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Oral Health

Oral Health

Name Oral Health Model
Modelers Mitsue Fujimaki, Josely Emiko Umeda, Renata Corrêa Pascotto, Raquel Sano Suga Terada, Thiago Brito, Ricardo Pietrobon, and Guttenberg Passos
Contact Professor Mitsue Fujimaki,
Coordinator of the Graduate Program in Integrated Dentistry, Universidade Estadual de Maringá – UEM,
Client/Participant State Secretary of Health of Paraná
Client Type Government

The Issue You Tackled

Dental caries is still considered the main pathology to cause tooth loss. It is a chronic disease that can mutilate people for the rest of their lives, negatively affecting their life quality.

According to a national survey conducted in Brazil in 2010, older people aged between 65 and 74 years had already lost most of their teeth. Although dental caries etiological factors and prevention procedures are well known, there seems to be a gap between the evidence found in the recent literature and the actual dental care provided in health services in Brazil.

What You Actually Did

The impact of the preventive approach over time does not seem to have been completely understood. Thus, the main objective of this study was to simulate the impact of educational preventive approaches in the maintenance of teeth throughout the lifetime of people.

System dynamics modeling involves the development of computer simulations based on conceptual interactions of multiple factors and processes of accumulation and feedback. This is a suitable approach for the dynamic complexity that characterizes many public health issues.

The model is a useful tool for policymakers when choosing the most appropriate interventions for their populations. This study used data obtained from the National Oral Health Survey conducted in 2010, and qualitative variables from a recent systematic review and some unpublished studies.

The Results

This model showed that educational preventive care can lead to the adoption of healthy habits by the population to a level of 22% over 1 year, resulting in higher numbers of people with retained teeth and improved life quality. This would likely result in the proportion of adults retaining all of their teeth rising from 25% to 50% over 60 years. This could be accomplished with no more than once a week of oral-health education per child, at a cost of no more than US$ 1,5 per year per child.

Our findings highlight the importance of investments in educational approaches from early childhood to result in an exponential cascade effect for the improvement of the oral health of the Brazilian population.

Related Publications

Understanding why caries is still a public health problem Download

Anemia Control

Anemia Control

Name Biomedical System Dynamics to Improve Anemia Control With Darbepoetin Alfa in Long-Term Hemodialysis Patients
Modelers James T. McCarthy, Craig L. Hocum, Robert C. Albright, James Rogers, Edward J. Gallaher, David P. Steensma, Stephen F. Gudgell, Eric J. Bergstralh, John C. Dillion, LaTonya J. Hickson, Amy W. Williams, and David Dingli

The Issue You Tackled

To determine the value of a biomedical System Dynamics (BMSD) approach for optimization of anemia management in long-term hemodialysis patients because elevated hemoglobin levels and high doses of erythropoiesis-stimulating agents (ESAs) may negatively affect survival in this population.

What You Actually Did

A model of erythropoiesis and its response to ESAs on the basis of a BMSD method (Mayo Clinic Anemia Management System [MCAMS]) was developed. Thereafter, an open-label, prospective, nonrandomized practice quality improvement project was performed with retrospective analysis in 8 community-based outpatient hemodialysis facilities. All prevalent hemodialysis patients seen from January 1, 2007, through December 31, 2010 (300-342 patients per month), were included with darbepoetin as the ESA. The primary outcome was the percentage of patients who attained the desired hemoglobin level. Secondary outcome measures included the percentage of patients with hemoglobin values above the desired range and mean dose of darbepoetin used.

The Results

The 3 treatment periods were (1) standard ESA protocol in 2007, (2) transition to the MCAMS (2008 to June 2009), and (3) stability period with the MCAMS used in all hemodialysis facilities (2009 to 2010). In the first 6 months of 2007, 69% of patients were in the desired range and 26% were above the range. In comparison, during the first 5 months of 2010, 83% were in and 6% were above the range (P<.001). The mean monthly darbepoetin dose per patient decreased from 304 μg in 2007 to 173 μg by the second half of 2009 (P<.001).

With the introduction of the MCAMS, more patients had hemoglobin levels in the desired range and fewer patients exceeded the target range, with a concomitant 40% reduction in darbepoetin use.

Related Publications

Biomedical System Dynamics to improve Anemia control with Darbepoetin Alfa in long-term Hemodialysis patients Download
Individualized Medicine and Biophysical System Dynamics: An Example from Clinical Practice in End Stage Renal Disease Download

Did You Know?

System Dynamics Application Award

The System Dynamics Applications Award is presented by the Society every other year for the best “real world” application of system dynamics. The Society awarded its 2015 Applications Award to McCarthy, James with Craig Hocum, Robert Albright, James Rogers, Edward Gallaher, David Steensma, Stephen Gudgell, Eric Bergstralh, John Dillion, LaTonya Hickson, Amy Williams, and David Dingli for their work Biomedical SD to Improve Anemia Control With Darbepoetin Alfa in Long-Term Hemodialysis Patients. To see the citation that was made by Bradley Morrison, please follow this link. (Jul 2015)

Individualized Medicine and Biophysical System Dynamics Presentation

The authors videotaped a copy of presentation made at 29th International System Dynamics Conference in 2011, Washington, D.C. The first part of this presentation describes the anemia of chronic kidney disease, shortcomings of current treatment protocols, and the structure of a System Dynamics model to improve patient care. Part 2 describes the outcome of implementing a model based protocol in a clinical setting. You can also find the slides used in this video here.

BSIG Webinar with Jim Rogers

On Thursday, 28 April, 2016, the Business Special Interest Group of the System Dynamics Society hosted their webinar “Dynamic Healthcare Models- accelerating diffusion and adoption” with guest presenter Jim Rogers of Advance Management Group. Jim, who has been consulting with Mayo Clinic in Rochester, Minnesota since 1997, discussed the use of System Dynamics models to improve patients’ quality of life while lowering the cost of care, using SD models for current research and insights for action, and drafting a framework towards model-informed, personalized care. Information about the Business SIG and the other Special Interest Groups of System Dynamics Society is available on our website.

MasterCard

MasterCard

Name Credit Card Market Simulation: Quantifying The Impact of Change Leads to Dramatic Strategic Innovation
Modelers Kenneth Cooper, Sharon ElsJim Lyneis, David Starr
Client/Participant MasterCard
Client Type Corporation
The Official Website For added information, or with any questions, see CooperSDNetwork.com, or contact Ken via email: Ken.Cooper@CooperSD.com

MasterCard Case: Part 1

(Narrated by Ken Cooper) 9:47 minutes

MasterCard Case Part 2 – The Back Story

(Narrated by Ken Cooper) 3:07 minutes

The Issue You Tackled

MasterCard, a major credit card company, once held a dominant market position US Market Share with only one primary competitor, Visa. They woke up one day and realized that, after six years of steady decline in revenues and market share, they had lost their leadership position. The company was stymied. Everyone was blaming each other. The erosion continued despite every effort to turn things around. Conventional wisdom, based on past experience, was not working. It was pretty desperate, nobody knew what to do, and it was feared that they would be out of business in the next five years if they couldn’t turn the “death spiral” around. Despite multiple initiatives to slow or reverse the decline, nothing seemed to work. Our work began with a more limited focus, but soon our objective became finding a solution to reverse the market share decline. It became clear, given the changes in the marketplace, that a new way of understanding the forces at play was necessary.

What You Actually Did

The company called in the System Dynamics group of PA consulting as part of a larger project to change the company’s fortunes. System Dynamics (SD) and PA consulting were chosen because of their ability to look at the problem in a whole new way: people within in the company were thwarting each other’s efforts, and a more holistic approach for the organization was necessary. SD provided the necessary perspective by looking at the system as a whole, without losing crucial details.

Among the early modeling insights, was a simple recognition of the perilous situation in which MasterCard found themselves. The fact was that the company’s clients, credit card issuers, tended to focus all of their marketing efforts on the market leader, while ignoring the runner-up. In this case, when Visa was king, clients only promoted Visa’s product to the detriment of MasterCard. This was a case of a common systems trap called “Success to the Successful” and, if left unchecked, would surely have led to the demise of the less successful entity, MasterCard.

MasterCard also learned that there was a limit on spending due to minimal payments. Customers would not use the cards to the full advantage if they were not being paid off. Counter-intuitively, the best observed solution for this problem was to create a higher minimum payment, to allow for increased monthly spending.

We designed, built and tested a model of the US credit card industry and market–the cardholders, the choices they made using different cards, the businesses that accepted the cards. The model simulated MasterCard performance and that of each of the main competitors-Visa, Amex, Discover.

We tested ideas that came from all parts of the organization, but none had a significant and lasting impact. At one point they told us, “Just go experiment and let us know what you can find that WILL make a difference.” After several analyses, we identified four factors that when COMBINED would have that significant, lasting market share benefit being sought. A few discussions quickly identified “co-branding” (though we didn’t know what to call it then) as a strategy that would “pull all 4 levers”. We just described it as partnering with consumer-facing companies.

The Results

PA consulting worked to collect real world experience, expert interviews, quantitative and qualitative data, and cultural factors. The information was cross checked, and at first, client focused. But a unique benefit of SD is its ability to scale upwards to encompass the entire market and capture the inherent complexities within the system. This model was scalable and could be moved from department to department to test a wide variety of initiatives. Hundreds of factors could be tested within the model’s nonlinear and time delayed system, to find the true leverage points which would allow Company A to regain and improve their market share. Consequently it was discovered that efforts such as increased value added assurance and increased issuer preference held the most value while conventional solutions like increased advertising held little leverage. This led MasterCard to be the first to market with the technique called co-branding, a partnership between a credit card brand and company, which allowed them to regain 6 points of market share.

Co-branding revolutionized the industry. Today, if you have a credit card, it is likely co-branded–the GM MasterCard, the Target MasterCard… Co-branding had the advantage of being a win-win-win… a win for the consumers, as the “points” gained by consumers provided noticeable discounts on their purchases…a win for the co-branders, who achieved higher customer loyalty as a result…and a big win for MasterCard, gaining almost exactly the market share and the timing predicted by the modeling. They hit the ground running and it was years before Visa and others could mount a similar set of alliances.To the MasterCard member banks the increase was worth billions in relative market share. Since then, co-branded cards have taken off in the United States and have redefined profits within the industry.

For MasterCard, System Dynamics changed not only the way the company saw itself, its competitors and its products, but it also helped drive the creation of an entirely new product line. MasterCard was able to efficiently understand their strategic resources and move on to a new field of growth by recognizing the key leverage points within their own system, identified thanks to the work done by PA consulting.

“In the end, everyone took credit for the work.”―Sharon Els

Related Publications

System Dynamics for Business Strategy: a Phased Approach Download

Did You Know?

System Dynamics XMILE Webinars

On November 19, 2013 David Starr from Cooper Human Systems, and Sharon Els from PA Consulting Group presented their work in a webinar hosted by Steve Adler from IBM, and Karim Chichakly from isee systems. In this webinar, David Starr and Sharon Els described how System Dynamics helped MasterCard International identify a bold new strategy to turn around a persistent loss of market share. Successfully implementing this strategy brought new players into the industry and significantly changed its dynamics. It also increased MasterCard market share by six percentage points over the course of a few years – a dramatic turnaround.

This webinar was the third in the Big Data, System Dynamics, and XMILE webinar series jointly sponsored by IBM, isee systems and the OASIS XMILE Technical Committee. The series was showcase exemplar applications of System Dynamics in the areas of environment, business, health care, and public policy. (Nov 2013)

Credit Card Giant Halts Market Share Slide With scenario Planning

The Business SIG of the System Dynamics Society, in partnership with Leverage Networks, has begun producing a series of short articles to demonstrate the usefulness of System Dynamics (SD) for addressing complex problems within the business and non-academic sectors. These success stories are intended to be a consistent, professional and easy to digest resource geared towards potential clients and problem owners who are performing due-diligence and are unfamiliar with SD. Please find the related story about this case here. (Jan 2016)

Commercial Applications of System Dynamics as Oral Histories page

In the winter of 2016, Ken Cooper visited the System Dynamics Society home office. During that meeting, a series of videos were recorded in which David Andersen interviewed Ken Cooper. In these videos, Ken narrates several of the high impact and more interesting commercial applications from his distinguished career. This series of nine short videos can now be found on the Commercial Applications of System Dynamics as Oral Histories page.

Firm-Level Capability Development Trade-offs

Firm-Level Capability Development Trade-offs

Name Impact of Growth Opportunities and Competition on Firm-Level Capability Development Trade-offs
Modeler Hazhir Rahmandad

The Issue You Tackled

How should managers prioritize among production, product development, branding, internationalization, and other capabilities and resources? This question is central to the resource-based view, and the answer depends not only on the direct returns on investment in each capability but also on the trade-offs in using those returns for future growth or survival in a competitive market.

Focusing on the investment allocation between operational and dynamic capabilities, this paper asks the following questions: (1) What fraction of the investment should go to operational versus dynamic capabilities? (2) How does this fraction depend on a firm’s growth opportunities?

(3) How does this fraction depend on competitive forces in a market? And finally, (4) how do firm characteristics (e.g., initial capability endowments) and market features (e.g., economies of scale) change the value of different capabilities?

What You Actually Did

Through simulation experiments, this study examines firm-level capability development trade-offs in the context of a firm’s market-level competition and growth. Two features distinguish the contributions of this paper. First, prior studies have not addressed the impact of endogenous changes in the investment flow available for capability development. However, investment flow is “endogenous”; i.e., it depends on the market performance of the firm, which in turn is dependent on the firm’s capabilities. Such endogeneity can be consequential. In Alpha’s example, the company could benefit from investing significantly in process improvement capability. However, that investment might be better applied to the fast-payoff coding capability because this alternative allows the firm to grow quickly and expand the resources available for further investment.

Considering the endogeneity of investment flow refocuses analyses on nonequilibrium growth and decline dynamics and, given the added complexity, calls for the use of simulation models. Second, the impact of competitive pressures on the viability of longterm capabilities is considered.

Under competitive pressures, survival may depend on developing short-term capabilities. Even though large investments in long-term capabilities may promise high downstream rewards, a firm may not be able to sustain the required investments in the face of an eroding market share.

The Results

It is found that investing in operational capabilities (which enhance short-term performance) gains priority over investing in long-term dynamic capabilities when the operational capability investment strengthens the reinforcing loop between performance, investment flow, and capability development. Such operational capability investment provides growth opportunities and competitive advantage. Moreover, in strategic competition, firms anticipating rivals’ focus on short-term growth need to further ignore dynamic (long-term) capability building in order to survive. Testable propositions are offered as to how trade-offs between short-term and long-term investments depend on different firm and industry characteristics. The results may explain why short-term-focused firm behavior persists in firms even in the absence of discounting, short-term managerial incentives, decision biases, or learning failures.

Related Publications

Impact of Growth Opportunities and Competition on Firm-Level Capability Development Trade-offs Download
Connecting strategy and System Dynamics: an example and lessons learned Download

Did You Know?

System Dynamics Forrester Award

The Jay Wright Forrester Award recognizes the authors of the best contribution to the field of System Dynamics in the preceding five years. In 2016, the award was presented to Hazhir Rahmandad for his winning work “Impact of Growth Opportunities and Competition on Firm-Level Capability Development Tradeoffs.”, published by Organization Science; Vol.

23, No. 1, January–February 2012, pp. 138–154. To read the Forrester Award Citation by Professor Khalid Saeed, please visit the page.
(Jul 2015)

Litton

Litton

Name Modeling with Litton Industries
Modelers Kenneth Cooper
Client/Participant Litton Industries
Client Type Corporation
The Official Website For added information, or with any questions, see CooperSDNetwork.com, or contact Ken via email: Ken.Cooper@CooperSD.com

Litton Industries Case: Part 1

(Narrated by Ken Cooper) 11:28 minutes

In 1980, Ken Cooper published his paper “Naval Ship Production: A Claim Settled and A Framework Built,” that described the now famous Litton Industries case. This case yielded a $500 million dollar settlement for Litton and launched the largest claim ever of System Dynamics commercial practice. Additional details for this case in Litton Industries in the Case Repository.

Litton Industries Case Part 2 – The Back Story

(Narrated by Ken Cooper) 4:05 minutes

Ken Cooper narrates interesting aspects of the Litton case that have never appeared in the published literature.

 

 

The Issue You Tackled

The Litton shipbuilding project modeling established lasting precedents on several fronts, ones that go far beyond winning $500 million for the client in a strongly contested legal battle. (See “Naval Ship Production: A Claim Settled and a Framework Built”, Kenneth Cooper, Interfaces, Vol. 10, No. 6, December 1980.)

In the System Dynamics world, it was the first large-scale modeling of a complex project. The Litton project modeling work, which began in 1976, introduced the basic dynamics, including the core “rework cycle”, seen in project models that have followed in the decades since. Indeed, project modeling has become one of, if not the most studied and practiced domains of SD modeling in the world.

This unprecedented use of System Dynamics in support of a legal dispute models the history of a project and poses the what-if question, “What would have happened, but for…?”. This became the most powerful means of quantifying damages, the “gold standard” for complex contract disputes.

The work raised awareness of System Dynamics in other arenas, from publications in project and engineering management journals, to the legal world, to the management science world outside SD (where it won multiple awards), to corporations in many industries facing persistent project performance problems, and beyond.

The story here focuses on the issues at stake for the client, and the seminal project that launched project modeling in System Dynamics.

What You Actually Did

The Litton work came to have large implications for arenas in business, law, academia, and the field of System Dynamics itself. But the origin of the work really begins with one person at Litton who was determined to find a better, more defensible, more accurate means of quantifying and explaining project cost and schedule impacts. The “story behind the story” of the Litton work illustrates the importance of an executive champion who is willing to venture out from the easy traditional path despite high stakes and formidable opposition.

The Results

The Litton claim modeling work ushered in an entire domain of System Dynamics modeling of project and program management. Not only did Litton remain an active SD client for two decades (all of which was proactive management aid), but the work was adopted by other shipyards, many aerospace contractors, construction firms, automobile companies, and more. And that was all at one SD firm. Project modeling has gone on to become one of, if not the, most studied and practiced areas of SD modeling in the world.

The “rework cycle” was not named such until well over a decade beyond the first 1980 publication, in a 1993 series of papers*, but its structure as designed for the Litton model in the 1970s remains a centerpiece of project models, one that has stood the test of time (decades) and hundreds of applications.

*“The Rework Cycle: Why Projects are Mismanaged” and “The Rework Cycle: How it Really Works…and Reworks…”, both published in PMNetWork February 1993, and “The Rework Cycle: Benchmarks for the Project Manager”, Project Management Journal, March 1993. Both PMNetWork and Project Management Journal are publications of the Project Management Institute. Ken’s Rework Cycle series was selected as among the best published papers of the year, and was combined and published in its entirety as a Special Report in Engineering Management Review, Fall 1993.

Related Publications

Naval Ship Production: A Claim Settled and a Framework Built Download
The Rework Cycle: Why Projects are Mismanaged Download
The Rework Cycle: How it Really Works…and Reworks… Download
The Rework Cycle: Benchmarks for the Project Manager Download
The $2,000 Hour:How Managers Influence Project Performance Through the Rework Cycle Download
Managing the Dynamics of Projects and Changes at Fluor Download

Did You Know?

Franz Edelman Award and System Dynamics Application Award

The first published description of the project model (and the structure that would later become known as the Rework Cycle) was in The Institute of Management Sciences Journal Interfaces in December 1980, “Naval Ship Production: A Claim Settled and a Framework Built”, Kenneth Cooper. The work won global recognition in the Institute’s (now INFORMS) Franz Edelman competition for the best applications of any form of management science in the world.

Thirty years later, Ken received the same Edelman award recognition for his work with Fluor Corporation on a SD model-based system to avoid project disputes. See “Managing the Dynamics of Projects and Changes at Fluor”, Kenneth Cooper; this was also the 2009 System Dynamics Society Applications Award winner. Please review the Fluor Case here.

Commercial Applications of System Dynamics as Oral Histories page

In the winter of 2016, Ken Cooper visited the System Dynamics Society home office. During that meeting, a series of videos were recorded in which David Andersen interviewed Ken Cooper. In these videos, Ken narrates several of the high impact and more interesting commercial applications from his distinguished career. This series of nine short videos can now be found on the Commercial Applications of System Dynamics as Oral Histories page.

Recycling Rate

Recycling Rate

Name Structural and Behavioral Effects on the Recycling Rate
Modelers John Egil Nilssen and Maren Sylthe
Client/Participant Waste Agency of Oslo, Norway
Client Type Government

The Issue You Tackled

One of the goals for the waste policy in the municipality of Oslo is to achieve a recycling rate at least 50 % from the household waste by 2018. In 2015 the recycling rate was 38 %. The result in 2016 was 38 % and this raises the question whether the objective of 50 % is realistic given the portfolio of means and actions that is used in the municipality today. The Agency of Waste Management in Oslo carried out a study to identify new ways and means to increase the recycling rate based on international published studies. The purpose of this work​ ​​was to use recommendations from the​ ​​modeling work, to implement these in different curbside collection schemes​,​ and​ ​​to quantify the effects on the recycling rate. The main aim is to give the Agency in Oslo sufficient information to conclude about the most cost-effective collection schemes and if it is relevant to change today​’​s scheme.

What You Actually Did

The work consists of five main parts.

  1. First ​​five different curbside collection schemes were designed and developed . These schemes consisted of different combinations of waste fractions and containers for recycled fractions and residual waste. The schemes were developed so they were mutually exclusive. From a decision point of view, the intention was that the decision maker has to choose one scheme, not a combination of schemes.

  2. ​​A system dynamics model ​was developed ​​that could simulate a future recycling rate​, based on data collected. This model consists of a traditional waste value chain and a structural and behavioral section that takes into account how the various schemes affect the ​public’​s waste sorting behavior. ​Three structural components in the model are populated with data ​reflecting the scheme that is simulated. These data were collected during group work with specialists in the waste agency.

  3. ​T​he collection schemes were simulated over a period of 15 years. The schemes were ranked by recycling rate and sensitivity analy​se​s​ were run​. ​​The net increase in recycling was identified ​by taking the schemes​’​ simulated recycling rate and subtract​ing​ the recycling rate in 2015.

  4. Then, as part four, the schemes ​were cost​ed. Cost and income drivers ​were identified and the different schemes​’​ cash flow calculated. Cash flows were transformed into a yearly ​totals – subtract​ing​ the cost base in 2015 ​identified ​the additional cost for each collection scheme.

  5. Finally, the simulated recycling rate and annuity ​were combined in two cost-efficiency figures. These figures gave the final ranking between the schemes. The cost-efficiency is the net increase in recycling rate ​compared with the additional cost.

The Results

The collection scheme ranked number 1 achieved a 50,9% recycling rate​ ​​for the lowest costs. However, this scheme requires another combination of bins and waste fractions compared to the scheme Oslo uses today, and​ ​​would ​require a major logistic change which will challenge the households and the waste agency.

The collection scheme​ ​​most similar to the scheme Oslo uses today was ranked as number 5 and achieved a 46,8% recycling rate to the highest costs. This scheme is a gradual development of today’s scheme.

Sensitivity analysis shows that ranking of the collection schemes due to cost-effectiveness is inelastic and the simulated ranking between the schemes did not change within the structural sensitivity parameters that were used (+/- 50%).

This work also shows that an implementation of a new collection scheme needs new sets of managerial information that the Agency​ ​​does not currently have. If Oslo finds it relevant to modify today​’​s collection scheme, 4 recommendations have to be​ ​​agreed before the Agency starts the process of changing the collection scheme.

Related Publications

Presentation Slides presented at the Waste Agency of Oslo Download
Supporting Material and Documentation of the Work (Recycling Effect) Download
Supporting Material and Documentation of the Work (Measures Package) Download

Northrop Grumman

Name Northrop Grumman and the $2000 Hour
Modelers Kenneth Cooper
Client/Participant Northrop Grumman
Client Type Corporation
The Official Website For added information, or with any questions, see CooperSDNetwork.com, or contact Ken via email: Ken.Cooper@CooperSD.com

Northrop Grumman Case: Part 1

(Narrated by Ken Cooper) 8:27 minutes

Northrop Grumman Case Part 2 – The Back Story

(Narrated by Ken Cooper) 2:31 minutes

The Issue You Tackled

After experiencing some large program cost and schedule problems, Northrop Grumman hired us to help proactively on a new, yet to be started program–the development of the F/A-18 E/F Super Hornet fighter aircraft. Extensive model usage contributed to an award-winning performance on this development program, and led to new corporate policy beyond that program as well.

What You Actually Did

We developed a model of the project dynamics for the design and prototype production of the F/A-18 E/F Super Hornet. Starting our modeling work even before the development program started, we spent extensive time with senior corporate leaders and the entire top management team on the program. In addition to the pure modeling work, we undertook an extensive series of sessions discussing the Rework Cycle and productivity dynamics. The Program Manager credited the SD modeling work with instilling an important understanding of the unintended impacts of different actions and of design changes (secondary impacts).

“Undiscovered rework” and “the rework cycle” became common elements of the lexicon of the program, changing the culture and thinking among the management.

Following that assignment, Corporate requested an analysis to support new company policies regarding the use of overtime.

This is discussed in the accompanying video, and in the paper “The 00 Hour”.

The Results

Today the F/A-18 E/F Super Hornet remains the premier carrier-basedaircraft for the US Navy, flying over 1100 mph in multiple combat roles. It is widely regarded as an extremely successful procurement in DoD, with over 500 aircraft produced in the past 20 years, with a value near $50 billion.

Related Publications

The $2,000 Hour: How Managers Influence Project Performance Through the Rework Cycle Download

Did You Know?

Commercial Applications of System Dynamics as Oral Histories page

In the winter of 2016, Ken Cooper visited the System Dynamics Society home office. During that meeting, a series of videos were recorded in which David Andersen interviewed Ken Cooper. In these videos, Ken narrates several of the high-impact and more interesting commercial applications from his distinguished career. This series of nine short videos can now be found on the Commercial Applications of System Dynamics as Oral Histories page.

Hughes Aircraft

Hughes Aircraft

Name First Aerospace Use of SD Project Modeling
Modelers Ken Cooper
Client/Participant Hughes Aircraft Company
Client Type Corporation
The Official Website For added information, or with any questions, see CooperSDNetwork.com, or contact Ken via email: Ken.Cooper@CooperSD.com

Hughes Aircraft Case: Part 1

(Narrated by Ken Cooper) 9:37 minutes

Hughes Aircraft Case Part 2 – The Back Story

(Narrated by Ken Cooper) 3:51 minutes

The Issue You Tackled

Hughes faced what seemed to be stalled progress and out-of-control costs on their most important aerospace program, the AMRAAM missile development. The future of the program and relations with DoD and Congress were in jeopardy. We needed to define the true scope of the problem and seek effective corrective action.

What You Actually Did

We designed and built a SD model of the AMRAAM (Advanced Medium Range Air-to-Air Missile) development program. This was the first SD model of an aerospace program, altered from our early shipbuilding program simulations. For example, we built additional sectors to portray prototype production and flight testing (not a big issue on ships…).

The senior program manager related that one year earlier the program was estimated to be 70% complete. After the past year, with 1000 engineers at work, the program seemed to be at …70%! He called it “The Lost Year”. The Company Board, auditors, Defense Department, and Congress were all demanding answers to what seemed to be rapidly escalating costs. Our objective was to identify where things really stood and find corrective action.

The Results

We were able to identify the causes of “The Lost Year” and explain them to the program, Corporate, and other reviewers. New initiatives were identified and implemented. The program went on to progress as simulated.

In the end, the AMRAAM program became one of the most successful programs in DoD and for Hughes.

After that uncertain start, the AMRAAM has been in production for over 25 years.

It flies at Mach 4 from most advanced fighter jets today, the F15, F16, F18, F22 and more. The AMRAAM is still known as “the world’s most sophisticated air dominance weapon”.

Related Publications

The Rework Cycle: Why Projects are Mismanaged Download

Did You Know?

Commercial Applications of System Dynamics as Oral Histories page

In the winter of 2016, Ken Cooper visited the System Dynamics Society home office. During that meeting, a series of videos were recorded in which David Andersen interviewed Ken Cooper. In these videos, Ken narrates several of the high impact and more interesting commercial applications from his distinguished career.

This series of nine short videos can now be found on the Commercial Applications of System Dynamics as Oral Histories page.

Attrition of Staff

Attrition of Staff

Name Attrition of International Seconded Staff in European Civilian Missions
Modelers Paulo Gonçalves and Manuela Vender
Client/Participant United Nations Mission in Kosovo (UNMIK)
Client Type NGO

The Issue You Tackled

Staff attrition represents one of the most important challenges facing non-profit international organizations and missions in post-conflict areas, dramatically affecting their cost-effectiveness and performance. High attrition rates, along with political and security instability, threaten the execution of operations and mandates of these organizations. European Civilian Missions (ECMs) in post-conflict areas often use secondment, a particular system of recruitment, to staff their operations. However, secondment often yields higher than average attrition rates among staff. In turn, high attrition rates in ECMs deteriorate organizational capability, weakening them and reducing their effectiveness. Additionally, the considerable cost associated with constant recruitment and training of staff drains resources intended to support the Mission directives.

This case explores the causes of staff attrition through an in-depth study of one Mission deployed in Kosovo that uses secondment for staff recruitment. The case-study describes the difficulties encountered by the Mission in fulfilling its mandate due to extremely high staff turnover rates, reaching 50% in 2008. We discuss possible improvement policies that can be undertaken by this Mission to reduce staff attrition.

What You Actually Did

The work consists of five main parts.
Using available data, our work analyzes both the general aspects of international non-profit work environments and specific aspects of the secondment system that can cause attrition. The field site for our study is the United Nations Mission in Kosovo (UNMIK) that struggled with high attrition rates. The case-study explores the mechanisms by which high attrition rates (reaching 50%) can cripple an International Mission. It also investigates why past policies aimed at reducing attrition failed.

Our project framework:

PART 1 – Review data, document HR process
– Analyzed data previously collected by UNMIK from interview panels and staff satisfaction surveys with international staff holding positions in different grade levels.
– Identified dynamics involved in the current human resources processes at UNMIK: recruiting and training new staff, the drain on experienced staff, the subsequent impact on attrition, aspects reinforcing this process.

OUTPUT*: Causal Loop Diagram mapping the HR processes that capture the impact of high attrition rates on staff productivity.

PART 2 – Analyze UNMIK’s past attempts at reducing attrition
– Reviewed and analyzed unsuccessful isolated UNMIK attempts to reduce staff turnover: increasing contract duration, increasing seconded staff salary, introducing capacity building and orientation training for new arrivals, and attempting to create a family oriented work environment.

OUTPUT*: Causal Loop Diagrams mapping dynamics of recruitment and retention measures, gaps in desired to actual total staff and the resulting pressure on staff to close such gaps.

PART 3 – Identify high leverage HR policies for intervention
– Analyzed comprehensive Causal Loop Diagram to identify the feedback processes that influence the variables driving attrition rates.
– Identified improvement policies that can reduce attrition rates as well as possible limitations of those policies based on UNMIK data and current literature on attrition issues.

OUTPUT*: Causal Loop Diagrams representing an integrated approach to problem of recruitment and retention identifying high leverage HR policies

*Comprehensive Causal Loop Diagrams were created to frame these complex issues. For more information or to see the models, contact Paulo Gonçalves (paulo.goncalves@usi.ch).

The Results

Our findings shed light into the complexities of attrition in International Missions, both ECMs and UN, and the shortcomings of the secondment system. We also suggest improvements to the secondment system that can reduce attrition rates.

Summary of policy recommendations:

While it is easier to attract new staff than prevent current staff from leaving, the two cannot be treated separately. Isolated recruitment improving measures were ineffective because they did not address the working conditions that directly affect retention.

Instead, a focus on integrated retention strategies yield a greater impact on lowering attrition, since ultimately these policies improve general working conditions and consequently the organization’s ability to recruit. Specifically, the following policy recommendations could significantly improve retention in ECMs while continuing to use secondment as the main recruitment mechanism:

  • Restructure compensation system

  • Develop career paths and improve job stability

  • Improve quality of work environment

  • Recruit experienced people

  • Increase hiring standards and establish concrete job expectations

  • Increase number of nominations and target prospective candidates

  • Avoid recruiting staff on short-term assignments

Missions should ensure consistency in human resource practices such as upgrading, downsizing and recruiting procedures across all staff, contracted and seconded staff. The harmonization of benefits and entitlements of all seconded staff independently of seconded Government would undoubtedly benefit the recruitment and the retention of staff.

If your organization faces similar problems of staff attrition, get in touch and we may be able to help.

Related Publications

Attrition of International Seconded Staff in European Civilian Missions Download

Dealer Hoarding, Sales Push and Seed Returns

Name Combined management of sales resources and sales targets to mitigate dealer hoarding and seed returns
Modelers Paulo Gonçalves
Contact For more information on this case, please contact Paulo Gonçalves.
Client/Participant Hybrid seed supplier (e.g., Monsanto, Pioneer, Syngenta)
Client Type Corporation

The Issue You Tackled

Product returns are a common problem and generate significant costs. Much has been written about reducing returns by aligning buyer and seller incentives, and yet high levels of returns persist. To address why, we examined the interactions between a supplier and its dealers in the hybrid seed industry. Through an in-depth exploration of a seed supplier experiencing over 30% returns, we studied the complex interactions among the supplier, dealers, and growers in the industry. Our research revealed influences on returns from variables (e.g., salesforce size, sales targets) that have not been identified previously. In the seed supply chain, the supplier sells seeds to dealers, who then resell them to growers. Both supply and demand are highly uncertain, which can result in supply shortages. If supply is limited, dealers tend to overstock seeds, exacerbating shortages, and intensifying competition and hoarding among dealers. This behavior leads to seed stocks that are not adequately matched to grower demand, and causes high returns. Seed suppliers often encourage dealers to overstock seeds to achieve opportunistic sales or to limit competitors’ shelf space. While there are short-term benefits associated with overstocking to gain additional sales from growers, the cost associated with excessive returns may, at times, far outweigh them.

What You Actually Did

Our research builds on interviews and direct observations to provide information on key variables (e.g., sales effort allocation), their interdependences (e.g., pressure and effort allocation), critical feedback processes (e.g., from sales effort allocation, to returns, to sales targets and next period effort allocation), and managers’ decision making process (e.g., dealers’ orders). Review of secondary data, company documents, standard operating procedures, helped us detail the physical features (e.g., shipments, level of returns, sales targets) of our model. We uncovered supplier driven influences (e.g., supplier’s salesforce size, recovery targets) on returns that have not been identified previously in Operations Management literature. We explored the impact of these influences through a formal system dynamics model capturing specifics of the supplier-dealer system, how they work together and how they behave when subjected to demand shocks.

Through a series of experiments varying the sales force size, the aggressiveness of its targets, and dealer incentives, we see that these factors interact to further exacerbate the level of returns. This cycle is reinforcing when examined across multiple seasons, and can be provoked by temporary increases in demand. The data suggested a link between the nature of sales activities and the probability of returns. Salespeople perform mainly two types of activities; they either position seeds with or push seeds to dealers. Positioning seeds takes more time and improves the sales forecast. In contrast, pushing seeds is comparatively quick and does not improve the sales forecast. Salespeople start the sales season positioning seeds. However, they shift from positioning to pushing as the time left to meet sales targets decreases and pressure upon them increases.

When sales force resources are constrained this causes high returns. Even with sufficient sales resources, a demand shock can stress the system, leading into a low performance equilibrium with high returns. We also observed that aggressive sales targets increased pressure on the sales force to push seeds and resulted in more returns. While a traditional prescription to the problem of high returns would be to implement adequate incentives for dealers, our analysis shows that the effectiveness of incentives depends on the adequacy of available sales resources. Dealer incentives solve the dealer over-ordering problem. However, over-ordering is just one component of the seed returns problem. Returns also occur when salespeople are faced with intense pressure to meet targets.

The Results

Our research shows that several parameters influence sales pressure: (1) availability of sales resources, (2) fraction of revenues lost from past year returns to be recovered and (3) sales targets. Increased sales resources, smaller fractions of revenues lost to be recovered, and moderate sales targets lower returns by reducing the pressure on salespeople. Our research highlighted the causes of returns, the limitations of dealer incentives, and the importance of adequate sales resources and moderate sales targets. Overly-aggressive sales targets increase sales pressure, and can detrimentally tilt the behavior of the system into a low-performance equilibrium characterized by high returns. Because this behavior is self-reinforcing, even transient aggressive sales targets can permanently tilt the system into a poor performance equilibrium from which it may not easily recover. The client followed our recommendations and experienced a reduction in seed returns from 30% to 18% in the first year. The relevant policies implemented were:

  • A dealer penalty policy

  • An order pacing policy, limiting the initial pace of dealer orders

  • A salesperson playbook policy, monitoring and limiting push activity through a protocol of salespeople’ s desired behavior.

After this early success, the client also started to collect data nationally (by sales team and salesperson) to measure progress toward sales targets as well as to estimate sales pressure. They changed their sales reward system to address some of the issues we encountered during the modeling effort and began to apply this integrated solution to other products that were experiencing high returns.

Related Publications

Summary presentation: Dealer Hoarding, Sales Push & Seed Returns Download
Academic Paper: Dealer Hoarding, Sales Push and Seed Returns: On the Interdependency between Incentives and Salesforce Management Download