System Dynamics
Systems Thinking

The study and management of complex feedback. Explanation of Systems Thinking of Forrester. System Dynamics.

What is Systems Thinking? Definition

Systems Thinking is an approach for studying and managing complex feedback systems, such as one finds in corporations and other social systems. In fact it has been used to describe practically every sort of feedback system.

System Dynamics is more or less the same as Systems Thinking, but emphasizes the usage of computer-simulation tools.

The term System means an interdependent group of things forming a unified pattern. Feedback refers to the situation of X affecting Y, and Y in turn affecting X. Perhaps through a chain of causes and effects. One cannot study the link between X and Y and, independently, the link between Y and X and predict how the system will behave. Only the study of the whole feedback system will lead to correct results.

What is System Dynamics?

System Dynamics is based on Systems Thinking, but takes the additional steps of constructing and testing a computer simulation model. The System Dynamics field developed initially from the book "Industrial Dynamics" of Jay W. Forrester.

Steps in the System Dynamics methodology

1. Identify a problem,
2. Develop a dynamic hypothesis explaining the cause of the problem,
3. Build a computer simulation model of the system at the root of the problem,
4. Test the model to be certain that it reproduces the behavior seen in the real world,
5. Devise and test in the model alternative policies that alleviate the problem,
6. Implement the solution.

Often these steps have to be reviewed and refined, going back towards an earlier step. For instance, the first problem identified may be only a symptom of a still greater problem.

Typical applications of System Dynamics

• strategy and corporate planning
• business process development
• public management and policy
• biological and medical modeling
• energy and the environment
• theory development in the natural and social sciences
• dynamic decision making
• complex nonlinear dynamics

Book: John Sterman -  Business Dynamics: Systems Thinking.. -

System Dynamics & Systems Thinking Special Interest Group

Visit the Special Interest Group

System Dynamics & Systems Thinking Forum

- England

Soft, Hard and Viable Systems

"Three systems methods are normally used: 1. Soft systems method - complex messy situations 2. Hard systems method- difficulties where we know the cause and desire endstate 3. Viable systems method - comparing operations, management and control with environmental influences and looking at the links between elements (communications, audit, feedback etc) Thus in conclusion; systems approaches aid analysis because it compares reality with the perceived ideal and takes all viewpoints and influences into consideration in an attempt to manage the cause and affect created by our decision making."

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- England

Complexity in Systems Approach

"Complexity exists due to a multitude of worldviews held by organisational members and external stakeholders and the cultural influences, individual experiences and organisational makeup i. E. Rituals, myths, procedures etc', each affect the overall considerations of any decisions managers take. Part of the systems approach is to construct conceptual models of how the organisation 'should work' (in the ideal world) and then compare these models with 'what really happens'."

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- England

Consider Issues Holistically

"Systems Methodology can aid our analysis of organisations because its key approach is to consider issues holistically. Rather than break elements into manageable segments, we accept that complexity exists and adjustments in one area may influence other elements (sometimes in ways we had not foreseen). So when looking at an organisation we consider its environment (internal and external) and how the various stakeholders affect the organisation with a view to balancing the best needs of each party with the organisation's approach (easier said than done). We look at the organisation's operations and how they are managed and how they interact with other business functions. Key areas are communications, quality control and audit and feedback loops. "

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Fudzi Michael - Ghana

Value of System Approach for Understanding Behaviour

"What value does the system approach have to understanding and analyzing behaviour in oganisations?"

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- Philippines

Strategy > SD > Performance?

"Could we use System Dynamics to assess if a firm's strategy is responsible for its performance?"

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System Dynamics & Systems Thinking Education & Events

Compare with System Dynamics:  Gestalt Theory  |  Strategy Dynamics  |  Soft Systems Methodology  |  Scenario Planning  |  Analogical Strategic Reasoning  |  Five Disciplines  |  OODA loop  |  Game Theory  |  Spiral Dynamics  |  Simulation  |  Quality Function Deployment

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