Title: More system dynamics'
1More system dynamics.
2Can you construct the schematic model for this
Causal model?
3We know what that is
4How about this one?
5We know what it is
6Some rules
- There are two types of causal links in causal
models - Information
- Flow
- Information proceeds from stocks and parameters
toward rates where it is used to control flows - Flow edges proceed from rates to states (stocks)
in the causal diagram always
7Loops
- In any loop involving a pair of quantities/edges,
- one quantity must be a rate
- the other a state or stock,
- one edge must be a flow edge
- the other an information edge
8CONSISTENCY
- All of the edges directed toward a quantity are
of the same type - All of the edges directed away from a quantity
are of the same type
9Rates and their edges
10Parameters and their edges
11Stocks and their edges
12Auxiliaries and their edges
13Outputs and their edges
14STEP 1 Identify parameters/inputs
- Parameters have no edges directed toward them
15STEP 2 Identify the edges directed from
parameters
- These are information edges always
16STEP 3 By consistency identify as many other
edge types as you can
17STEP 4 Look for loops involving a pair of
quantities only
- Use the rules identified above
18System Dynamics Software
- STELLA and I think
- High Performance Systems, Inc.
- best fit for K-12 education
- Vensim
- Ventana systems, Inc.
- Free from downloading off their web site
www.vensim.com - Robust--including parametric data fitting and
optimization - best fit for higher education
- Powersim
- What Arthur Andersen is using
19What is system dynamics
- A way to characterize systems as stocks and flows
between stocks - Stocks are variables that accumulate the affects
of other variables - Rates are variables the control the flows of
material into andout of stocks - Auxiliaries are variables the modify information
as it is passed from stocks to rates
20A DEMO
21Natures Templates the Archetypes
- Structures of which we are unaware hold us
prisoner - The swimmer scenario
- Certain patterns of structure occur again and
again called ARCHETYPES
22We are creating a language
- reinforcing feedback and balancing feedback are
like the nouns and verbs - systems archetypes are the basic sentences
- Behavior patterns appear again in all
disciplines--biology, psychology, family therapy,
economics, political science, ecology and
management - Can result in the unification of knowledge across
all fields
23Recurring behavior patterns
- Do we know how to recognize them?
- Do we know how to describe them?
- Do we know how to prescribe cures for them?
- The ARCHETYPES describe these recurring behavior
patterns
24The ARCHETYPES
- provide leverage points, intervention junctures
at which substantial change can be brought about - put the systems perspective into practice
- About a dozen systems ARCHETYPES have been
identified - All ARCHETYPES are made up of the systems
building blocks reinforcing processes,
balancing processes, delays
25Before attacking the ARCHETYPES we need to
understand simple structures
- the reinforcing feedback loop
- the balancing feedback loop
- THE DEMO
- Pages 520-525 in Austin/Burns--your handout
26ARCHETYPE 1 LIMITS TO GROWTH
- A reinforcing process is set in motion to produce
a desired result. It creates a spiral of success
but also creates inadvertent secondary effects
(manifested in a alancing process) that
eventually slow down the success.
27Management Principle relative to ARCHETYPE 1
- Dont push growth or success remove the factors
limiting growth
28ARCHETYPE 1 LIMITS TO GROWTH
- Useful in all situations where growth bumps up
against limits - Firms grow for a while, then plateau
- Individuals get better for a while, then their
personal growth slows. - Falling in love is kind of like this
- The love begins to plateau as the couple get to
know each other better
29Structure
30Understanding the Strurture
- High-tech orgs grow rapidly because of ability to
introduce new products - This growth plateaus as lead times become too long
31How to achieve Leverage
- Most managers react to the slowing growth by
puching harder on the reinforcing loop - Unfortunately, the more vigorously you push the
familiar levels, the more strongly the balancing
proces resists, and the more futile your efforts
become. - Instead, concentrate on the balancing
loop--changing the limiting factor - This is akin to Goldratts Theory of
Constraints--remove the bottleneck, the impediment
32Applications to Quality Circles and JIT
- Quality circles work best when there is
even-handed emphasis on both balancing and
reinforcing loops - JIT has had to focus on recalcitrant suppliers
- THERE WILL ALWAYS BE MORE LIMITING PROCESSES
- When once source of limitatiin is removed,
another will surface - Growth eventually WILL STOP
33Create your own LIMITS TO GROWTH story
- Identify a limits to growth pattern in your own
experience - Diagram it
- What is growing
- What might be limitations
- Example--the COBA and University capital
campaigns - NOW, LOOK FOR LEVERAGE
34Test your LIMITS TO GROWTH model
- Talk to others about your perception
- Test your ideas about leverage in small real-life
experiments - Run and re-run the simulation model
- Approach possible resistance and seek WIN-WIN
strategies with them
35ARCHETYPE 2 shifting the burden
- An underlying problem generates symptoms that
demand attention. But the underlying problem is
difficult for people to address, either because
it is obscure or costly to confront. So people
shift the burden of their problem to other
solutions--well-intentioned, easy fixes that seem
extremely efficient. Unfortunately the easier
solutions only ameliorate the symptoms they
leave the underlying problem unaltered. The
underlying problem grows worse and the system
loses whatever abilities it had to solve the
underlying problem.
36The Stereotype Structure
Symptiom-Correcting Process
Addictioin Loop
Problem-Correcting Process
37Special Case Eroding Goals
- Full employment meant 4 unemployment in the 60,
but 6 to 7 unemployment in the early 1980s - Gramm-Rudman bill called for reaching a balanced
budget by 1991, but this was shifted to 1993 and
from 1993 to 1996 and from 1996 to 1998 - If all else fails, lower your goals..
38EXAMPLE
39Another Example
Raise tuition, add course fees, etc.
Costs of Higher Ed not funded by State
Perceived cost to the student
Lower enrollments
40Still Another Example
Symptom-correcting process
Addiction Loop
Problem-correcting Process
41Shifting the Burden is an insidious problem
- Is has a subtle reinforcing cycle
- This increases dependence on the symptomatic
solution - But eventually, the system loses the ability to
apply the fundamental solution - The system collapses
42Senge Says
- Todays problems are yesterdays solutions
- We tend to look for solutions where they are
easiest to find
43HOW TO ACHIEVE LEVERAGE
- Must strengthen the fundamental response
- Requires a long-term orientation and a shared
vision - Must weaken the symptomatic response
- Requires a willingness to tell the truth about
these solutions
44Create your own Shifting the Burden Story
- Is there a problem that is getting gradually
worse over the long term? - Is the overall health of the system gradually
worsening? - Is there a growing feeling of helplessness?
- Have short-term fixes been applied?
- The Casa Olay problem of using cupouns to
generate business and then cant get away from
using the coupons because their customer base is
hucked on coupons
45To structure your problem
- Identify the problem
- Next, identify a fundamental solution
- Then, identify one or several symptomatic
solutions - Finally, identify the possible negative side
effects of the symptomatic solution
46Review
- We have now seen two of the basic systems
archetypes. - The Limits to Growth Archetype
- The Shifting the Burden Archetype
- As the archetypes are mastered, they become
combined into more elaborate systemic
descriptions. - The basic sentences become parts of paragraphs
- The simple stories become integrated into more
involved stories
47Seeing Structures, not just Trees
- Helps us focus on what is important and what is
not - Helps us determine what variables to focus on and
which to play less attention to
48WonderTech The Chapter 7 Scenario
- A lesson in Growth and Underinvestment
- What Senge gets out of this is the Growth and
Underinvestment Archetype - A combination of variants of the Limits to Growth
Archetype and the Shifting the Burden Archetype
49The WonderTech Scenario
- WonderTech continues to invest in the growth side
of the process. Sales grow but then plateau.
Management puts more sales people into the field.
Offers more incentives to sales force. But
because of long lead times, customers wane. Yes
you have a great product, but you cant deliver
on your lead time promise of eight weeks. We
know weve heard from your other customers.
In fact, the company relaxed its lead-time
standard out to twelve to sixteen weeks because
of insufficient capacity.
50The Reinforcing Loop
51The Balancing Loop Following the LTG Archetype
52The Growth Curve Page 117
53Whats happened?
- WTs management did not pay much attention to
their delivery service. They mainly tracked
sales, profits, market share and return on
investment. WTs managers waited until demand
fell off before getting concerned about delivery
times. But this is too late. The slow delivery
time has already begun to correct itself. The
management was not very concerned about the
relaxed delivery time standard of eight weeks.
54The WonderTech Scenario
- The firm decides to build a new manufacturing
facility. But the facility comes on line at a
time when sales are declining and lead times are
coming back to the eight-week standard. - Of every 10 startup companies, 5 will disappear
with five years, only 4 survive into their tenth
year and only 3 into their fifteenth year.
55The Shifting the Burden Component
56Put the whole thing together
57Comments on The Senge Methodology
- Sees problems as conforming to a finite number of
archetypes - Formulates models based on combinations of the
archetypes - Addresses problem-driven situations
- What about situations and systems that are
technology-driven, dynamics-driven,
exogenously-driven, anything but problem-driven
58More Comments on the Senge Methodology
- But does this become sufficiently general to
accommodate all dynamical scenarios and
situations? - It is difficult to translate his archetypes and
causal models into running system dynamics
simulations - A lot of variables (RATE VARIABLES, specifically)
get left out in terms of connections
59More Comments on the Senge Methodology
- The focus is on characterizing the dynamics, not
on how to capture that in terms of stocks, flows
and information paths - He doesnt label his edges with or - signs
60Another methodology The Sector Approach to SD
model formulation
- Begin by identifying the sectors
- A sector is all the structure associated with a
single flow - There could be several states in a single sector
- Determine the within-sector structure
- Reuse existing molecules where possible
- Determine the between-sector information
infrastructure - There are no flows and therefore no stocks or
rates here
61A Single-sector Exponential goal-seeking Model
- Sonya Magnova is a television retailer who wishes
to maintain a desired inventory of DI television
sets so that she doesnt have to sell her
demonstrator and show models. Sonyas ordering
policy is quite simple--adjust actual inventory I
toward desired inventory DI so as to force these
to conform as closely as possible. The initial
inventory is Io. The time required for ordered
inventory to be received is AT.
62A Two-sector Housing/population Model
- A resort community in Colorado has determined
that population growth in the area depends on the
availability of hoousing as well as the
persistent natural attractiveness of the area.
Abundant housing attracts people at a greater
rate than under normal conditions. The opposite
is true when housing is tight. Area Residents
also leave the community at a certain rate due
primarily to the availability of housing.
63Two-sector Population/housing Model, Continued
- The housing construction iindustry, on the other
hand, fluctuates depending on the land
availability and housing desires. Abundant
housing cuts back the construction of houses
while the opposite is true when the housing
situation is tight. Also, as land for
residential development fills up (in this
mountain valley), the construction rate decreases
to the level of the demolition rate of houses.
64What are the main sectors and how do these
interact?
65What is the structure within each sector?
- Determine state/rate interactions first
- Determine necessary supportng infrastructure
- PARAMETERS
- AUXILIARIES
66What does the structure within the population
sector look like?
- RATES in-migration, out-migration, net death
rate - STATES population
- PARAMETERS in-migration normal, out-migration
normal, net death-rate normal
67What does the structure within the housing sector
look like?
- RATES construction rate, demolition rate
- STATES housing
- AUXILIARIES Land availability multiplier, land
fraction occupied - PARAMETERS normal housing construction, average
lifetime of housing - PARAMETERS land occupied by each unit, total
residential land
68What is the structure between sectors?
- There are only AUXILIARIES, PARAMETERS, INPUTS
and OUTPUTS
69What are the between-sector auxiliaries?
- Housing desired
- Housing ratio
- Housing construction multiplier
- Attractiveness for in-migration multiplier
- PARAMETER Housing units required per person
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