and experience gained by a team of senior managers using a systems thinking approach, to develop their own set of future scenarios, to support a realignment of strategy and the redesign of a worldwide exploration group of a major integrated oil company.  The opportunity for this experience arose from a need to assess the diminishing returns produced during several years of overseas exploration activity.  According to a recent article in the Wall Street Journal, the entire petroleum industry has increased its search for reserves overseas.  “…between 1988 and 1992, the world’s 234 largest publicly traded oil companies spent $157 billion on exploration and development overseas, 49% more than in the U.S.”, but diminishing results.  In 1990, the industry discovered 148 barrels of oil outside the US  for every 100 barrels it sold abroad; last year it added just 100 barrels of foreign reserves for ever 100 barrels sold, while the average cost of replacing crude surged 55% to $6.56 a barrel.
Against this backdrop, the senior manager used a systems thinking approach to brainstorm the factors influencing the dynamics of the world oil and gas industry.  From this process the group was able to develop a set of five distinctly different plausible futures that might develop.  To test their group mental model for consistency, they develop a causal model of the industry and discovered that their five different futures all could be explained by a common model.

Implementing AACSB Standards Through Feedback-Loop Planning

Nicholas C Georgantzas, Amy Hamilton, Nancy Drobnis

To maintain the standards set forth by the American Association of Collegiate Schools of Business (AACSB), one thing a business school (B-school) must do is to maintain a certain proportion of tenured faculty members to students.  The AACSB standards also affect the process of reviewing tenure track faculty members for promotion and tenure (P&T).  Typically, tenure faculty members are considered more committed to enhancing the reputation of a B-school and of the AACSB through research and publications.

This paper presents a system dynamics simulation model of the interrelationships among variables pertinent to hiring adjunct and tenure track B-school faculty.  An ad-hoc committee of administrators, faculty and students of a relatively small prestigious B-school met to evaluate the implication of AACSB standards and to consider the possible implications the school’s recent expansion history might have on these standards five years into the future.
An important concern underlying the modelling process is that having less than fifteen students in classes is preferable to students.  Smaller classes allow for more instructor-student interaction, so the student better understands what the instructor require and the instructor knows the student interaction, so the needs and skills.  Estimates of the growth and attrition rates of both students and faculty members affect administrative decisions on the number of adjunct and tenure track faculty to hire. Although the time a student spends in the B-school program varies depending on whether enrolled full-time or part-time, the student growth history, the student growth fraction and the student growth forecast are the variables that determine future student enrolment.
The model confirms that the inexorable nature of P&T evaluation process makes the often desired balanced growth in B-school faculty a physical impossibility.  Yet, the model’s computed scenarios, which corresponding to alternative future student enrollment and faculty growth rates, show how the proportion of tenured faculty to students may respond differentially to alternative growth strategies.  An important implication of the simulation results would require the B-school administration to consider both ratios in making hiring and firing decisions for the B-school to maintain the current AACSB accreditation status.

Intermediate Structure Economic Dynamics: The Television Industry

Nicholas C Georgantzas, Philip A Schmid, Mark D Walton

This paper describes a system dynamics simulation model of the interrelationship among firms competing in the entertainment industry.  The model integrates ideas from strategy design, organization design and new technology adoption to describe exactly how the diffusion process of new hardware and software technologies into the entertainment industry is changing the power and stability of syndication firms, the dynamic changes in the extant production capacity of TV networks, and the investment opportunity in basic cable network system operators.
The economic organization and regulation of TV networks broadcasting vary substantially from country to country, but having a mixture of public private enterprise placed under the supervision of a government agency is a common arrangement.  TV networks and affiliates in the United States represent a clear manifestation of government regulation.  The granting of licenses and promulgation of rules pertaining to cross-media ownership enabled independently owned affiliates to carry regularly scheduled programming produced by the networks or by outside contractors. Except for news and sports programs, TV networks currently do not participate significantly in the ownership of production.  Yet this situation has been changing through modification stemming form the financial interests and syndication rules presently in effect.
A team of managers and planners from a group of syndicators met to discuss current events and the changing structure of the entertainment industry.  Changes stem from the moves of major pay cable channels, TV networks, basic cable networks and system operators, each responding differentially to the diffusion of new signal-transmission technologies into their industry.  A broad discussion culminated into a system dynamics simulation model of the interrelationships among firms competing in the entertainment market.  The model produced new insights into the power and stability of syndication firms, the dynamic changes in the extant production capacity of TV networks, and the investment opportunities in basic cable and networks and cable system operators.

Lessons for System Dynamics Mentors in Schools

William Glass-Husain

This successful, large-scale introduction of system dynamics into education requires many supporting elements.  One important element is an institutional structure that supports school change.  A major part of such a structure needs to be the availability of expert system dynamics mentors to provide on-going training and support for teachers.
This support occurs on three tracks.  One track is relatively formal workshops and meetings spent cooperatively developing projects.  Another track is classroom observation and documentation.  The third track consists of encounters by the coffee machine, and consists of informal, brief conversations where the mentor and teachers can brainstorm ideas or confer on a current project.  These methods of on-going support are preferable to the more conventional format of short-term intense workshops, which research shows has little long-term effectiveness.
In this paper, the author discusses his experience a part of the System Dynamics Project in the Catalina Foothills School District (CFSD), located in Tucson, Arizona.  Specifically, the author has been a system dynamics mentor at Catalina Foothills School District (CFSD), since the fall of 1992.  As a mentor, the author works with administrators facilitating the use of system dynamics as a method of instruction.

The Price of Oil: A System Dynamic Approach

J V Greenman

There has recently been a revival of interest in the dynamics of the oil market, not least because its key determinants are still a matter of intense debate even though the turbulence experienced in the 1970s and the early 1980s has largely dissipated.  One aspect of the discussion is how to appropriately model the market given that dominant paradigm of the 1970s – that of exhaustion of a finite resource – is no longer seen to be valid for the short time scales involved.  Models that are based on the behavioral simulation approach typically use the target-capacity utilization (TCU) supply-side model in their description of events, but doubts remain as to the validity of the TCU hypothesis.  In this paper we adopt a bottom up approach by modelling as closely as possible, from first principles, the strategies adopted by OPEC in their attempt to manage the world oil market.  We also look afresh at the demand side of the oil market to capture the completed lag structures that characterized the response to price volatility.  The complete model, constructed in Stella, is shown to reproduce accurately the hysteresis effect exhibited by the oil market in the period of interest.

The Management of Innovation in International Corporations as a Dynamic Process of Organizational Learning

Martin Grossmann

Scholarly research has long identified innovations as one important reason for internationalizing corporate business.  This statement is represented analytically by cause and effect relations at the beginning of the project. Innovations, i.e. the underlying technologies have a crucial impact on industries and their development over time.  The dynamic relationship between technologies and their industries will be explained on the basis of technology and industry life cycles. 
Subsequently, it is pointed out that one important precondition for generating innovations successfully is the organizational structure by which research and development (R&D) units are linked together.  Basically, three organizational models which are examined can be distinguished: an international network models, the process of organizational learning on knowledge, relevant for innovations, takes place in different ways.   To generate successful innovations, R&D personnel has to learn diligently and quickly from both: the new technological developments and from new or diligently and quickly from both: the new technological developments and from new or changing market needs.  Proposals could be made to facilitate organizational learning in the field of R&D.  Then, the organizational models are allocated to the quadrants of a technology portfolio.  One axis symbolizes the attractiveness of the technology which basically illustrates the technology life cycle.  This may offer a theoretical explanation of the need for adjusting organizational R&D models and the organizational learning process according to the dynamics of technologies.

Functional Economic Analysis of Purchasing at MITRE

Thomas Gulledge, Henry Neimeier

Functional economic analysis is a modeling approach that provides a uniform basis for analysis and comparison of alternative investment and management practices.  The approach takes into account the costs, benefits, and risks associated with new ways of doing business and managing organizations.  The entire purchasing process from initial request to final delivery, payment and accounting is being re engineered at MITRE.  A complete resourced process flow chart was developed for both the present and proposed systems.  An “i think” system dynamics model of both the present and proposed process was developed.  The model projects the seasonal workload over the proposed system lifetime.  Dynamic normal, overtime, and temporary staffing requirements were calculated.  The new system reduced total requisition delay by a factor of ten.  This will greatly reduced expediting actions and costs.  Multiple data bases and computer systems along the process were combined into a single system.  This greatly reduces data entry and reconciliation effort.  The new process groups purchase requisitions by type that provides the opportunity for bulk discounts.  All these will result in 37 million dollars of saving over a ten year system life.

Organizational Learning and Adapting Trajectories Found in a System Dynamic Based Business Game

Roger I Hall

The counterintuitive associations, known as Bowman’s Paradox, found between measures of financial risk and return for a large sample of companies across many industries have previously been explained in terms of the attitudes of managers to risk using prospect Theory.  Similar results were obtained by the author from teams playing a system Dynamics based business game to stimulate a magazine publishing industry.  Experimental results of the dynamics movements of the team companies within the financial measures of risk and return space are presented.  Explanations based on organizational learning and adapting group decision making behavior provide an alternative account of the archetypal team transitions observed.

System Dynamics Underwood

Kjell Henden

This paper deals with System Dynamics as an alternative to methods of problem-solving that are traditionally taught in colleges.  It is based on my experience of teaching the use of the methodology for analyzing small system of finance, hydrography, demography etc.
Testing out any hypothesis where System Dynamics is compared to another methodology is complicated, and I do not present any conclusions.  I argue further that this has to be done by a qualitative approach.
In the field of finance quite a lot can be gained by using System Dynamics.  The given example of calculating the net present value of a cash flow illuminates my point.  In traditional textbooks this value is given by a formula based on the assumptions that interest remains constant over a long period of time, and that there is no or constant depletion of money value due to inflation.  In view of economic reality this description is very native.  On the other hand, it is rather cumbersome to develop and use a formula that takes in account variation of annual earnings, varying interest and varying inflation.  Similar observations have been my incentive for applying System Dynamics to various sciences.  Quite a lot of traditional calculations can be greatly simplified by resorting to the methodology of system dynamics; especially when it comes to integrating complex, realistic assumptions into the models.
My preliminary conclusion is that System Dynamics enhance the understanding and enables the students to go well beyond the oversimplifications of traditional textbooks, and that the use of the methodology in various disciplines should be advocated.  It is further my belief that teaching the subjects in undergraduate classes creates an underwood of users; a basis from which further system analysts can be recruited.

Competitive Simulations: Introducing Corporations to Organizational Learning

Gregory Hennessy

System Dynamicists usually view simulation as a means to help them understand the counter-intuitive behaviors commonly exhibited by complex systems and to facilitate others’ learning about these behaviors. However, a second and closely-related application is typically overlooked: the elicitation of barriers to organizational learning in a non-threatening environment. In our experience, when clients are placed on teams and presented with a simulated future, the organizational defensive routines which prevent effective decision-making in the real world soon arise in the simulation setting. A skilled facilitator can then begin to address these behavior patterns in the (relatively) safe context of the simulation.

Thus, we see tremendous power in the integration of the applications of simulation technology. First, the dynamic model used to build a simulation helps both the modeler and the client understand systemic behavior – which leads to better strategic choices. Second, the addressing of organizational defensive routines promotes learning and the conversion of such choices into timely action.

DIAGNOST; A Microworld in the Healthcare for Elderly People

Gerton Heyne, Jac L Geurts, Juliette Vermaas

DIAGNOST is a policy exercise based on a gaming/simulation in which managers and directors of institutions for the care of the elderly in a region of the Netherlands are given the opportunity to anticipate the coming changes in health care in general and in the care of the elderly in particular.  A microworld is created in which the participants can safely experiment with various policy options.  This paper describes the methods by which the game was constructed.  Apart from the more of less customary gaming techniques, also system analysis and tools from participative model building are used.  The results of the test runs and of the first official run are viewed and evaluated along with the methods and techniques applied during construction.

Launching System Dynamics

James H Hines, Dewey W Johnson

It is increasingly common for companies to undertake a system dynamics study with the aid of outside consultants.  However, it is still uncommon for even large companies to successfully bring system dynamics into the organization as an internal competency.  This paper reports on the efforts at Eastman Chemical Company to create an internal capacity in system dynamics.  At this point, Eastman has successfully launched system dynamics as an organizational approach to decisions making, and the effort continues to develop rapidly.  Eastman managers must yet address issues of sustainability, however the process that resulted in a successful organizational start is of interest in itself and may help other companies seeking competency in system dynamics.  This paper describes the launch of system dynamics at Eastman.

Modeling the Constraints on the Global Pharmaceutical Industry

Geoffrey D Hobbs, Bryan R Deane

Advances in all fields of medical technology have driven rapidly growing expectations of medical care over the last half century.  The rate of growth of this demand for health-care had consistently exceeded GDP growth and, in many countries, the health-care bill had been absorbing an ever greater proportion of government spending.  Governments throughout the world are increasing concerned that this growth is unsustainable.  The pharmaceutical industry, whose products account for about 5 to 10% of the health-care spend, has based on a cycle of growing sales from ever more effective new products, fuelling a substantial re-investment in high-risk, long-term research and development, leading to further advances and new product introductions.  Historically the overall sales growth has been founded on both price-related factors.

The purpose of this study was to explore the relevance of a System Dynamics modeling approach to understanding the potentially complex interactions between the pharmaceutical industry, the medical and related professions, and the regulator and paymasters who fund health-care.  A prototype model has been constructed and used to create a variety of scenarios describing alternative futures, in which the regulators impose constraints on either price or volume increases.  Not surprisingly, the developing dynamics vary, depending on the type and severity of the constraints and the industry responses to them.  For example, under price control, increased investment in marketing by the industry to promote volume growth might accelerate the reduction in the industry’s profit margins, leading to a fall in the proportion of sales income devoted to R&D and a fall in the number of new products being developed.  This scenario suggests a transformation of the industry towards a high volume, low margin, non-innovative “commodity” industry.
Experiments with the prototype suggest that the System Dynamics modeling approach can help to explore in an insightful way the potentially complex interactions of the various groups involved in health care delivery.  There is extremely broad scope for further development of the approach, which should ideally be targeted at specific issues within the system.

Systems Thinking and Business Process Re-design: A Case for Combining Techniques

Alan C Hocking, Peng Sea Lee

This paper describes a consultancy project where the main aim was for the client to learn about systems thinking (ST) through an application in the area of business process re-design (BPR).  Over a two week period, systems thinking was applied in variety of contexts: exploring the interfaces between business processes; re-designing a single process; and structuring a chronic problem relating to the client’s budgeting process.  It was found that systems thinking performed differently depending on the problem context within which it was being applied.  Systems thinking performed well when applied to specific and chronic problems, but less so when used to explore business processes where no particular problem had been identified.  Blending systems thinking with other problem-structuring techniques, however, created an integrated and powerful method for re-designing a business process.
Four ways are describes in which systems thinking was applied during the project and pays particular attention to the way a range of techniques was used to re-design a business process.

Requisite Cognitive Skills for Decisions about Systems

Anthony M Hodgson, Gary B Chicoine-Piper, Nela Chicoine-Piper

The organizational learning orientation to systems thinking requires managers to think together and share mental models using a variety of related techniques.  It is generally recognized that this is no easy matter since the demand for new ways of thinking puts stress on old habits of mind.  The purpose of this paper is to show how treating this difficulty as purely a technical problem falls short by overlooking the cognitive dimension of what new events have to happen in the brains of the managers.  Cognitive biology gives a starting point to consider the decision behavior relates to implicit mental models.  The consequences of mental models without feedback and systemic coherence are illustrated by an analysis of faulty thinking in privatization.  A classification of system and feedback types emphasizes that, in managing organizations, uni-dimensional systems thinking is not adequate.  The requisite multi-dimensional systems thinking requires holistic multi-factor thinking, multi-future thinking combined with causal feedback thinking. A crucial link between practical consulting, applied cognitive science and applied system science is the use of visual facilitation which increasingly makes use of the power of interactive visual representations of mental models behind decisions.

The Use of Influence Diagrams in Formulating an IT Strategy for Retailers

R K Holmes

This paper is concerned with the use of a set of influence Diagrams representing the major processes in retail branch operations.  (i.e., stock flow, sales activities, and human resources management), to identify I.T. applications that can help improve control over these processes.  These applications can then be mapped onto the type of retail branch to give a portfolio for development and implementation.  Prioritisation may be based on cost/benefit/risk analyses.

Developing a Business Flight Simulator for Learning Organizations

Clive Holtham

The Business Flight Simulator is a major action  research project involving academic and industrial collaborators.  Its central purpose is to support the creation and development of learning organizations through the application of wide variety of IT and software tools.  The particular influence of evolving system dynamics thinking on the project is identified.  The project also draws in finding from a recent international study of the application of information technology to support group working.  The preoccupation of the Business Flight stimulators is with creating a physical and networking environment for group decisions and their implementation.  Groups are supported by a variety of software tools.  Much of the emphasis during the last decade has been on the application of single tool to support group working.  These range from the highly quantitative to those which focus on more qualitative and inter-personal issues.  The research project involves applying combinations of tools to business processes across a variety of industrial sectors, and preliminary conclusions in this area will be discussed.

The Concept of Waste and its Use in Information System Design

W Hutchinson

No system is 100% efficient and so by definition produces waste. Whilst the concept of waste and waste minimization is entrenched in the industrial systems sector eg with the Just In Time philosophy, it is still not widely used in others such as business information systems. Waste is not confirmed to material loss, but also to such things as time wasted, or to more intangible concepts such as loss of morale. In fact, any unwanted system output is waste. The identification of all but the most obvious of these by system designers can be difficult because they are designing the system using their own perceptions of what is a “good” output and what is waste. Waste can be “in the eye of the beholder”. The identification of waste in all but simple systems can itself be a contentious issue. One person’s waste can be another’s benefit.

The identification of waste can itself be illuminating if system methods are being used in resolving issues where perceptions of the problem space are not agreed upon, ie “soft” problems. The “world views” of the stakeholders in the problem can just as easily be identified by what they regard as waste as it can from what is regarded as desirable. In fact, it can bring out entrenched biases more clearly.

Whilst most system techniques consider the expected and desired outputs of a system, few consider the unwanted ones. The system itself is, of course, just a concept but the classification of waste can identify paradigms which might otherwise have been hidden in the system definition.

At a more concrete level, the design of information systems can greatly benefit from the identification of unwanted outputs. Designers often become engrossed in productivity, ie expected outputs, but rarely consider the detrimental effects of their system (although the detrimental effect of other systems, eg the one to be replaced, are cited).

Frameworks for Integration of Systems Thinking in Quality Management Practices

Anil B Jambekar

Total Quality Management (TQM) has been experiencing great deal of attention.  It has become the competitive strategy of choice.  However, a seeming lack of a unifying framework, TQM appears to be fragmented into isolated approaches.  For an organization to achieve business success, various quality initiatives should be mutually reinforcing.  Implication is that managing relationship among several TQM component programs is at least as important as the implementation of the individual programs.  In contrast to many other tools, system dynamics tools facilitate management of relationships in a proactive way.  The focus of this paper is to advance this role of system dynamics.  Several relevant processes and critical initiatives generally confronted by an organization engaged in phasing in quality management are captured in distinct casual frameworks.  The paper also explores how and when system dynamics tool can be leveraged with commonly known quality management tools by quality professionals.

System Dynamics Analysis of Experience Gained During Personal Quality Improvement Projects

Anil B Jambekar

This paper shows the connection between the softer tools of system dynamics and the foundation of personal quality.  This accomplished by portraying the problems and issues students experienced while engaging in individual personal quality improvement projects using system archetypes or casual loop diagramming.  A major objective of the improvement project was to provide a critical and fuller glimpse of organizational quality by building on personal experience.  Because the feedback from own actions is rapid and unambiguous while working within the framework of personal quality improvement project, it becomes possible to learn about the important systemic issues in a relatively short duration.  Furthermore the visual representation of the issues using system dynamic tools preserved the learned lessons.

A Grey Simulated Model for Urban Strategy Planning on SocioEconomyEnvironmentR&D

Geng Jijin

This paper is concerned with urban strategy planning on macro SocioEconomyEnvironmentR&D.  Based on Grey System Theory, a urban grey simulated model (UGSM) has been established.  The base run shows that it is high efficient in system action fitting.  Taking a city as an example, some strategy policy tests are illustrated and main conclusion are presented.

Total Quality Management – Managing Change in Manufacturing: Contrasting the Problem Solving Approach Employed in a Quality Cost Related Initiative with Soft System Methodology

W Keogh

An ongoing study, in Company X, has been underway for some three years. The management team in the company has been working on a program of continuous improvement which includes changing attitudes and work conditions in an effort to improve productivity; cut the costs of achieving quality or the costs of producing non-quality; and generally make the organization more competitive.

The areas which form the basis of the management of change focus are: Quality, Communications, Equipment/Resources, Health and Safety, and Training. Over and above these, a sixth category, which highlights the importance of problem identification within the operator environment, was included; consequently, potential future change activities and internal change agents could be identified. These main areas of research interest, which were identified during the introductory period of study, are all related to a total quality management program. The findings from the phases of the study have implications for strategic policy issues and these may have been, or still need to be, addresses by senior management.

This paper will illustrate one key initiative driven by the management team; explain the context of the initiative; contrast the method used with Soft Systems Methodology; and highlight the immediate outcomes from the initiative. Questions are raised regarding the suitability of the methods employed, the objectives of the initiative are explored, and the broader issues, such as the potential of increased involvement of the workforce, are brought to the fore.

Changes have occurred in this dynamic environment and the company study shows that a number of these can be quantified in some way. The way forward has meant involving people from various work backgrounds, introducing education programs, and improving communications. However, in order to use the available staff potential, methods, such as SSM, could be employed to allow creativity and greater understanding of the issues involved in order to make meaningful changes. The illustrations used in this paper will outline the outcomes effected by the management team’s efforts.

Neural Network Heuristics for Controlling System Dynamics Model

Dong Hwan Kim, IK Jae Chang

Many System Dynamics researchers have found that decision-makers have difficulties in controlling System Dynamics model which represent complex social reality.  This means that heuristics employed by decision-markers are not appropriate for controlling dynamic social problems.  As alternative ways for understanding and controlling System Dynamics models, various mathematical methods have been suggested.
Some simulation-based experiment demonstrated the possibility of decision-makers’ learning ability.  For instance, the experiment performed by Sterman showed that game players’ performance was improved slowly as their experiences are accumulated.  The slow learning process is often regarded as indicating the limitation of human intelligence.  On the contrary, it may be interpreted as indicating a potential power of human intelligence or heuristics.
In previous studies, decision-makers’ heuristics are formulated in simple decision rule.  Such decisions rules failed to incorporate the learning ability of decision-makers.  To experiment the learning ability of decision-makers, this study replace decision-makers with neural network model.  The neural networks are recognized as a representative of human intelligence by many students in artificial intelligence.  In this study, neural network heuristic are applied to two System Dynamics models; Meadow’s commodity cycle (1969) and Sterman’s model of the Kondratiev cycle, or long wave (1985).  Neural networks model have demonstrated a surprising performance in learning and pattern recognition.
In addition to neural networks applications, this study demonstrated technical feasibilities in IBM environments using Smalltalk.

System Dynamics Concepts Applied to the Development and Quality Assurance of Environmental Information Systems

O M Knol

At RIVM environmental models are not only used for exploration but also for production, whereby environment reports are provided on a yearly base.  Using models in a production situation raises the demand on quality to which model must comply.  A robust “multiuser, multipurpose information system” is needed rather than a set of separate models.  The demands on quality include:

– full reproducibility of results
– high performance (speed, reliability, uniform user interface)
– complete documentation to assure ease in maintenance
– explicit regulation of responsibility for and access data.
These demands have called for a method of software development that can assure the quality resulting information system.  This paper describes the method which RIVM’s Laboratory for waste Materials and Emissions has developed.  Important elements are:
– Development of information in a cyclic “evolutionary” process, consisting of a number of stage, as opposed to a linear succession of steps.  The end-users (environmental specialists) participate in all stages.  The development cycles can also be considered as feedback loops.  The quality of specification appears to be a key factor in the behavior of the system. 
– Management and modeling of data preceding the modeling of functional relations.
– Facilitating the testing of the resulting, complex information system by creating a description in the form of adapted casual loop diagrams.
The laboratory is now in the process of obtaining ISO 9001 certification for its information management based on this method of software development.

A Soft Systems Management Approach to Energy and Conservation for the Hotel Industry of Cyprus

Costas Y Konis

The paper describes an attempt to tackle the problem of energy management and conversation of the hotel industry of the Island of Cyprus utilizing the Soft Systems Methodology.  Hotel industry is one of the most dynamic industries of the Island and contributes heavily towards its national income.
The paper describes all steps of all the methodology applied that is: the development of the rich picture, the identification of issues for investigation, the development of conceptual models and the derivation of useful, feasible and culturally acceptable recommendations.
The paper concludes that Soft Systems Methodology is an excellent means for tackling complex problems involving human activity systems and that  is certainly suitable for improving problematic situations in energy management and conversation.

Applying the principles of Human Computer Interaction to the Design of Management Flight Simulators

W Brain Kreutzer, David P Kreutzer

Engaging managers in facilitated team model building and using all the principles of system dynamics to obtain high quality models are useful prerequisites to creating a good management flight simulator. No amount of interface improvement should substitute for or mask a poorly designed or understood model.  However, there is a great deal of learning going on in the field of Human Computer Interaction that we in the system dynamics community can learn from in order to improve the effectiveness of our management flight simulators and model based learning workshop.  This paper will explain how we can apply the principles of Human Computer Interaction to building management flight simulators.

A Basic Business Loop as Starting Template for Customized Business-Process-Engineering Models

U La Roche

Conventional Business-Process-Engineering (BPE) consists of cautious small step improvement in succession to optimize target figures such as financial outcomes, delivery time and leadtimes.
To support BPE for fast and focused change, a simulation model on top and outside of MRP-system in place is proposed.  Useful business models for this task include the whole process from clients billing to supplier paying.  A continuous flow simulation allows to cover the long time horizons of several weeks to years to include the bottom-line-effects relevant for decisions.
Outside of existing MRP-systems means that alternatives of structuring the business-process can be assessed without the heavy reprogramming and database support needed, if you do this with the MRP-systems in place.  We use process-chain-models with the appropriate flow calculations instead of the discrete-event type calculations of MRP-systems.  This simplification pays out in better focus on essentials such as dynamic control of the process-chains for the price of not going into the details of single piecewise operations.
A generic template as a starting model is used to cover the many-facetted problems of business-process-engineering in order to prepare the follow-up with a professional custom-model and simulation-tool for the real company’s problems. Any final customized model is of course highly company specific.

Is there a Cause-Effect Relationship Between Unemployment and Taxation Level?

U La Roche

The debate on the causes of present high and apparently staying unemployment is just starting to get the grand picture together.
A preliminary investigation of a two-sector economic model is presented.  Its focus is the interactions between wages in the productive sector and rents and subsides in the non-productive sector.
Aging populations, late entry into the labor market, a growing administration headcount and widespread subsidizing add up to taxes and other fiscal measures.  Their driving force is modelled  to be the recompensation expected relative to the wages before tax of the productive sector.
There are three different behavioral-modes identified:
– full employment policy will result in a stable employment inverse to the expected recompensation of the Non-Producing sector.
– hire and fire policy will get a stable mean taxation level, but with oscillations of some twenty years duration at least.
– preventative hire and fire will induce catastrophical changes of employment and tax-income.
A weak interaction composite model of this two-sector model into an available longwave model further reinforces, that a high rent-and-subsidizing expectation kills employment and reduces the so called self-ordering of capital production in the longwave model context, except for businesses with high profits.  Also, the longwave periods is influenced strongly in this composite experiment.
The context for interpretations of the results is proposed to be the national economies with their taxation in global competition.

Social Theory and System Dynamics Practice

David C Lane

This paper explores the social theories implicit in past, present, and future (envisaged) SD practice.  Previous work on the theory of SD is first reviewed.  A framework for studying social theories is then introduced; the assumptions underlying its axes discussed and the four paradigms of social theory which these yield described.  Various grouping of SD practice are then defined and these are placed in the framework, primarily within functionalist sociology.  Motivated by alternative paradigms, two new and potentially productive forms of practice are envisaged.  The term “holon dynamics” is proposed to describe them both.  These are subjectivist and they are described briefly along with the new type of research approach necessary to advance them.

A number of conclusions arise from this analysis.  Firstly, that Forrester’s basic conception of the field was spread across the schools of Social System Theory and Integrative Theory and resulted in a period of interpretive division regarding validation.  Secondly, that the resulting move by some practitioners towards more subjective forms of practice should be seen not as revolutionary, as some external observers assert, but as an evolutionary extension of the basic conception.  Thirdly, that some current SD practice may, and the envisaged forms certainly do, indicate that the field is not wedded to a particular theory but rather that the method of SD can be used in different paradigms.  This conclusion implies a greater need to be aware of, and consistent with, the social theoretic axioms implicit in SD activities if practitioners are to sustain a Kuhnian ‘normal science’ – hence reinforcing the paper’s consideration of social theory.

The Greater Whole Towards a Synthesis of SD and SSM

David C Lane, Rogelio Oliva

This paper concerns two system-based approached for organizational intervention – soft system methodology (SSM) and system dynamics (SD).  After a brief description of the theoretical and methodological assumptions of the two a partial critique is presented.
SSM is strong on the generation and representation of diverse perspectives, or Weltanschauugen and attempts to deal with the socio-political elements of an intervention. But SSM is weak in ensuring what is termed here ‘dynamics coherence’: consistency between the instinctive behavior resulting form proposed changes and behaviour deduced from ideas on causal structure. Hence, in situations where causal structure and instinctive behaviour are meaningful, the intervention is blind to the dynamic complexity of the proposed changes.
SD examines the causal structures capable of explaining and exploring the dynamics interactions of different policies.  However, whilst SD emphasises the need for a clear issue focus for a study, the approach has little theory regarding the generation and explicit representation of diverse issues.  A proposal is made regarding the dove-tailing of the two to form a synthesis.  After an SSM intervention a second stage is described.  This continues the socio-political analysis and draws on the previous Weltanschauuugen.  It operates within a new Weltanschauuug which values dynamic consistency of the holon which is able to represent the proposed changes.  A model of this holon is constructed using SD to represent causal structure and deduce behavior.  Using SD methods, the changes are thus rendered ‘systemically desirable’ in the additional sense that dynamic consistency has been confirmed.  With due regard to respective theories and the preservation of ontological consistency, ‘holon dynamics is utilized to describe the process.
This paper closes with reflections on the proposed synthesis, particular emphasis being attached to the need for theoretical consistency when mixing tools.

Only Connect!

Part I: An annotated Selection from the Literature on the Problem Structuring Methods of ‘Soft’ Operational Research

David C Lane, Jonathan Rosenhead

What other activities and techniques exist that are interest to system dynamicists?  Are there possibilities for system dynamics itself to contribute to them?  These questions have been of interest to the authors for some time and now the 1994 System Dynamics Conference is helping to advance the debate. This paper tries to help things along.

We consider two areas of interest: the problem structuring techniques of ‘soft’ operational research and the wide range of system thinking concepts employed in the systems movement.  Both involve valuable ideas and experiences.  Both have a more European-orientated perspective, in contrast to the mainly-US viewpoint of system dynamics.  In this two-part paper we therefore offer a selection from the literature of the two as well as brief annotations.

In this first part we consider the emergence of a range of practical problem structuring methods, their grounding in respective theories of organizational interventions and group processes, their creators’ concern with participation and the political and power consequences of their work and, finally, the current debates in the area.  In the second part (q.v.) we turn to systems thinking.

Of course, this is only our own selection but our aim is to encourage connection between these areas of activity.  We have no doubt that they will be mutually beneficial.

Only Connect!

Part II: An annotated Selection from the Literature on the Breadth and Scope of Systems Thinking

David C Lane, Mike C Jackson

What other activities and techniques exist that are interest to system dynamicists?  Are there possibilities for system dynamics itself to contribute to them?  These questions have been of interest to the authors for some time and now the 1994 System Dynamics conference is helping to advance the debate.  This paper tries to help things along.
We consider two areas of interest: the problem structuring techniques of ‘soft’ operational research and the wide range of system thinking concepts employed in the systems movement.  Both involve valuable ideas and experiences.  Both have a more European-orientated perspective, in contrast to the mainly-US viewpoint of system dynamics.  In this two-part paper we therefore offer a selection from the literature of the two as well as brief annotations.

The first (q.v.) deals with ‘soft’ OR.  In the second part we consider ‘systems thinking’.  Although this terms seems to have been appropriated by the system dynamics community it can be interpreted very differently.  We therefore try to convey the breadth and scope of the intellectual and practical endeavours that define the systems movement and explore the range of holistic ideas that people have found useful thinking about and acting in the world.
Of course, this is only our own selection but our aim is to encourage connection between these areas of activity.  We have no doubt that they will be mutually beneficial.

Mad, Bad and Dangerous To Know?

The evolution and limitation of the ‘generic structure’ concept in system dynamics

David C Lane, Chris Smart

This paper trace the evolution of the ‘generic structure’ concept in system dynamics, and discusses the different practical uses to which they have been put.  By reviewing previous work on the concept we have identical three different views of what a generic structure is and, hence, what transferability means.  These different views are distinguishable in practice as well as in concept. Examination of these interpretations shows that the assumptions behind them are quite dissimilar.  From this analysis we argue that it is no longer useful to treat ‘generic structures’ since a single concept as the unity it implies is only superficial.  We conclude that the concept needs unbundling so that different assumptions about transferability of structure can be made explicit, and the role of ‘generic structures’ as generalisable theories of dynamic behavior in system dynamic behavior in system dynamics theory and practice can be debated and clarified.

I Can’t Believe It’s a System Dynamics Model!

Paul A Langley, Erik R Larsen

This system dynamics community has been active in developing model-supported cases studies, gaming simulations and management flight simulator for use in learning laboratories and student workshops.  As multimedia environments are being introduced, system dynamics based learning tools are beginning to look increasingly like many commercially developed games.
Developments within the commercial video game markets, including new mass storage media (CD-I, CD-ROM) and multimedia technologies have resulted in a host of new business and policy related games and simulations becoming available.  In this paper, we examine the possibilities for using commercially available games in a system dynamics context.  We demonstrate those opportunities through an example, SimCity, a well-known commercial strategy game.
How can the system dynamics community contribute to these new exciting developments in the area of commercial edutainment products? How can we make use of the current interest in strategy games to get more people introduced to system dynamics?

Modeling Electricity Privatization in the UK

Erik R Larsen, Derek w Bunn

There seem to be several advantages in using System Dynamics modeling to understand the behavior of newly privatized industries.  System dynamics models can develop insights on the possible evolution of the industry from public to private ownership and from protected to competitive markets.  The implications for business strategy and for the regulatory framework can be examined under various scenarios.
As part of the privatization of the UK electricity industry a spot market to clear the electricity market has been created.  The main reason for the spot market is to set the half hourly price at which electricity is traded.  A further aspect is that it allows the regulator to set incentives to increase or decrease the generating capacity according to what he believes is necessary in the long run.  We have modeled capacity investment in this newly created industry in the basis of testing its theoretical design
Our model focuses on how long term development of capacity utilization is likely to evolve, how much influence the regulator will have under the current regulatory framework, and how this framework should be modified to give the regulator more influence on the market to prevent cycles of over and under capacity.

Living Systems Dynamics: A New Approach for Knowledge Representation

Stephane Le Peutrec, Michele Courant

In the perspective of formulizing abstractions as a fundamental facet of cognition, we study knowledge in its relationship to the biological substratum from which its outcomes.  Our research is mainly founded on the works of F.J. Varela concerning the autonomy of living systems (autopoiesis) and of S. Lupasco on antagonism.
We show how autopoiesis brings a new enlightment upon knowledge, by turning representation problems to organization problems and how the autopoietic dynamics of living systems leads to a new formulation of machine learning.  By developing new internal dynamics, a system does not learn to know its environment, but to adapt himself to it.
It follows that modeling an autopoietic system requires to focus, no more on sharing of semantic universes between a system and its environment, but on structural models producing behavioral regularities of the system in answer to environmental perturbations.  Autopoiesis seems therefore more suited for developing adaptive and complex systems, especially when an exhaustive specification of the operating factors is prohibitive, as well as for providing a unified framework for modeling cognition.  Moreover it provides a paradigmatic foundation to the design of massively parallel system.

From Task To Goal Orientation   Changing the Culture of Public Sector Agencies A System Dynamics Approach

Keith T Linard

Over the past decade, the Australian labor Government has cut the size of the Australian federal budget sector from some 32% to around 24 % of Gross Domestic Product.  This cut in public sector intervention in the market-place has been achieved while the Government has continued to focus on achievement of its social justice objectives.
Central to those changes has been the Financial Management Improvement  (FMIP), initiated in 1984 with the establishment of a small management reform team drawn from the department of Finance and the public service board.
Fundamentally, the FMIP sought to effect a change in bureaucratic and government culture, shifting the prevailing paradigm from input accounting to output and outcomes management.  In responding to this challenge, the FMIP unit in the Department of finance adopted a ‘systems thinking’ approach, initially using qualitative casual loops analyses and subsequently dynamic simulation modeling, to identify high value leverage points in bureaucratic government. processes.  Qualitative and quantitative system dynamics modeling is now starting to be used in the broader policy advising areas of government.
This paper presents an overview of key elements of the Australian federal public sector reforms from the perspective of systems thinking and summarizes significant recent uses of system dynamics modeling in public sector management and policy analysis.

The Use of the SaGa Tool for Scenario-Based Planning

Edward Lewis

This paper describes the scenario generator (SaGa) tool that prepares “plausible” futures for use in developing – or testing – managerial plans.  SaGa generated adaptive, written scenarios based upon some of the power systems thinking.
SaGa produces scenarios from the combination of textual and numeric values that are linked into cascades of formulae or decision tables.  It provides a written description of the implications of using different sets of input values in a model of complex systems behavior.  Managers with preferences for verbal material can use these scenarios to consider what preparations should be made to achieve their preferred future.

The use of iThink in Scenario Planning in the Building Industry In South Africa

Llewellyn B Lewis

Since 1990, South Africa has been undergoing a paradigm shift from authoritarian rule to a new democratic society.  Typically, the process of transition has been conditioned and shaped by historical circumstances which are unique to South Africa but nevertheless, shaped and patterned in predictable ways.  The building industry has an important role to play in the political transition process, basically because of the need for reconstruction and socio-economic development, giving rise to the struggle between the contending visions of redistribution and growth.  All the contending visions for the new South Africa identify the four inner-related objectives of the need for growth, for equity, for political participation and for stability.
The affordable housing market has an aura of destiny and paradox about it.  On the one hand, the housing backlog of some 1,14-million units appears to be an unsurmountable problem and on the other, it provides an amazing and historically important opportunity.  Through the provision of affordable housing at scale for the under-privileged, many of the objectives of a new South Africa can be achieved, in creating massive employment in redistribution income, in wealth-creation and in promoting stable family life, which underpins a healthy society and promotes nation-building.  Nevertheless, the affordable housing problem is bedeviled by many complex issues which defy simple analysis and which require a systems approach.
In the search for leverage, a systems model, using the ithink soft-ware package was developed of the building industry in South Africa.  It related activity per market segment, to affordability, the need for and effect of subsides, employment creation, housing stock and backlog and home-ownership.  The model challenged and clarified the mental models of participants in a scenario building process, identified the major obstacles and the major leverage for a trend-break in the building and for breaking the housing log jam.
In the model, it was possible to link hard data such as building activity, gross domestic product, housing backlog and need, home-ownership, employment and subsides. with ‘soft issues’ such as the need for leadership and vision and for establishing a Housing Accord.  The Systems Model enabled the participants to see the impact of alternative strategies over a 20 year planning horizon.  Sensitivity analysis was applied to varying levels of subsides demonstrating the impact on the housing backlog and building industry activity.
The “ithink” strategic modeling package provides an extremely useful tool in scenario building and in challenging the mental models of leading influences and decision-makers in the building industry.  In particular, it highlighted the need for a gradually phased increase (and timeous decrease) in affordable housing delivery, in order to avoid “over shoot” and “over correction”, with the potential of putting the system into dangerous fluctuation.  In the scenario planning process, the use of the model information enabled some 60 participants in a Think Tank process, to obtain a much clearer view of the future of the building industry and to use the process in ‘creating a memory of the future‘ and thus, to have some influence on housing policy and strategy in South Africa.

Modeling Interactions Between Autonomous Agents

Michel Ludwig, Michele Courant

In the framework of designing programming environments based on the paradigm of autonomous agent systems, we conceived an interaction model based on the notions of charge and force.
In a multi-agent system, an agent is defined as autonomous entity composed of an agent’s kernel and charges forming an envelope around this kernel.  An agent perceives the other agents exclusively through sensors attached to his charges.  Therefore all the dynamics of the system is governed by charges.
The introduced interaction model supports two kinds of dynamics: an internal dynamics obtained by changing inside an agent, and an external dynamics obtained by the agents movement through the environment.  These dynamics enable the agents to vary jointly the forces acting on them and the forces they generate.

Because the high level semantics of the charges is not fixed by the model, the model may be used as well for modelling high level interactions, like psychological relations, as for modelling low level interactions, like elementary interactions used in artificial life.

Strategic Analysis of Global Telecoms Service Provision

Tom Lynch, Sonia Skelton, Michael H Lyons

One of the largest growth areas in telecommunications is global business communications. In today’s global economy, companies want to communicate across the globe through a single service provider, in a seamless manner between all their locations.  For this to happen the service provider must operate in markets which have differing cultures, regulatory frameworks and levels of competition.
We present here a system dynamics model developed using the IThink software package, which investigate some of the major issues of global service provision.  The world is segmented into four regions within which there can be distinctly different conditions.  The model captures the complexity of obtaining a customer in a region and providing a global service in time scale which will satisfy the requirement for connectivity between world-wide locations.  The degree to which customer’s requirement can be met will be dependent on the presence the provider has throughout the world. 
Initial results indicate that the perception of a provider’s service has a strong influence on market share within its home region and also the other region of the world.  However, this can lead to scenarios where a strategy to improve service offering without due regard to provisioning constraints can lead to a loss of market share. 
The modeling activity delivered three major benefits: it has provided valuable insight into a key telecommunications markets; it has demonstrated the applicability of system dynamics to telecommunications strategy, and; it has highlighted areas for development which will provide future value.

Tactical vs. Strategic Approached to Competitive Positioning – An Example from the Telecommunications Industry

James M Lyneis

Many firms take actions which affect their competitive position without considering the longer-term strategic consequences of those decisions.  This is particularly true of many recent downsizing initiatives, which have tended to be tactical in the sense of being reactive, focusing on pieces of the business, and with short time horizons.  This paper uses examples from a dynamic simulation model of a telecommunication company to illustrate the dangers of such a “tactical” approach which is anticipatory, holistic, and long-term in its viewpoint.

Preparing for a Competitive Environment – The Prospects for American’s Electricity Utilities

James M Lyneis, Carl G Bespolka, Ben Tucker

America’s vertically integrated electric utilities will soon face the prospect of direct competition.  Initially, this will occur at the “upstream” side of their business to provide the supply of electric power to the utility’s system.  Later, the “downstream”, retail side of the business will open up, especially for large industrial and commercial customers.  After many years as a monopoly with essentially cost-plus pricing, competition will pose a significant threat to these high cost utilities.  Fortunately, unlike previously deregulated industries, electric utility have a number of years in which to prepare themselves for competition, and the experiences of their forerunners to guide their preparation.  This paper first present an analysis of the outlook of a typical, but hypothetical, eclectic utility in the face of such competition, and then examines a range of options for preparing for a competitive environment.  These analysis show that the difference in present value to shareholders between successful and unsuccessful strategies can be as much as $150 million (20%0 over a 10-year period, and $ 1 billion (40%) over a 25 -year period.

Evaluating Optimization Model Based Decision Support Systems in the Framework of a system Dynamics Based Game

Biswajit Mahanty, Pratap K J Mohapatra

Evaluating optimization model based decision support system is a complex task.  Once an optimization model is built, one is not sure how to compare the effectiveness of two competing optimization models.  One is also not sure how the model results will fare when they are actually implemented in practice.  This paper lays out a procedure for evaluating optimization models in the framework of a system dynamics based game.  Using the suggested procedure, a number of optimization model based system are evaluated.  Investigations are then carried out on the effect of such decisions support system on the performance of the game participants.  The proposed procedure opens up the possibilities of developing realistic and credible optimizations models by testing them for their effectiveness in the context of a specific problem situation.

Integration of Knowledge-Based Systems and System Dynamics Models for Decision Support in Innovation Management

Frank H Maier

Traditional models of innovations diffusion ignore the complexity and dynamics underlying the process of diffusion.  Usually these models consider only a single management decisions variable, e.g., price of advertising, but they assume these variables to be exogenous elements.  The models seek for strategies to optimize the cumulative profits without consideration of the highly independent influencing elements.  Their aim is normative decision support, but they use models, which do not appropriately represent the structural fundamentals of the problem.
The use of the system dynamics methodology allows the development of more complex and detailed models to investigate the process of innovations diffusion.  These models can enhance the insight in the problem structure and increase understanding of the complexity, the dynamics and the impact of management decisions.  But the development of adequate system dynamics models requires expert knowledge and plenty of time.
The paper presents a knowledge-based approach to System Dynamics Modeling to shorten the process model building and to make the knowledge about innovation management available for many users.  It consists of two parts: A knowledge based system with the traditional components for dialog, explanation, knowledge representation and inference is used to configure System Dynamics Models, and a modelbase of different modules that represent the generic structures of typical innovation management problems.  The knowledge about the innovation problems is included in the different modules and in the knowledge base of the knowledge-based system.  In dialog with the user the knowledge based system analyses the problem structure, chooses the relevant modules and finally configures the model that then can be used for further analysis through the problem owner.

Optimal Control Modeling with Vensim: Applications to Public Finance

Rolf R Mantel, Juan C Rego, Pedro Goyena

The purpose of this paper is to improve the results obtained by Fernandez and Mantel (1989), referred to the price control inconvenience in the application of a stabilization plan for Argentina’s hyperinflation in the Eighties.  For the model’s correct translation is checked by replications of the original experiments.  Secondly, an intuitive policy suggested by the shape of the original experiments, that proposes a timely starting of the original price control policy is tested, achieving better results.  Finally, an optimization process, currently available in Vensim programme, penalizes, on the one hand, the oscillations which are shown by the path that the instantaneous inflation follows to reach the equilibrium inflation rate; on the other hand, the slowness to reach that equilibrium point.  Vensim’s advise nearly matches previous intuituve timing for starting to control prices.

A Comparison of Regional Models Using Different Levels of Geographic Aggregations

Norman L Marshall, Stephan J C Lawe

We have developed several models linking land use changes and transportation for different regions with populations ranging from 100,000 to 2,000,000.  The models are uses to long-term planning for land use, transportation, and air quality. The level of detail desired by clients requires that the models have a high degree of spatial disaggregation, typically several hundred zones.
The spatial detail is a strength of the models, but it is achieved at cost.  Model development is time-consuming and expensive.  Even on the fastest microcomputers, model run time is measured in hours. Testing new models structures and making structural enhancement is slow and difficult.  The complexity of the models inhibits experimentation and learning by clients.  Simpler models are needed to aid in prototype development and in communication and training.
We compared results of policy simulations from regional models with three levels of spatial disaggregation.  The most detailed models are as described above.  For a highly-aggregated example, we developed a system dynamics model with two concentric rings using STELLA software.  Finally we evaluate two simplified grid models with intermediate levels of spatial disaggregation models.
The STELLA model is able to demonstrate some of the policy results, and is an excellent tool for model development.  In some ways the grid model combine the worst of both worlds.  They are neither simple nor fully detailed.  The detailed models exhibit the most rich behaviors.  We are developing techniques to move from STELLA structures directly to the more disaggregated model

A Conventional Versus a System Dynamics Approach to Planning

Ali N Mashayekhi

In the conventional view, planning is a process in which various goals for the future are set and action programs are formulated to achieve those goals.  Future goals and appropriate plans are formulated based on analysis of environment forces and audits of internal conditions or strengthens and weaknesses.  Then, plans are implemented to achieve the goals.  But, in the System Dynamics view planning is a decisive formulation of policies or decision making riles which will enable the system to evolve from its present state to the desired one.  The design of decision making rules is within a framework of feedback and based on consideration of the fact that new conditions will lead to new decisions and actions as the based  on consideration of the fact that new condition will lead to new decisions and actions as the system moves towards it’s desired states.  The implication of these two views in planning is discussed with respect to management of a company within a growing market.

Management Games for Group Decision Making in a Dynamic Environment

Peter M Milling, Frank Lehmann

Management games are very powerful teaching and training devices which however, sometimes suffer from a direct and usually one-to-one interaction between player and the model.
The paper presents a management simulator for decisions occurring during the innovation process.  Several groups of players represent the boards of directors of virtual enterprises that compete with each other.  The computer model serves only as a clearing device to coordinate the decision consequences on the supply side and on customer demand.
Technically, the game is based on a simulation model written in Professional Dynamo.  It has an interface for the preparation of the simulation results and the communication with the players, that was realizes using Microsoft Excel.
A simulation model for generating data for management gaming must comprise a realistic structure and stable policy rules.  The players should be able to use their professional knowledge and their business experience.  The computer-model in the paper represents a microworld for testing different strategies, to experience different forms of behavior, and for improving the understanding og the consequences of decision making in a dynamic environment.

Extending System Dynamics for Environmental Research and Management

Ian Moffatt

System dynamics modeling is used in many disciplines to examine the various ways in which dynamic system function.  At the University of Stirling system dynamics has been used since 1978 to model environment processes and contribute to the management of environmental problems.  These two aspects of environmental research haven been reinforced by new developments in computing technology and by greater awareness of the importance of environmental problems by both politicians and lay people.  At present, however, system dynamicists have remained aloof from many developments in computing technology and it will be argued that that could be failing to make a major contribution to the understanding and resolution of environmental problems.
The main thrust of this paper is to argue that system dynamics needs to be extended into a more general framework so that detailed investigations of major environmental problems can be undertaken.  In particular it is suggested that system dynamics needs to develop dynamic models to interact with several areas of information technology, especially database, quantitative methods, geographical information system (GIS) and experts systems in order to contribute further to the understanding and management of environmental problems.  This argument is illustrated with a description of a prototype, integrated and general  environmental research and management system (GERMS) developed explicitly to address the problem of modeling and management water quality in the forth estuary, Scotland.  Some of the results of this research and its implications for environmental management are discussed.  It is suggested that further development along these lines could be made to ensure that system dynamics make an even greater contribution to try to resolve many of the environmental problems which surrounds us.

Safety Hazard Control in the Workplace: A Dynamic Model

Jonathan D Moizer

The work described in this paper was carried out as part of a study into occupational health and safety information systems, and the simulation package used was Powersim. Systems thinking and practice are tools which can contribute greatly to better safety management (Waring 1990). The paper presents a generic model to illustrate the life cycle of a workplace hazard, from its conception to its final control. The greater the number of uncontrolled hazards in a working environment at any one time, the greater the likelihood of accidents being generated. The rate at which hazards can be identified and controlled will have a great bearing on the overall safety of the workplace. The exclusive use of a reactive approach to hazard control in the following system models proves not to be sufficient in substantially controlling hazards.

Management of Fiscal and Monetary Policy (The Case of Developing Countries)

Mohammad T Mojtahedzadeh

A system dynamics model is presented to analyze fiscal and monetary policies.  The model describes an economy which suffers from infrastructure shortage.  Further, government is responsible for the development of infrastructure.  The model demonstrates the contradiction between fiscal policy and monetary policy in offsetting the rise of inflation.  The contradiction can be addressed in terms of time horizon—from a short-run and a long-run perspective.  In order to control inflation, a monetary policy may suggest a reduction in the rate of increase in money supply.  This can be done by restricting dudget deficit based on inflation. In contrast, a fiscal policy may suggest that in order to control inflation, aggregate supply (of goods) must be increased.  An increase in aggregate supply requires infrastructure; thus, budget deficit expansions is unavoidable.  The model also shows that a policy which restricts new project initiation based on government budget availability causes a lower inflation rate, particularly in the long run, without decreasing the production growth rate.

To Shower or Not to Shower: A Behavioural Model of Competition of Shared Resources

John D W Morecroft, Erik R Larsen, Alessandro Lomi, Ari Ginsberg

Most system dynamicists have used a simple shower model to explain feedback and to introduce cyclical dynamics behavior characteristic of a balancing loop. The damped system’s temperature is relatively easy to manage.  But what if we assume the existing of the two showers sharing the same limited supply of hot water?  It turns out- as one might expect – that it is much harder to control the water temperature because a person managing one shower is unaware of the other shower or it’s occupant, yet must react to the aggregate temperature outcome resulting from a joint ‘management’ effort.
We discuss how a single two-shower model can provide a useful metaphor for a wide range of real managerial problems.  The model is used to illustrate the causes and consequences of interdependence in processes of resources allocation, competition within and among organization.

Qualitative Analysis of Financial Models

Thomas F Morgan, William M Ammentorp

Financial modeling is generally founded on the premise that financial managers and fiscal policy makers operate ‘by the numbers’.  Indeed the assumption is so deeply ingrained as to shape much of spreadsheet software to conform with accounting practices.  It is the thesis of this paper that there is a qualitative side to financial decision making which translate the mathematical expressions of accounting into the commonsense language of mangers.
The research reported in this paper examines the relationship between conventional financial models and the linguistic representations given them by financial managers.  The research takes form of a STELLA model of corporate finance with a HYPERCARD interface.  In the interface, the authors employ the propositions of fuzzy set theory to incorporate such linguistic hedges as “too high”, “way out of line”, and others found in common management speech.  The resulting model assists financial managers in linking their qualitative judgments to the numerical parameters of a typical corporate financial model.  As the model runs, it allows managers to adjust their financial policies on a quarterly time scale – while recording each person’s decisions as related to model performance. 
The authors report the decision making practices of a sample of corporate executives as a set of qualitative propositions.  There take the form of statements like, “If market share is falling rapidly, and leverage is fairly high, product line expansion is required.”  Such propositions take on a dual role; they can be translated into average numerical values to control a Stella simulation – or they can be simulated as a purely qualitative model.
The significance of the qualitative thesis lies in the new perspectives it offers to those who study and practice financial management.  The thesis offers a clear connection between the arcane world of the analyst or accountant and the complex environment of the working manager.  It fosters a dialog across professional boundaries that may well result in more accurate models and more effective practitioners.

In Search Of Learning Organization Within the Australian Hotel Industry

Michael Morrison, Fern Marriott

The concept of “organizational learning” offers a rich opportunity for not only rethinking theories of organizational behavior (OB) but also reexamining the relationship between OB and financial performance.  This paper examines an attempt to operationalise organizational learning by conducting a field study in the Australian hotel industry.  The research process is described.  Four models from the literature and out own feedback model provided the basis for initial analysis.  Preliminary results suggest that the methodology is not only useful in differentiating hotels but in promoting new questions that need to be addressed.  However the models provided little more than a check list.  As a consequence, we have constructed a composite model that proved for a more useful testing of the triggers and dynamics of organizational learning.

Short Term Manpower Planning: Time Basic Simulations vs Systems Dynamics Approach

G I Mould

The bulk of the literature on manpower planning models deals with long term planning and strategy evaluation.  The most common approach is to use a Markov type model.  This can readily model wastage and promotion rates, together with training policies and can be used to evaluate the longer term impact of personal policies.  However many manpower planning problems span a much shorter time period and precise modeling of training and promotion strategies is inappropriate.  This paper presents such problem.  Staff planning procedures were required to reduce a large but temporary backlog of work.  Two modeling approaches are contrasted: a time base simulation (a decision support system approach) and a system dynamics approach.  The simulation model was encoded in a spreadsheet this enabled management to easily make alternatives, to the model data.  The systems dynamics model presented a graphical representation of the problem which made all the modeling assumptions explicit.  Both models could assess management alternatives, the spreadsheet model was  able to provide very detailed information, whilst the main strength of the system dynamics model was its ability to provide more general results for the longer term.  With both approaches the cooperation of management was essential for suggesting practical solutions.

Investigating the Dynamics of Employee Participation

Jose Edgar S Mutuc

There has been an increased interest in teams and empowerment of working groups in management literature yet some researchers note that little has been done to define and analyse the critical factors that explain the variations of their performances as well as the participation progamme itself.
This paper presents an initial investigation of the interfacing factors in participation, and its construct, motivation.  The system archetypes in the participation system are first developed using recognized relationships in social science literature.  Their corresponding balancing loops are later inferred largely from conflicting accounts and observations of the participating process.  Some of the basic loops that are presented include the Organizational Improvement Loop, the Worker Environment Loop, the Tug-o-War Control Loop and the contribution sharing Loop.  A simulation model of the Organizational Improvement Loop is then presented with its results.

Powerful Modeling Using Array Variables

Mangne Myrtveit

As the field of system dynamics modeling is expanding, there is a continuos need for improvements of the available tools for developing simulation model.  Lack of features like array variables often lead to modelers to choose third generation languages like C when developing large, realistic models.
This paper describes the array variables of the POWERSIM language.  Comparisons are made to other notation, including mathematics and DYNAMO.  Index variables, array dimensions, subscripts, and functions operating arrays are described.  An important feature of POWERSIM is that the array notation goes well together with standard accumulator-flow diagram (AFD) and casual loop diagram used by system dynamicists.  This makes the use of array variables almost as easy and intuitive as using scalars.
The transition from single scalar values to multi-element array variables is visualized through examples.  Examples include capital stock with machines and building, work force with inexperienced and experienced workers, delay structures programmed as arrays, etc.
The array features of POWERSIM has been used with success in several large-scale projects.  Many modeling problems are not practically solvable without using arrays.  Even models that can be developed using only scalars, sometimes become much easier to develop, explain and maintain when using array’s.  In conclusion, the family of simulation problems that are best solved using a system dynamics tool, has been extended significantly through POWERSIM’s array mechanism.

System Dynamics and Learning Curves

N M Naim, D R Towill

Learning curves are met in a wide variety of industrial situations.  They have become particularly important in modern business strategy because product life cycles are constantly reducing as companies seek to gain competitive advantage via a rapid response to customer demands.  The paper describes a family of System Dynamics models that have been found particularly appropriate in modeling and forecasting the performance of business organisations including the performance of manufacturing systems and the penetration of new product into the market place.
The system dynamics learning curve model have a servomechanism analogue that yields valuable insights into the parameter estimation problem.  The models are required under two quite different circumstances.  The first is based on historical information where the model is to be added to a company or consultancy data base.  The second is for on-line forecasting and control of a business activity.  An enhanced stability least squared error predictor is described which covers both requirements.  The paper concludes with industrial applications of the system dynamics models.

A System Based Methodology for Industry-Level Analysis

Allen Nash

Both strategic planning by senior management in the private sector and industry policy analysis by analysist in the public sector have the need for a systematic approach to develop an understanding the dynamics of their industry.  Currently a systematic attempt at industry-level analysis requires the simultaneous use of a plethora of techniques such as Porter’s five forces for competitive analysis, network approaches to examine inter-organizational transactions, as well as competitive population ecology to examine population dynamics.  Building scenarios of possible consequences of significant strategic moves involves modeling the industry or strategic analysis.  The underlying theory is developed from general system theory, strategic policy analysis.  The aim of the approach is to allow a comprehensive qualitative model of the industry or strategic group to be developed based on graphically representing three subsystems: The social Subsystem, Information Subsystem, and the Physical Subsystem.  The approach has been applied to an examination of the rapidly developing textile industry in Indonesia.

Analytic Queuing Network

Henry Neimeier

A new simulation is proposed to overcome several of the limitation of discrete event simulation.  It is based on the combination of analytic queuing networks and analytic uncertainty modeling.  The analytic queue techniques gives an approximate transient solution to the general inter arrival time and general service time single server queue.  Analytic uncertainty analysis is based on the beta distribution.  It provides the entire uncertainty probability distribution can be fit based on the minimum, mean, maximum, and estimate of the mean and standard deviation statistics.  In a complex results calculation, all that is required is to keep track of these statistics as the calculation proceeds.  At any point in a calculation, the probability distribution of the result can be derived by fitting a beta distribution based on the four statistics.  When analytic queuing is combined with analytic uncertainty, modelling dynamics uncertainty analysis becomes feasible.  The time varying uncertainty distribution in resulting measures of effectiveness can be calculated at any specified time or over nay user specified time interval. The new capability is not available in discrete event simulation.

Analytic Uncertainty Modeling

Henry Neimeier

The analytic uncertainty modeling techniques is useful whenever sensitivity analysis is important.  It provides the entire resulting probability distribution instead of a single uncertain point estimate of the mean.  Both analytic development costs, and computer execution cost are far less than in discrete event simulation.  The price paid is some lack in modeling flexibility.
Discrete simulation requires multiple long simulation runs to obtain a statistically significant point estimate.  The different result values from multiple runs with identical parameter values but different random number seeds, are average to obtain the point estimate of the mean results value.  Conversely, the analytic solution gives the entire resulting probability distribution with minimal calculation.  The analytic solution also considerably simplifies sensitivity analysis.  A single analytic run is done for each input parameter setting.  Discrete event simulation requires multiple runs for each input parameter, to obtain a statistically significant mean result.
In functional economic analysis we are interested in the relative future cost of alternative systems.  There are uncertainties in process performance, resource requirements, cost estimate, investments required, workload, interest and inflation rates.  There is also uncertainty in the future projection of these elements.  Analytic uncertainty modeling provides a simple way of calculating output measure uncertainty from model input parameter uncertainties.

Dynamics Software Life cycle Model

Henry Neimeier

This software life cycle model encompasses initial development, software upgrades, and error maintenance.  The dynamic S**4 model is used to calculate several different development and maintenance strategies.  The impact of Intergrated Computer Assisted Software Engineering (ICASE) tools on development and maintenance cost, schedule, and error rate is quantitatively evaluated.  Alternative techniques for grouping error rate is quantitatively evaluated.  Alternative techniques for grouping errors and functions into releases are evaluated. 

Performance Evaluations Gradient

Henry Neimeier

The performance Evaluation Gradient (PEG) model quantitatively compares the relative merits of government operation versus outsourcing to provide government needed goods and services.  DOD outsourcing is the contracting out of business-related activities to save money.  PEG provides a means to minimize procurement operations and maintenance, and investment costs for a broad range of products and services.  Products are categorized by their associated input parameter values.  The model evaluates the effect of fourteen key economic parameters on per-unit costs.  This section describes the current budgetary environment and the relation of PEG to Functional Economic Analysis (FEA).  PEG is applied to a Local Area Network (LAN) services example and summary results are presented.

Performance Evaluation Surface

Henry Neimeier

The performance evaluation surface relates total cost over a system lifetime to eleven key performance factors.  A system dynamic model is developed to project initial cost and trends over the system lifetime.  A quadric surface (equation with all linear, quadratic, and two factor interaction term) is fit to a complete factorial design of model runs.  These runs span the practical range of factor values.  The equation is a generalized cost model that gives a first-cut cost projection for any product or service.

System Dynamics Model of the Standards Development Process

Henry Neimeier

An overall dynamics model of the standards development process was developed to document savings potentially obtainable from standards improvements in the defense information system.  The model will aid in allocating standards development resources.  Different funding and personnel strategies are quantitatively compared.

Using System Dynamics Simulations Model to forecast Long-Term Urban Water Demand

Huien Niu, Allan A Gillard

Forecasting long-term water demand is essential in water resources planning and management.  A common problem existing in long-term forecasting is that many uncertainties are involved due to the various assumptions which can be used.  Thus, it is highly desirable to give the assumptions explicitly in a long-term forecasting.  By using system dynamics simulations, scenarios can be easily produced based on different assumptions, or by issuing different valued to the parameter and initial variables.  And the assumptions can be stated explicitly and organized systematically by presenting the alternatives in tables.  The frequency distribution of the forecast results, which are obtained from different scenarios, can be derived.  A range of forecasts, rather than a single forecast, can be produced.  This can possibly supply an overall picture of a forecast.

The Public School System: A Dynamic Model of Community Standards, Students, Teachers, and Resources

Conrad F Nuthmann

Problem
Public school systems have server problems that are rooted in the fundamental dynamics of the system. A list of problems include:
-Declining performances
-Diminished Standards
-Relativistic performance assistance
-Student motivation
-Confused objectives and curicula
-Teaching fads
-Cultural heterogeneity
-non-educational responsibilities of schools
-Social pathology
-Administrative confusion
-Disenchantment with public school
Purpose/Objective
The objective of the effort was to reduce the public education system to its basic elements: standards, students, teachers and resources; and then to analyze the dynamics of such a system as it responded to three fundamental kinds of disruption: resources waste, teacher diversion, and student distraction.
Method/Approach
A system dynamics model of a public education system was constructed using STELLA II.  It was exercised according to a 5X4 factorial experimental design that examined the behavior of 12 dependent variables under the 20 conditions specified by the factorial design.
Findings
Results were summarized as a series of parametric plots.  For example, plotting Performance X Cost per Performance point gained across all conditions of degradation revealed a significant interaction effect.  That is, performance cost at high standards are much less per unit of performance gained, (and much less sensitive to disruption) than those at low standards.  Eight major findings are discussed, and a discussion of each of the major identified problems is offered.

Job Opportunity. Wanted: Multi-Skilled Technicians to Join a Six-Person Production Team Operating Highly Automated Equipment. Immediately

Patrick J O’Brian

The combination of global competition and automation has had a major impact on how contemporary businesses serve their customers.  Product development, operations, and sales have all been reshaped by the desire to provide high value products and services to the changing needs of customers.  A corporation’s ability to compete is intimately tied to its ability to continually develop its workforce.  The number of traditional manufacturing jobs in the future will decline; the competency demands will increase.  The paper outlines how one company developed six strategies to ensure that the skills of its workforce kept pace with the innovations of its production technology.

System Dynamics as a Tool to Advance Organizational Learning

Martin R Ochs

Today it can be seen that management of change has become a management of ‘surprise’, in which an enterprise can only survive by recognizing future events in the environment and by acting on that information with appropriate business moves.  The ability to learn about these changes requires a kind of organization that never stands still; moreover, enterprises have to develop their own strengths according to their environmental conditions.

Managerial Learning Laboratories: An Action Research Project for Group Learning

Rogelio Oliva

The purpose of this paper is two fold.  The first is to structure the thinking and theories about managerial learning laboratories as held by the MIT Organizational Learning Center.  The second purpose is to go beyond the utilization of management flight simulators and redefine those theories based on the experience of implementing five managerial learning literature is used to frame some of the results from the study and to generate new models aimed at increasing the effectiveness of managerial learning laboratories as group learning setting.
The paper can be viewed as iteration of action-research, where active participation of the researcher in the problem situation is followed by reflection and learning from the process.  The lessons are then used to update the theories that gave origin to the action.

A Model for the Polis, the Ancient City-State

Mauro Piattelli, Nicola Bianchi, Marta Cuneo

Polises are the ancient city-states that began to appear in the Mediterranean around 1000 BC.  They were to be found not only in the area of ancient Greece, but also in Phoenicia and Etruria as well.  These polises had different evolutionary paths and relationship with the sea.
The aim of the proposed model is to simulate these different paths by introducing cultural factors such as the ‘trade aptitude and ‘conservative tendency’ of the dominant classes and also by considering geographical constraints.      
The model uses nine main state-variables, four concerning population and five economy. Macro events such as emigration and/or expansion, which may generate new polis, are explained in terms of social conflict between the two dominate classes.  The economic unit measure is yearly per capita consumption and the sampling interval is set to one year.
The model description also includes a comparison with Forrester’s well-known Urban Dynamics.  The reasons for the choice of the System Dynamics methodology are expounded in the paper.
Two-running examples are discussed and shown as output plots.  They deal with a case of high social stability due to sea trade activity of the Emerging class, and also with a case of low stability with generation of new polises.
In the authors’ opinion, the model offers a general heuristic tool in historical analysis, but may also be useful for approaching present-day problems about the identification of a new development hypothesis for western civilization, in that it recognizes the fundamental role of cultural factors in addition to the economic ones.                                                                                                     

A Dynamic and Integrative Model for Detecting Strategic Changes in Efficiency and Effectiveness of an Industrial Company

Seckin Polat, Halulk Erkut

The purpose of this paper is to present a model developed for detecting strategic change in efficiency and effectiveness of an industrial company that is structured along with mechanistic concept, produces consumer products, and profit center.
Main aim of the research is to develop a model for detecting strategic changes that is a step of strategic issue diagnosis.  Which strategic changes are monitored is on dependent on which analysis unit is.  In this study it is organizations that are structured with mechanistic concept, vested in a multi product company and profit centre.  It can be found in literature that for these companies changes in effectiveness and efficiency are likely strategic changes.
Our approach to constructing the model is based on problem detecting approach due to relevant literature.  The model consists of two sub model; namely simulation sub model that is a system dynamic model and control chart sub model.  The simulation model provides us with distribution of profit values that can be obtained under the normal changes in effectiveness and efficiency.  The control chart model receives profit values produced by simulations model and calculates limits to show a manager whether there is a strategic changes in efficiency and effectiveness or not.
The model was run by input values of a Turkish company that produces paints.  In the test of the simulations model we did not found any statistical difference between profit values obtained from the simulation sub model and one obtained from profit formula, which may be a confidence indicator for validation.
As a conclusion it can be said that the detecting strategic changes offers a lot to system dynamic researcher and using management science tools with system dynamic will likely increase strength of it.

The Epistemological Assumptions of the (Main) Soft System Methodology Advocates

Stephen K Probert

A number of writers have argues that Soft Systems Methodology embodies a distinctly “subjective” philosophical approach and (or) yield a system methodology based on a “subjectivist” epistemology, and as such it is distinct from “objective” methodologies.  It has also been argued that Soft System Methodology avoids, or attempts to avoid, the “reductionism” inherent in traditional approaches to study of natural phenomenon.  In this paper it is argued that such argument contain a number of conceptual and historical confusions, and that whilst the advocates of the developed form of Soft Systems Methodology in fact subscribes to a subjective mode of enquiry, such a mode has its history firmly grounded in the natural sciences.  It is also argued that the Soft System Methodology advocates (in fact) subscribe to the thesis of epistemological reductionism, and this thesis will be contrasted with that of epistemological holism.

Innovations in Conceptual Modeling

Marcel M H Quanjel, Ivo Wenzler

In this paper we describe the process of building a conceptual model of a guided missile base of the Royal Netherlands Air Force, a complex organization in the middle of transformation.  Based on this conceptual model, we developed a policy exercise that is used by the Air Force to explore their future organization, focusing especially on the communication structure.
We will describe the steps made in developing the model and explain the choices that lead to some methodological innovations in communicating complexity through a conceptual model. We will also describe this model, which consist of 28 actors and actor groups, and between them more than 350 relationships of nine different types, including five specified types of communication.
Furthermore we will look shortly into the possibilities of transforming our qualitative model of actors and relations between actors into a system dynamic model, thus broadening the scope of system dynamics by giving an input from the system analytical approach we use in developing policy exercises.

A Study of Output Curve Intersections in the Case of Delay i (i=1,2,3, …)

Jia Ren’an

Delay function is one of the most important functions in dynamo Language in system dynamics.
This article discusses intersection characteristic of output curves in the case of delayi (i=1,2,3,…), and proves that in step-input, output curves in the case of  delayi (i=1,2,3,…) doesn’t intersect at the common inflection point and that when DEL1=DEL2/2=DEL3/3, the output curves in the case of  delayi (i=1,2,3,…) doesn’t intersect with each other except common initial point.
Above-mentioned result is very important in the application of delay function.

Modeling the Unanticipated Side Effects of Successful Quality and Productivity Improvement Programs

Nelson P Repenning

This paper describes a simple model of a manufacturing firm in which a successful productivity improvement program is implemented.  This model is an attempt to generalize an earlier theory developed to explain one company’s paradoxical experience with Total Quality Management (Kofman, Repenning and Sterman, 1994).  The model describes a dynamic hypothesis concerning the firm’s financial performance.  In this model the Half-life Equation suggested by Schneiderman (Schneiderman 1988) is used to determine the maximum rate of improvement.  The spread of skills and commitment is modeled as a diffusion process, and the allocation of resources to support that commitment is represented as a dynamic adjustment process with a multi-dimensional utility function and fixed resources constraint.  This formulation, with the assumption of locally rational decision rules, results in differential rates of improvement in the capacity and demand generating areas of the firm.  This differential, when coupled with traditional accounting, pricing, and human resource policies, can create unanticipated side effects that result in sub-standard performance or failure of the program.

Business Simulations and the Role of the Manager

Martin Rich

 

This paper examines some of the experience of using business simulations, for management teaching, in an academic environment.  It is particularly concerned with simulations which promote groups and collaborative working, and which encourage students to review their interaction within the group.  Using this experience, and examining the nature of managers’ work in business, it discusses the extension of these principles to in-service management training.  In the business context, the emphasis on group work translates to an emphasis on enabling managers to recognize and use their individual skills, and personalities, to the best effect.

Management training, especially in the UK, has long been regarded as a luxury, only to be indulged in where money and time are plentiful.  To encourage the use of simulations in business, some ideas for evaluation of their effectiveness in training are also discussed.

Foundations of Mental Model Research

George P Richardson, David F Andersen, Terrence A Maxwell, Thomas R Stewart

Ongoing research at the Rockefeller College is exploring the ability of subjects in a computer-based management laboratory to manage the implementation of welfare reform.  Reflection on the design of such research have pushed us to develop a firmer theoretical foundation to guide our research  on distinguishable submodels focused on ends (goals), means (strategies, tactics, policy levers) and connection between them (the means/ends model).  These distinctions, coupled with a view of human judgment from Brunswikean psychology, lead to a rich integrated theory of perception, planning, actions, and learning in complex dynamic feedback systems.
From that theory we derive classes of testable research hypotheses about decisions making in dynamic environment in particular, design logic and operator logic hypotheses that have serious implications for system dynamics research and practice.  The operator logic hypothesis suggests that system intervention focused on understanding detailed system structure will have little impact if they are not captured in easy-to-digest chunks of strategic insights that managers can integrate into relatively simple means-ends associations.  Compounding the difficulties of mental research is the likelihood that individuals’ mental models can not be directly elicited without distortion.

System Dynamics of Petroleum Development Training for Long-Term Cooperation Across Cultural Divides

James L Ritchie-Dunham

This paper addresses the dynamics of energy development projects.  Nationalization has repeatedly squandered the economic, physical and mental resources of large joint-ventures between multinational oil companies, and developing countries.  A deteriorating relationship between multinational oil (MNOC) management and regional hosts consistently leads to nationalization. This cultural gulf between corporation and regional host, while existent in many regions is most significant in high conflict areas, which is why petroleum managers, with most of their experience in low conflict areas, have mostly ignored and cultural gulf.  To form strong relationships that bridge the cultural gulf requires cultural sensitivity.  Neighbor conflict studies show this problem to be most prevalent in developing countries, but also existent in emerging areas such as offshore California, Florida and Alaska.
The proposed microworld trains first world petroleum managers, through cause-effect analysis, that while cultural-sensitivity to the developing country’s need increases marginal costs, it’s lower the probability of nationalization, generating positive project economics and raising expected payouts from extended project life.

The Role of System Dynamics in Project Management: A Comparative Analysis with Traditional Models

Alexandre Rodrigues

The increasing rate of change to which organizations are exposed, along with the growing complexity of projects and of the environment, has highlighted some weaknesses of traditional approaches in coping with the strategic issues of project management.  System Dynamics models provide a useful tool for a more systematic management of these strategic issues.  There have been a number of applications of System Dynamics in project management; this experience permits a tentative comparison with the more traditional approaches and to examine the particular benefits of system dynamics.  The conflicts of options between their supporters stress the different perspective underlying the two approaches.  The comparison of the two approaches is focused on the “view” of the project management process.  Although they both assume a system perspective, identifying a cycle of planning, implementation and control, the level of detail in which they consider the project system is different.  Traditional models support the project manager in the operational problems within the process, while System Dynamics models provide more strategic insights and understanding about the effectiveness of different managerial policies.  For effective project management both operational and strategic issues have to be handled properly.  This paper suggests an approach to combining the lessons of system dynamics and traditional models within a single, integrated project management methodology.

Study of Work Climate in R&D Organizations: A System Dynamics Approach

Santanu Roy, Pratap K J Mohapatra

Research regarding the examination and evaluation of work climate in understanding organizational functioning has enabled us to formulate strategies that not only improve the behavioral aspects in institutional functioning, but also result in more effective organizational performance.  While sufficient studies exist on examination of work climate for industrial, service and allied sectors, relatively few researchers have considered government-funded Research and Development (R&D) institutions as their unit of study.  Further, most of the studies reported have been conducted for scientists working in R&D units in developed countries.
System Dynamics methodology as applicable to studying organizational behavior have found limited acknowledgement in literature.  Moreover, most of these studies are based upon theoretical understanding of the subject with little empirical support.  The present study is an offshoot of a serious of studies which were undertaken in the National Institute of Science Technology and Development Studies on different aspects of R&D Management with primary emphasis on organizational behavior.  An attempt is made here to model the work climate of an R&D laboratory using the System Dynamics methodology with support from the studies carried out earlier as mentioned above.  The motivational conditions prevailing in an R&D laboratory was studied in order to understand the factors and forces which are necessary to provide a climate which will motivate the scientists. Likewise, factors and forces that contribute significantly to the overall satisfaction with the work group were also studied.  The question whether operating within an environment as is prevailing with the R&D laboratory stimulating or a debilitating effect on the work enthusiasm of the scientists were addressed to them.  The aspect of R&D effectiveness of the research group was also probed into and the factors and forces contributing to the same identified.  A detailed flow diagram was then developed relating to above factors to the project flow dynamics.  Trail runs of the model using the DYMOSIM package have been carried out and project-related data collection are currently in progress to evaluate the constants and multiplier factors and for validation of the model structure.

Strategy and Systems Thinking Though Dynamics Storytelling

Jorge Rufat-Latre

This paper describes a way of using systems thinking concepts and a system dynamic model to help clients design strategic approach.  The client, a large information services corporation, knows the market it is serving now and the market it wants to serve in the future.  It also knows the core competencies necessary to meet the benefits needed in each market.  A can-do attitude and limited time for reflection limit the client’s ability to design the policies necessary to achieve this strategic transition.  Systems thinking concepts help the client understand the urgency of the situation and the difficulties faced in achieving a strategic transition.
The model is designed around the client’s perception of the corporation’s present and desired market, and around Gary Hamel’s strategy concepts.  It is not designed to answer a specific question, but rather to allow the client to address strategic issues.  The model incorporates every implied casual link that the developer could collect from diverse constituencies within the company to increase the chances that users will find topics from which to build a discussion.  Reports are made to look like corporate reports to ground the model in the client’s mind.  The model runs on MicroWorlds.  It is used like other existing management flight simulators.

Utilization of System Dynamics for Comparing Traditional and O.P.T Production Systems

A Ruiz, Jose A D Machuca, Miguel A D Machuca

In the study presented here we have modeled a firm with various production sections managed along traditional lines.  We also include in the model the structural changes necessary for the company to be managed according to OPT.  It is possible to work with the two philosophies alternately.  We have thus created a tool which allows us to check the validity of the various basic rules from which professor Goldratt works in developing his theory, and also to establish its strengths and/or possible weaknesses for different business situations.

A Framework for Problem Solving Using Dynamics Modeling with a Japanese Management Technique

Tom Ryan

This paper reflects on a successful problem solving exercise that was carried out in a textile factory using a systems approach together with a Japanese management technique.  The systems approach used was System Dynamics modeling and the Japanese management technique was CEDA (see appendix).  The paper concludes that successful problem solving can be viewed as a group of learning process and that this approach offers a useful framework for initiating and managing performance improvement.  The degree of success is largely determined by the degree of learning that takes place.

Bargaining Delays in a Macroeconomic Context

Alexander Ryzhenkov

A desirable movement towards a high skill and high wages economy may imply a broader employee participation in shaping investment/innovation strategies.  This could extend collective bargaining over automating, timing of innovations in addition to issues involving employment, wages and other working conditions.  This paper makes us of nonlinear differential equations and of a qualitative state space analysis to describe dynamic feedback system, based upon a Goodwin-like model of economic cyclical growth and income distribution.  The patterns of behavior are traced to the system’s feedback structure (in particular, to delays and polarity of it’s feedback link and loops).  It is shown that typically growth of labor productivity promotes a steady state labor bill share and employment ratio, although irrationality or myopic rationality in bargaining, disregarding regularities of the whole system, may be detrimental.

Technological Development in a Dual Economy: Alternative Policy Levers for Economic Development

Khalid Saeed, Ponthep Prankprakma

A system Dynamics model of a dual economic system incorporating also the behavioral responses to competition and the ability to innovate on the part of the formal and self-employed sectors is developed and used as an experimental apparatus to search for technology-related entry points for achieving economic growth and changing income distribution. Policies to promote competition among the monopolistic formal fi9rms while simultaneously providing positive assistance to the competitive informal firms appear to offer promising alternatives to the traditional fiscal policy levers mainly affecting prices and factor costs.

System Dynamics in High School Physics

Horst P Schecker

System dynamics has strong didactic potential of physics education.  The use of modeling systems like Stella in the physics classroom creates new opportunities to
– accentuate the basic structure of physical theories,
– investigate more complex and realistic phenomena,
– improve the possibilities for students to bring in their own ideas.
Conventional physics instruction is often dominated by a bulk of special equations (gimmicks) for special cases, like s=v.t for linear motions on an air track.  System dynamics models help students to realize that the core of physics can be expressed by a limited number of power tools like Newton’s laws _p=F._t, which are applicable to a wide range of topics, including process and the graphical modeling language, they can use system dynamics as a tool to solve problems from nearly all domains of physics, starting from the motion of bodies to the decay nuclei.
Empirical research carried out by the University of Bremen has documented case studies about the use of STELLA over three years of high school physics courses.  A comprehensive selection of modeling examples ranges from the motion of meters over electromagnetic vibrations to Rutherford scattering.  Our empirical finding shows a) that using systems dynamics methods is feasible in normal physics classes, and b) that content, methods and results of physics teaching are improved. The paper presents the didactic rationale and selected examples.

Results of the 1993 System Dynamics Society Benchmarking Study

Greg J Scholl

 

The lack of commonly held rules or standards for system dynamics, the eclecticism of its application, and the wide variety of modeling and non-modeling methodologies developed over the past thirty years present formidable challenges for establishing an effectively functioning system dynamics community. It is reasonable to suggest that the current structure of the community may hold back the growth of the field more than obvious obstacles such as the inherent difficulty of developing insightful moods or the counterintuitive nature of nonlinear feedback lessons.  In this light, the structure of the community deserves closer scrutiny.
Benchmarking the System Dynamics Community, a survey sent by the author to System Dynamics Society members in February of 1993, is the first survey of the system dynamics community and a first step towards developing a more comprehensive understanding of the structure of the field.  The survey instrument consisted of five sections: background, Practice, Software, and Hardware, Model Building, and History Development, and Community.  The survey was designed to isolate where system dynamics is practiced, by whom and for what; understand how the methodology is applied and identify lines of communication across the field.
This paper presents the results of survey response, structured parallel to the five sections of the survey instrument.  It concludes with a series of questions for further investigations.

Organizational Learning as a Dynamics Sociological Construct: Theory and Research

David R Schwandt

With the advent of concepts such as punctuated equilibrium, chaos, and systems thinking from the hard sciences, and their respective implications for the social science, we must consider change to be more performance; it requires us to examine both the organization’s ability to perform and their collective ability to learn.  This perspective necessitates the use of a sociological paradigm which allows for a better understanding of the dynamic and complex nature of organizational learning.  The organizational systems model discussed in this essay contains four subsystems each responsive for carrying out vital functions for the organizational learning system to adapt to its environment.  Relationships among the subsystems is established through the use of input/output variables labeled as interchange media: new information, goal referenced knowledge, structuring, and sense making.  These interchange media are products of the functional subsystems of the organizational learning system and are manifested and measurable dynamics variables.
Qualitative data is used to provide illustrative case examples.  The paper concludes with implications for the system modeling of organizational change as a function of both performance and learning.

System Dynamics for Budget Planning and Management Control

Hebib Sedehi, Ugo Biader Ceipidor, Lidia D’Alessio, Chiara Ronconi

Top management, through strategic plan, designs the guide of actions that are necessary to achieve company goals.
Methodologies and tools are essential for comparing the results reached through operative actions with those programmed; so that the management can analyze the differences and decide operations to better manage the future.  In this area the principle aim is to support, who has the decision, with instruments that increase management knowledge.  As a whole, the control system, is “simply” an overall feedback model, the results of which, if given in time to top management, allows him/her corrective actions that can be “vital” for company conduction.
Above knowing how things are going compared to what has been planned, top management needs to know which are the so called “master variables” that have particularly influenced the results.
What will describe in this paper will be the following: how, through System Dynamics approach, a simple “feedback control” management model can be integrated with a “feed-forward System” so to support top management in the process of budget planning and management control.
Two problems will be particularly discuss that could be of interest.
– An application of dynamic problem definition as a prerequisite to a good System Dynamics modeling.  This theoretical approach will be integrated also with an approach that imposes to define an aggregate model which contains, particularly, “master variables”.
– The model will be discussed and developed together with an academic expert in Italian public accounting and this will be a way to spread out the knowledge in System Dynamics approach in Italian university environment.
The result model will support public managers in the process of budget plan and the management control.

Number of Surviving Teeth for Japanese Age Groups

Toshiro Shimada, Takahiro Kojima, Koichiro Okumura, Kinya Machida, Akira Uchino

We have done research fore these 20 years on the model for dental diseases in Japan.  We started from 2 sector of demography and dental caries, then added pyorrhea, baby teeth and technology sectors.

The demographic sector covered populations of 5 three year age groups under 14 years of age and 13 five year age groups above 15 years of age. From the total number of defective teeth, total dental costs in Japan were calculated annually from 1963 and projected to 2025.

We reported each stage of this model at the 1987, 1992 and 1993 International System Dynamics Conference.

We will make a general explanation of this research progress and show how changes of metamorphic rates among dental diseases affect number of surviving teeth for Japanese age groups and total dental costs in Japan.

Optimizing System Behavior using Genetic Algorithms

Robert M Sholtes

Abstract: This paper explores the use of genetic algorithms (GAs) for optimizing system dynamics models. System dynamics offers a unique and powerful approach to identifying the most successful policies for managing complex problems. Unfortunately, policy makers too often avoid the use of models because of high level of experience required to operate the models and the time and expense which results from trail and error testing of a multitude of policy options in order to discover the best policies. The role of system dynamics models as decision-makers tools would be greatly strengthened if model users could simply identify the goals for the system being modeled and have the system dynamics model identify the best management actions. Current analysis and optimization techniques used with system dynamics models are not capable of automatically determining which policies most nearly produce the desired system behavior. One emerging optimization technique, (GAs), offers great promise in automating the identification of the best policies for selected system goals.

The paper is divided into three sections. The first explains how genetic algorithms work. The second section demonstrates how GAs can be used to optimize system performance for a more complex model. The paper concludes with a discussion of the advantages and limitations of Gas as they relate to the needs of the system dynamics community.

Dynamics of Organizational Learning, An Axiomatic and Model Approach

Kazimierz Roman Sliwa

Abstract: With computer tools that have recently become available, we can model, understand, and re-interpret many important concepts that habitually have had descriptive form. One of these concepts is organizational learning as presented by D. Schon and C. Argyris. Instead of searching for empirical evidences and applications of a single (simple learning) – and double learning (meta-learning) mechanism, the paper attempts to develop an axiomatic view of learning process exploring the model of Autonomous System – AS (by M. Mazur) as an organizational arquetype. Used as teaching instrument, the model linked with the system modeling and simulations has proved to be very stimulating effect and effective tool in the classroom.

Solid Waste Management in Puebla. A system Dynamics Approach

Kazimierz Roman Sliwa

Abstract: This paper presented a preliminary attempt of bridging a gap existing traditional approach to solving public administration problems and the System Dynamics perspective. The problem of solid waste in Puebla is a practical context in which think model is developed. The model and its runs prove that present official definition of the problem is wrong and that the solid waste recollection and recuperation could be converted from a resources consuming to resource generating process. It also shows how the municipal budget assigned to cleaning service can create a new reinforcing loop that links profit of the companies involved in the refuse recycling industry with a decrease of solid waste contamination in Puebla.

System Dynamics Modeling of Energy Consumptions in the Colombian Industrial Nation

Ricardo Smith, Gloria E Pena, Isaac Dyner, Juan C Suarez

Abstract: A System Dynamics model specially built to analyze energy policies in the Colombian industrial sector is presented. The model allows to simulate two main aspects of industrial energy consumption: line production and boilers.  The decision processes takes into account all energy alternatives and select the most economic one. Decision are made based on economic terms where variables such as investment, tariffs, energy consumption and maintenance are taken into account. The model allows to examine several aspects such as: alternative on technology diffusion, energy consumption growth and effects of pricing policies on diverse energetic demands. The model was applied to the energy consumption of the industrial sector in the Medellin Metropolitan Area, Colombia. Results are included.

A System Approach for estimating Corrosion Incidence to the Economy of a Nation

Ricardo Sotaquira G, Jorge H Panqueva, Hugo H Andrade S

 

Abstract: This paper presents a model in System Dynamics to estimate the economic incidence of the correction in the economy of a nation, in particular the Colombian case is studied. For the construction of the model, the Input-Output Analysis methodology is also used. The model disaggregates the national economy in economic sectors and allow for each one, to get their corrosion cost, and to estimate the economic benefit of control policies.

The simulation results, obtained through EVOLUTION for windows software, indicate that corrosion cost in Columbia is about a 2.35% of its GIP (Gross Internal Product), $US 1.250 million of dollars for 1193, approximately. This model allowed to evaluate the effects of a control policy of the corrosion, that according to the results, would induce a middle term an annual saving over the $US 125 million. These results have sustained the creation of a national entity for the investigation and technical assistance on the corrosion in Colombia.

Using a System Dynamics Approach as a Tool for Enhanced Company Performance Through Developing the Imagination Models of Managers

P . Stoyanova, R Woodward, M. Elliott. A O Moscardini

Abstract: In today’s highly competitive market, many organizations are uncertain of how to structure themselves. For maximum flexibility and effectiveness there is, for most organizations a need to accommodate change and to introduce innovative methods that will improve efficiency and quality. Managers are required to exhibits much more imagination than ever before. This paper uses the system approach to help managers consider corporate performance improvement through developing their imagination model.

A system Dynamics model of an existing non-traditional organization has been developed. The company considered had completely innovated its organizational structure into what is commonly termed a spaghetti organization as opposed to the traditional hierarchical organization.

The authors believe that there is a vast potential in using System Dynamics Approach for developing managers’ imagination model in the attempt to make a breakthrough for speed, quality and productivity; encouraging thinking the “unthinkable”.

Modeling the Diffusion of Innovations Based on Individuals Adoption Decisions

Juergen Strohhecker

Abstract: Innovations are the drive for a company’s growth and contribute substantially to its competitiveness in a world of falling economical barriers. New products are to be invented, developed and introduced into the market if the success and existence of a company are to be preserved. Therefore it is not astonishing, that the explanation and forecast of the diffusion of innovations in a special market are a subject the management is vitally interested in.

Most of the model that are to support the difficult forecast of new product sales – among them the widely spread Bass model – are based on describing view of life-cycle of a product and generate s-shaped sales curves using only one single mathematical formula or maybe just a few. In these models the diffusion of new products seems to be predetermine by nature. The management only has to estimate the parameters had coefficients to forecast the cycle correctly.

This paper wants to present a different, a more individualistic and microanalytic point of view. Not the entire market, not the homogenous potential of the market is in the center of this model, but the single, individual protagonists of the market. Using the methods of object-oriented analysis (OOA), the relevant objects and there classes will identified, the characteristics and conduct will be examined and their relationship among each other will be laid open.

This way, an object-oriented model of the market is created, a model of which one of the most remarkable features is the very natural copying of reality. Therefore it contains a much higher grade of explanation, and it can be more easily implemented to an object-oriented programming language, which makes it usable for simulation. The first results will be introduced in the final chapter.

Experiences in Teaching System Thinking

Johan Strumpfer, Tom Ryan

Abstract: The paper describes a programme in teaching system thinking at the Graduate School of Business at the University of Cape Town. This programme has been run for the last four years and has achieved good results in getting MBA students to apply system thinking in problem solving situations. The results are judged significant given the relatively brief exposure to systems thinking and varied background of participants.

The course itself is based on an action learning model, with self application a major mode of learning. Less emphasis is placed on the theoretical input, but students are required to invest significant effort in acquiring this through self study. The course makes extensive and explicit use of group work to structure and support the learning experience.

The course uses systems thinking to deal with general problem solving. The underlying methodology for problem solving used is one based on group inquiry, aimed at building up an appropriately rich and shared model of reality. The process of group learning is structured using Soft Systems Methodology and Systems Dynamics Modeling.

In the end the course is more about changing the way people think than about techniques. Some of the experiences relevant to this type of teaching is reflected on.

Leadership in a Global Village: Creating Practice Fields to Develop Learning Organizations

Stephan A Stumpf, Mary Anne Watson, Hemant Rustogi

Abstract: For a practice field to be of greatest value in developing global leadership capability, it needs to be constructed so as to combine meaningful cultural and national issues with realistic interpersonal dynamics. This paper examines how two practice fields designed to facilitate systems thinking and organizational learning Foodcorp, International and Globalcorp accomplish this task. Both are management development tools called behavioral simulations (not computer simulations) each creates a realistic context, a micro world, for people to interact on business and global issues. Both can be used to: (1) surface cultural assumptions in a social business context where they can be observed, tracked, and discussed relative to various effectiveness criteria; (2) create a team capable of performing with a shared vision and common mental models; and (3) develop leaders who can create as well accommodate micro cultural norms.

Preliminary results using this practice field approach are supportive of these objectives. A growing number of organizations (e.g., Apple Computer, Citicorp, Dow Jones & Company, American Express, AT&T, Northern Telecom, Glaxo) and educational institutions (e.g., University of Michigan, Dartmouth College, Indiana University, New York University, The University of Tampa, Defense Systems Management College) use such tools in their educational efforts. This paper describes the approach, provides two examples of how micro world practice fields are used, and shares the results of the research underway.

Systems Educations for Kindergarten Through Twelfth Grade in the United States: A view from the Creative Learning Exchange

Lees N Stuntz

Abstract: In the United States the use of system dynamics in Kindergarten through Twelfth grade education is growing but it has not yet approached the steep slope of an exponential curve. STELLA, a user-friendly system dynamics program, stimulated the first few uses of system dynamics in the classroom in Brattleboro, Vermont and Orange Grove Middle School in Arizona. The number of schools using system dynamics has grown to include, not only the schools of the STACI project from ETS but also schools in Ann Arbor, Michigan; Portland, Oregon; Brunswick, Georgia; Ridgewood, New Jersey; and Concord, Massachusetts. Each of these schools has started down this path through different portals. These differing starts give an insight into how other school systems might approach the venture.

The Creative Learning Exchange is a non-profit organization set up to encourage networking and curriculum sharing among teachers and schools who are using system dynamics in the classroom as well as those interested in initiating the process. Over the three years of our existence, this network has grown across forty states and into almost a dozen other countries.

Beyond Solution: A Re-Presentation for the “New Times”

Ann Taket, Leroy White

Abstract: Many commentators have pointed to changes in organizational practices and structures, with moves from hierarchy and centralization to decentralization and more democracy. There is an increased emphasis on local action and self-organization, rather than steep vertical structures. This paper responds to the challenge of looking at the relevance of the theory and practice of problem solving methodologies in this changing context. Within the framework provided by postmodernist and poststructuralist ideas, we draw on our work in the domain of community operational research (COR), working with a variety of groups in the voluntary sector. The voluntary sector is particularly relevant as it exemplifies the characteristics of the “new times”, with democratic and self-organizing groups, many of which operate at very local level.

In the paper we will approach the subject in the following three ways:

  1. By scrutinizing the notion of problem ‘solving’ and suggesting that it might open a larger space for action and choice to recast this issue-structuring. This involves a move away from the notion of a singular optimum or best solution to exploring a range of possibilities.
  2. By examining the nature of representation implicit in the notion of modeling, (as in systems dynamics and issue structuring methodologies), drawing on a reading of the ideas of Baudrillard.
  3. By subverting the notions of the experts and expertise in practice. Here we demonstrate how the relationship between expert and client has shifted to encompass the idea that the client can be seen as the expert in context.

 

System Dynamics in Educational Science: An Experience of Teaching Production-Distributions Mental Models Building

Daniel Thiel

Abstract: We have tackled the problem of teaching business logistics. Over vision and knowledge of the industrial world and particularly its logistics are obviously not the same as that of out graduate and post-graduate students without professional experiences. Therefore, our teaching difficulty consists in adopting the means of transferring knowledge to this specific public. How can system dynamics contribute to this knowledge transmission?

The originality of this paper consists in placing our training based on system dynamics concepts and tools, in relation to different traditional pedagogical doctrines and methods (attractive, interrogative, intuitive and active methods).

We present also a particularly analysis of different methods of formalizing knowledge in production-distribution system learning.

This study has led us to use management games even very limited ones, built by students themselves. This is the solution that we advocate in out approach to logistics using system dynamics.

The Applications of System Dynamics to Re-Engineering of Value Processes

R K Thurlby, J O Chang

Abstract: Value Processes are those high level processes which are critical to achieving an organization objectives. This paper describes the authors’ work in re-engineering a value process which was not working efficiently and causing serious problems to an important new business operation. Conventional process engineering tools were initially used and after these had failed to deliver significant improvement. The authors readdressed the problem using System Dynamics and the I-THINK modeling tool.

The authors’ experience of using System Dynamics are reported in detail, together with the results achieved. The models produced are described as is how system dynamics forced the authors to explore the processes beyond the boundaries identified by the conventional approach. It was in these new areas that the key to the problem lay and its solution lay. The problem was case of process invasion by the customer into the suppliers value process and the solution identified by simulating the i-THINK model lay in obliteration of element of the process. Finally, the authors comment on the relative merits of System Dynamics with conventional process engineering and describe their plans to continue investigation into other areas of value process.

Simulations Model for Policy Analysis on Multi-Airport System in Metropolitan Region

Tomoyuki Todoroki, Yoshio Hanzawa, Atsushi Fukuda

Abstract: Tokyo Metropolitan Area (TMA) has two airports for air service, are Haneda and Narita airport. So far, Haneda airport delivers the service for domestic air flights, while Narita airports for international flights. This has mainly done by the strong regulation of the government.

This has, however, made users pay additional travel time and cost, because Narita airport located in outlying area of TMA.

In this paper, the simulation model for multi-airports system is developed so as to know the answer for the question whether both airports can survive or one lose a demand after competition or cooperation. The model mainly consists of three bodies, namely air passengers, airlines and airports. Under the competition between two airports to get both domestic and international flights, share of air demand between two airports is calculated. Finally, key factors on the service, demand and management of a milt-airports system which are decided depending on the behavior of users, airlines and airports authorities, is defined by using this model.

“1961 and all that: The influence of Jay Forrester and John Burbidge on the Design of Modern manufacturing Systems”

Denis R Towill

Abstract: Modern manufacturing systems are expected to respond rapidly, effectively and efficiently to changes in the marketplace. Simultaneously there is the drive to achieve world class customer service levels coupled with minimum reasonable inventory (MRI). We thus have the classic conflict of interests between marketing off-the-shelf; production is still all-too-often looking to manufacture in economic batch quantities so as to achieve economies of scale; and the materials management is trying to minimize storage and distribution costs which in turn requires that a total systems MRI policy be adopted.

As reviewed in the paper the ground rules for effective manufacturing system design were co-incidentally established in 1961. Jay Forrester showed that medium period demand amplification was a system dynamics phenomenon which could be tackled by reducing and eliminating delays and the proper design of feedback loops. In parallel, via his “rules to avoid bankruptcy” and “laws of manufacturing systems”, John Burbidge showed that short period demand amplification was due to multi-phased, multi-period ordering policies.

Some thirty years later the work of both pioneers (which is conveniently summarized in the frequency domain) is still ignored at their peril by manufacturing industry. As an aid to fruitful exploitation of these ideas we describe their application to the analysis and design of a real world automotive spares supply chain and to a multi-product “to-make” ordering models which drives an MRP system to ensure that customers service level targets are met. Input-Output block diagrams were found to be particularly useful diagnostic tools for these projects.

A Systems Thinking Approach to Analyze the Waitinglist Phenomenon

Ann Van Ackere

Abstract: The aim of the national health Service (NHS) is to provide access to medical care to all. One of the challenges is to balance demand and resources while avoiding unduly waiting lists, either for treatment (the traditional waiting list phenomenon), or to see a practitioner. This note illustrated how Systems Thinking can contribute to the understanding of the complex of this issue, and to assess the impact of various policies. Systems thinking differs from traditional approaches in that it looks at the problem as a whole, as a system, and focuses on identifying key inter-relationships and feedback loops between different components of the system. We present three simple examples which illustrate the concepts of systems thinking, and indicate how this approach could be useful to analyze various policies.

Building Consensus in Strategic Decision-Making: Insights from the process Group Model-Building

Jac A M Vennix

Abstract: System dynamics is increasingly employed as a method to foster team learning in strategic decision making groups. Although only a full brown computer simulation model can reveal the dynamics of the system, in group model building the client organization is frequently satisfied with the construction of a conceptual (qualitative) model. In this paper a case is described in a Dutch government agency. Since people from different departments held strongly opposite viewpoints on the strategy, the agency had discussed its strategic problem for more than a year, but had obviously not been able to reach consensus. The group model-building process was successful in integrating opposite points of view, as well as in fostering consensus and creating commitment. Careful evaluation of the case shows that three factors might have been responsible for this: the role of systemic thinking, improvement of the quality of communication and finally the role of the facilitator.

A Systemic Account of Learning Organizations: Defining the Learning Capabilities of Organizations

D Vriens, E Philips

Abstract: In this paper we will develop a systemic framework for the description of organization by which we will define ‘organizational learning’ and ‘learning organization’. The framework will follow modern insights on system-theory and will be used to define and operate these concepts. In order to do this, first, a general framework for observing/defining systems will be introduced. This will follow the distinction between organization and structure of systems. Secondly, the general framework for defining systems will be used to define organizations. To this aim, the ‘organization/structure’ dichotomy will be further conceptualized according to social system-theory. Here, antipoetic, communication-oriented notion organization (Luhmann, 1988) will be used. A communication definition of organizations, however, does not suffice: a rationale for defining a ‘communicative whole’ as an organization should be given. These rationales are to be found in the perceived network of outputs and transformation of the organization to-be-defined. Finally, to an organization, defined as a communicative system, a number of properties might be attributed. Among these are learning (organizational learning and the learning organization), flexibility and anticipation. These concepts can be defined adequately within the developed framework. To conclude, it will be argued that the defined concepts of flexibility and anticipation contribute to the understanding of the learning capabilities of organizations. Therefore, these concepts may offer an increased understanding of learning and of how learning can be influenced. Consequently, this leads to an increased understanding of how organizations may gain viability.

A Promising Way of Revamping the State-Owned Enterprises In China

Qifan Wang, Wang Huihua, Jin Yin, Wang Xianyong

Abstract: Chinese state-owned enterprises, which have decades of expertise under planning economic system, have been inured to the simple production function far from the market-oriented economy, the challenge and influence they met are serve. Some experiences have been accumulated in the past years reform, but how to make state-owned enterprises more vigorous is still a critical problem that should be solved immediately. This article tries to discuss how to apply the learning organization, a successful management theory and method used in the Western Countries universally, to the organization-constructing of Chinese state-owned enterprise so as to find out a commonly effective means to envigor the enterprise. The characters and problems of Chinese state-owned enterprises as well as the features of learning organization applied in China are illustrated in the article at first. Then the procedures of building learning organization in a typical enterprise are discussed, aiming at developing the basic principles and commonly used methods of realizing a learning organization. The combination of learning organization and genetic structures are developed. Because the principles and methods are rooted in the Chinese realization, it is possible to be applicable to our purpose.

The Development of Shanghai in 2010

Qifan Wang

Abstract: This paper revealed the main problems which thwarted Shanghai’s economic Growth before 1990s. Basic principles of long term coordinated development of city and metropolis are explored. The paper described the blueprint of Shanghi in 2010 and studied more main factors which might limit its future economic development.

Business Transformation: The Key to long-term survival and success

Henry Birdsye Weil, Leon S White

Abstract: Internal and external forces beyond the control of management strongly influence the life-cycle characteristics of organizations. As a business moves, from infancy through adolescences to maturity and decline, the precepts for profit growth can change dramatically. Many corporations have become quite large and successful, only to ride and curve downward at the end a cycle. In the process, enormous amount of shareholder value are destroyed. Companies such as Wang and IBM are recent examples. Businesses that survive and succeed over the long-term must redefine or even reinvent themselves, not just once, but repeatedly. Imagining the next step is a big challenge. Implementing the transformation without permanently damaging the business is an even more complex strategic undertaking.

Drawing on a real and timely case, the authors explore a set of critical, interrelated issues pertaining to the process of business transformation. What are the key strategic considerations for managing the “end game” of your current core business? What are the major interdependencies between your current business and the one into which toy are transitioning? How can you maximize the transfer of business “assets” (including such intangibles as corporate reputation, customer loyalty and brand franchises) from the business of the past to the one of the future? What management policies might limit your growth in the new business area? How can you control the downside risks associated with corrections? The authors illustrate the use of computer simulation modeling to analyze these issues, provide a framework for debate among the senior executives of the company and facilitate strategic decisions.

Simulating the Effects of Regulatory Change in the UK Pubs Industry

Kim Warren

Abstract: A 1989 Monopolies Commission Inquiry into the supply of beer claimed that Tied retail distribution by brewers’ ownership of retail outlets (pubs) restricted consumer choice, excluding would-be competitors from brewing and retailing, and forcing up the retail price of beer. The inquiry recommended reducing large brewers’ ownership of pubs. This was intended enable new entry into retailing and production, reduce wholesale and retail beer prices, and extended consumer choice. However, a 1993 Government review found that the outcome had been largely the opposite of these aims, and a further serious consequence was the closure of large numbers of pubs and a sharp fall in their values.

These unintended consequences need to be understood if such outcomes are to be avoided in other cases, and firms need good models to help anticipate the effect of regulatory change and discover appropriate strategic responses. Since in this case there are complex interactions and feedback effects between three distant markets – (beer supply, pub retailing, and property) – models are needed that capture the dynamics of competition in each market as well as the interactions between them. This paper reports on the structure and results for a system dynamics model built to capture the growth of pub-owning firms, given different characteristics, incentives and behavior. This forms the basis of a further model for the licensed property market as a whole. Data was derived from the Inquiry report and discussions with industry executives, but all such data was available at the time of the original inquiry.

Preliminary results demonstrate the mechanisms by which firms grow chains of pubs and show how the impact on property values and numbers might be assessed. The model also demonstrates the broader value of applying a system dynamic methodology to researching issues of industry structure, strategic management and business policy.

How to get Managers to Use System Dynamics

Frederick P Wheeler

Abstract: The article aims to identify actions that will lead to an increased likelihood of managers adopting system dynamics. The specific purposes are:

-To explain how to implement successful information technology that supports managers.

-To identify the implications of adopting system dynamics as regular support software;

-To see if there is a need for system dynamics by examining how managers use information for decision-making.

Executive information systems are an example of information technology that is being used by managers. Lessons from the successful implementation of executive information systems are shown to be relevant and research on decision-making is used to show why managers need system dynamics. The main message is that system dynamics modeling needs to be done by internal support staff who actively adapt the support system to managers’ needs.

Learning about Modelling for Learning

Leroy White, Tony Ackroyd, Michelle Blackeborough

Abstract: It is widely recognised that modelling organisational systems can be used to provide insights into the problems of an organization, and to induce learning about the context. The objectives are to increase the effectiveness of thinking about the situation, to enable a wide participation in the constructions of the models, and to allow an analysis that minimizes the need for opaque technical reasoning. It is important, therefore, in the training of future modelers on undergraduate and postgraduate courses, to appreciate the need to identify a system structure and behavior, without necessarily placing a strong emphasis on the underlying mathematics.

This paper describes how system dynamics was used to re-design a course on system modeling, with an emphasis on system dynamics. In the approach adopted, cognitive mapping in conjunction with drawing influence diagram helped to conceptualise and to think about the situation, and a workshop environment was adopted to design and analyze the model of the course.

In addition, the paper will discuss the nature of the modeling process, and the problems of the distinction between qualitative and quantitative forms of representation. Finally, conclusions will be given on the potential of system dynamics modeling in the education of System Analysis, modelers or Operational Researchers.

Managing Information Technology Investments – The Application of a Dynamic System Approach

Phillip Wing, Mark Maloney

Abstract: Understanding, quantifying and realising the net benefits derived from Information Technology investments is becoming a complex and difficult management process.

A theoretical framework for managing Information Technology investments has been developed by the authors and applied to a process innovation initiative in the health sector in Australia. As part of this study, a dynamic system approach was used as the underlying conceptual and analytical approach to support this framework.

This paper details the background to the process innovation project, how a dynamic system approach was applied and the results of the case study.

The preliminary results confirm the conceptual robustness of the IT investment management framework and validated the practical use and application of a dynamic system approach within this framework.

Organisational Learning – The creation of ecological minds in organisations

Rolf Wolff, Olof Zaring

Abstract: This contribution draws from several research sources in order to develop on an organizational learning frame of reference towards ecological implementation in business companies. 1. It will demonstrate the necessity for companies to protect their production systems from over demands through the establishment of various legitimating functions in the company. 2. The paper will also show that rational decision making instruments (like capital investment planning) per se not adapt to ecological demands, but to the contrary hide the ecological decisions taken in the decision making process 3. Based on these empirical case studies we therefore can develop the organizational-learning-structure for ecological learning. The learning-issue is completed with the different modes of decision making in businesses (strategic choice, optimization, competition driven). Thus, this paper aims at overcoming the many myths regarding pressures posed on companies, both from the consultant community and different green pressure groups, by demonstrating that companies reactions (even defensive) are rational from the learning perspective.

Developing a Balanced View of Management Ecology

Eric Wolstenholme

Abstract: Many approaches to change management have tended to focus on specific dimensions or functions of organisations at the expense of others. For example, there has been organisational analysis, strategic analysis and more recently business process analysis. Strategy, organisational structure and process are inextricably linked via information and delays and form a management ‘ecology’, where changes to any one of the elements have repercussion for all. This paper suggest that a balanced understanding of the organisational ecology is required to generate effective and appropriate planning and change which the author is currently using system dynamics modeling to assist change management. The paper is written to assist System Dynamics in bringing the role of System Dynamics as a change management tool to the attention of managers, at a time when there is much confusion about alternative approaches to analyzing organisational change.

System Dynamics Modeling of National Policy: Case of Environment Conservation Input in China

Qingrui Xu, Jin Chen, Shaoxia Chan, Jie Han

Abstract: The underpinning factor for one nation’s sustainable development is the proper investment on environment conversation, advanced countries spend 24% GNP on national environment conversation, but China spends’ is only around 0.06.7% of GNP. Increasing the input on environment conversation emphasize by Chinese Government and many scholars. In this paper, based on the situation of environment conversation input in some countries, the mechanism analysis on the relationship between environment, economy, science & technology, education, population, we introduce a system dynamics model to forecasting China’s environment through synchronization of economic growth and environment conversation. The relationship between model structure and model structure and model behavior in a mathematical framework of system isomorphism as well as the scenario of different economic growth rate and different ratio of environment conversation input over GNP are studied.

Modeling Defense: A Challenge to System Dynamics

Mike Young, Robert Bailey

Abstract: CORDA has developed SD models for the UK Ministry of Defense over several years. This paper survey a number of defense applications where Stella and iThink have been used, either directly to predict results for a study, to examine a concept, or to create a prototype which can be used to determine a functional specification.

Two of the models are described in more detail to illustrate how we overcame limitations either in the SD paradigm or in the current programs. This paper summarizes a number of “lessons learnt” which it is hoped will prove of relevance to other practitioners and which may influence future program developments.

Overcoming the Learning Barriers of Management Flight Simulators: Task Salience and the Dissociation between Performance and Learning

Showing H Young, Sy-Feng Wang, Jenshou Yang

Abstract: Recent experimental studies in management flight simulators showed a dissociation between task performance and learning: subjects’ performance was significantly improved through practice, but very little deeper learning was detected. A theoretical framework is developed to explain the dissociation. That is, the cognitive strategies really used by subjects, e.g. Situations matching, feedback control and feed forward control are different from the normative cognitive strategy of mental model simulation expected by researchers. Methods to overcome the dissociation are suggested and demonstrated by two experimental studies. Based on the discussion and the experimental results, we found that considerations of cognitive strategies and task salience are very important dimensions for designing effective learning environment of management flight simulators.

The House of Quality Within a Knowledge-Based View of Firm

William E Youngdahl, Russell W Wright, Lillian C Wright

Abstract: Most, if not all, descriptions of process reengineering reply on the notion of translating the voice or satisfaction is criteria of the customer into a redesigned chain of value-adding business processes. While customer satisfaction is critical to business success, the tactical process of designing process to satisfy current customers may still overlook long-term strategic considerations. If managers are unable to see beyond current customer requirement, they will miss the opportunities that require new combinations of knowledge and skill.

We suggest that quality function deployment provides a framework for considering a variety of strategic criteria and translating these criteria into well integrated business processes. The “House of Quality” used in the QFD process maps customer quality criteria to design and functional activities and includes benchmarking of competitors’ customers satisfaction and technical performance. We will demonstrate that the house of quality can be used to match competitor best practices with a firm’s desired competencies and business process purposes. This model successfully integrates QFD and Business Process Reengineering with a knowledge-based view of the firm.

last updated by NG on 1/24/08
System Dynamics Admins
System Dynamics Admins

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