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Digital Twin Business Models for Strategy and Operational Management

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Digital Twin Business Models for Strategy and Operational Management

In the business field, dynamic models have long been used for simulating long-term plans (3+ years) and medium-term challenges and issues playing out over a few months or quarters. But models have also been used to understand shorter-term phenomena, such as in supply-chain and service-delivery cases. Often, though, the same structures and mechanisms operate over both short and long-time scales. Examples include customer acquisition and retention, and staffing (hiring, promotion, and turnover), and performance-improvement programs. This webinar will show how a single model can capture both short-term and strategic views of the same issue, enabling management to have a coherent long-term plan and to check the impact of that plan on short-term tactical episodes. Taken to the extreme, this approach can get close to offering a “digital twin” of a business or some part of the business, that closely matches its actual performance as well as the development of the wider system that drives that performance. Similar considerations may well apply to plans and challenges in other domains. In this webinar, you will learn:

  • The benefits of using System Dynamics to capture both short-term and long-term perspectives of a business issue.
  • How to design and implement effective digital twin architectures that can improve organizational performance.
  • Real-world examples and case studies of how System Dynamics and digital twins have been used to optimize business performance and drive competitive advantage.

About the Speakers

Kim Warren is the founder of Strategy Dynamics, helping organizations improve their planning and strategy implementation. Kim spent 15 years in senior strategy roles in business before joining the Strategy faculty at London Business School, where he taught MBA and Executive programs. Realizing limitations with existing strategy methods, he developed powerful strategy dynamics frameworks. Kim is the author of several books, including Competitive Strategy Dynamics and Strategic Management Dynamics, and has collaborated with leading consulting firms to extend the scope of Strategy Dynamics’ impact. His work has also been directly applicable to issues in international development. Kim has an engineering background, an MBA, and a Ph.D. from London Business School. He was awarded the Jay Wright Forrester Award by the International System Dynamics Society in 2005 and was the Society’s President in 2013.
Martin Lycko is a Customer Success Manager at Silico. Silico’s simulation platform empowers organizations to create Digital Twins that span teams and functions. With the ability to connect these Digital Twins to real-time data from across the organization, businesses can simulate the impact of decisions virtually in a Digital Twin of the Organisation.

Fluor Avoids Costly Project Changes Saving $1.3bn

Fluor saves $1.3 billion in System Dynamics-based project management.

#United States #Engineering #Fluor #Corporation

CLIENT: FLUOR

Fluor is one of the world’s largest engineering and construction firms, with 2008 revenues over $20 billion. The US-based firm operates in every major business sector and geography.

CHALLENGE: CHANGES DON’T IMPROVE PROJECTS, QUITE THE OPPOSITE

A large part of Fluor’s work is organized in the form of projects, which are typically market-driven with aggressive cost and schedule targets and evolving client needs. It is the tension among these different objectives that is often the underlying dynamic for generating changes on projects. In an initiative by Fluor’s Chairman, a comprehensive quantitative review examined all Fluor projects over several years. For many in the industry, there is a misperception that contractors improve their performance with more changes. This company-wide review was unequivocal in refuting that notion. There is a clear, unambiguous relation between the level of changes and the cost and schedule performance of projects: more changes bring ever-worsening performance on projects.

ACTION: FLEXIBLE SYSTEM DYNAMICS MODEL TO PROJECT COST OF CHANGES

After Fluor had identified and quantified the business need for improving the practice of project change management, two external consultants first built and piloted and validated a project model to assess change impacts on several initial projects. In the four years since then, the model has been used in the “Change Impact Assessment” system to conduct thousands of analyses on over 100 client projects. Fluor projects analyzed with this model range in size from less than million to more than billion.

The system rapidly tailors a model to simulate each engineering and construction project. Each model is then used to foresee future cost and schedule impacts of project changes, and most important, test ways to avoid the impacts.

We developed a project model based on our prior modeling work with Fluor, and built a system around it, with defined practices to rapidly and automatically tailor the model to a specific project. We set up an interface to allow dozens of trained company users to test proactively project-wide impacts of proposed design or scope changes.

We conducted worldwide training of executives and managers and analysts, ensuring the focus was on foreseeing and mitigating future change impacts. The system was applied to hundreds of Fluor projects.

RESULTS: COST REDUCTION OF $1.3 BILLION

A cultural change occurred in the company, focused on proactive mitigating efforts that reduce change impacts on the projects.As a result, many disputes were avoided (some had cost tens of millions of dollars), and cost impacts were reduced by proactive actions identified in the analyses, amounting to over $1.3 billion savings to Fluor and their clients.

LEARN MORE

System Dynamics modelers: Kenneth Cooper and Gregory Lee

AWARDS & PUBLICATIONS

Award: In 2009, the Society awarded its System Dynamics Applications Award to Kenneth Cooper and Gregory Lee for their work Managing the Dynamics of Projects and Changes at Fluor. See conference slides and citation.

Article: Managing the Dynamics of Projects and Changes at Fluor

 

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OTHER SUCCESSFUL APPLICATIONS

System Dynamics Helps Farmers Escape Poverty Trap in Guatemala

System Dynamics Helps Farmers Escape Poverty Trap in Guatemala EXECUTIVE Summary Guatemala holds the 4th highest global ranking for chronic malnutrition, and climate change is intensifying the challenges subsistence farmers face in providing food for their families....

Twinings Uses System Dynamics Games to Enhance HR Capability

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RSC Uses System Dynamics to Increase HVACR Sales Against the Tide

RSC Uses System Dynamics to Increase HVACR Sales Against the Tide “Using the proven Strategy Dynamic process focused our limited resources on organizing strategic issues, identifying the critical resources, and developing the insight to more rapidly create intuitive...

Recent Posts

A Close-Up on Our New Look

A Close-Up on Our New Look We are excited to reveal our new logo and branding, embodying the System Dynamics Society’s values and vision for the future. The looped arrows with an S curve symbolize growth, change over time, and commitment to raising complex...

Upcoming Events