System Dynamics

Information about System Dynamics

System dynamics is an approach to understanding the behaviour of complex systems over time. It deals with internal feedback loops and time delays that affect the behaviour of the entire system.^[1] What makes using system dynamics different from other approaches to studying complex systems is the use of feedback loops and stocks and flows. These elements help describe how even seemingly simple systems display baffling nonlinearity.

Overview

Systems dynamics is an aspect of systems theory as a method for understanding the dynamic behavior of complex systems. The basis of the method is the recognition that the structure of any system — the many circular, interlocking, sometimes time-delayed relationships among its components — is often just as important in determining its behavior as the individual components themselves. Examples are chaos theory and social dynamics. It is also claimed that, because there are often properties-of-the-whole which cannot be found among the properties-of-the-elements, in some cases the behavior of the whole cannot be explained in terms of the behavior of the parts. An example is the properties of these letters which when considered together can give rise to meaning which does not exist in the letters by themselves. This further explains the integration of tools, like language, as a more parsimonious process in the human application of easiest path adaptability through interconnected systems.

History

System Dynamics was founded in the late 1950s by Jay W. Forrester of the MIT Sloan School of Management with the establishment of the MIT System Dynamics Group. At that time, he began applying what he had learned about systems during his work in electrical engineering to everyday kinds of systems.

Determining the exact date of the founding of the field of system dynamics is difficult and involves a certain degree of arbitrariness. Jay W. Forrester joined the faculty of the Sloan School at MIT in 1956, where he then developed what is now System Dynamics. The first published article by Jay W. Forrester in the Harvard Business Review on "Industrial Dynamics", was published in 1958.

The members of System Dynamics Society have chosen 1957 to mark the occasion as it is the year in which the work leading to that article, which described the dynamics of a manufacturing supply chain, was done.

Topics in systems dynamics

The elements of system dynamics diagrams are feedback, accumulation of flows into stocks and time delays.

To illustrate the use of system dynamics, imagine an organisation that plans to introduce an innovative new durable consumer product. The organisation needs to understand the possible market dynamics, in order to design marketing plans and production plans.

Causal loop diagrams

Main article: Causal loop diagram

A causal loop diagram is a visual representation of the feedback loops in a system. The causal loop diagram of the new product introduction may look as follows:

There are two feedback loops in this diagram. The positive reinforcement (labeled R) loop on the right indicates that the more people have already adopted the new product, the stronger the word-of-mouth impact. There will be more references to the product, more demonstrations, and more reviews. This positive feedback should generate sales that continue to grow.

The second feedback loop on the left is negative reinforcement (or "balancing" and hence labeled B). Clearly growth can not continue forever, because as more and more people adopt, there remain fewer and fewer potential adopters.

Both feedback loops act simultaneously, but at different times they may have different strengths. Thus one would expect growing sales in the initial years, and then declining sales in the later years.

Stock and flow diagrams

Main article: Stock and flow

The next step is to create what is termed a stock and flow diagram. A stock is the term for any entity that accumulates or depletes over time. A flow is the rate of change in a stock.

A flow changes the rate of accumulation of the stock

In our example, there are two stocks: Potential adopters and Adopters. There is one flow: New adopters. For every new adopter, the stock of potential adopters declines by one, and the stock of adopters increases by one.

Equations

The real power of system dynamics is utilised through simulation. Although it is possible to perform the modeling in a spreadsheet, there is a variety of software packages that have been optimised for this.

The steps involved in a simulation are:

Define the problem boundary
Identify the most important stocks and flows that change these stock levels
Identify sources of information that impact the flows
Identify the main feedback loops
Draw a causal loop diagram that links the stocks, flows and sources of information
Write the equations that determine the flows
Estimate the parameters and initial conditions. These can be estimated using statistical methods, expert opinion, market research data or other relevant sources of information.^[2]
Simulate the model and analyse results

The equations for the causal loop example are:

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Simulation results

The simulation results show that the behaviour of the system would be to have growth in adopters that follows a classical s-curve shape. The increase in adopters is very slow initially, then exponential growth for a period, followed ultimately by saturation.

Application

System dynamics has found application in a wide range of areas, for example population, ecological and economic systems, which usually interact strongly with each other.

System dynamics have various "back of the envelope" management applications. They are a potent tool to:

Teach system thinking reflexes to persons being coached
Analyze and compare assumptions and mental models about the way things work
Gain qualitative insight into the workings of a system or the consequences of a decision
Recognize archetypes of dysfunctional systems in everyday practice

Computer software is used to simulate a system dynamics model of the situation being studied. Running "what if" simulations to test certain policies on such a model can greatly aid in understanding how the system changes over time. System dynamics is very similar to systems thinking and constructs the same causal loop diagrams of systems with feedback. However, system dynamics typically goes further and utilises simulation to study the behaviour of systems and the impact of alternative policies.^[3]

System dynamics has been used to investigate resource dependencies, and resulting problems, in product development.^[4] ^[5].

References

1. ^ [1]
2. ^ Sterman, John D. (2001). "System dynamics modeling: Tools for learning in a complex world". California management review 43 (1): 8-25.
3. ^ [2]
4. ^ Repenning, Nelson P. (2001). "Understanding fire fighting in new product development". The Journal of Product Innovation Management 18: 285 – 300.
5. ^ Repenning, Nelson P. (1999). "Resource dependence in product development improvement efforts". Massachusetts Institute of Technology Sloan School of Management Department of Operations Management/System Dynamics Group.

Literature

Sterman, John D. (2000). Business Dynamics: Systems thinking and modeling for a complex world. McGraw Hill. ISBN 0-07-231135-5.
Meadows, Donella H. (1972). Limits to Growth. New York: University books. ISBN 0-87663-165-0.
Senge, Peter (1990). The Fifth Discipline. Currency. ISBN 0-385-26095-4.
Forrester, Jay W. (1961). Industrial Dynamics. MIT Press. SBN 262-06003-5.

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• • [ e] Global structure in Systems, Systems sciences and Systems scientists
Categories
Systems	Biological system Complex system Complex adaptive system Conceptual system Cultural system Dynamical system Economic system Ecosystem Formal system Global Positioning System Human organ systems Information systems Legal system Metric system Nervous system Non-linear system Operating system Physical system Political system Sensory system Social system Solar System System Systems of measurement
Fields of theory	Chaos theory Complex systems Control theory Cybernetics Holism in science Sociotechnical systems theory Systems biology Systems dynamics Systems ecology Systems engineering Systems theory Systems science
Systems scientists	Russell L. Ackoff William Ross Ashby Gregory Bateson Ludwig von Bertalanffy Kenneth E. Boulding C. West Churchman Heinz von Foerster Charles Franois Jay Wright Forrester Ralph W. Gerard Debora Hammond George Klir Niklas Luhmann Humberto Maturana Donella Meadows Mihajlo D. Mesarovic Howard T. Odum Talcott Parsons Ilya Prigogine Anatol Rapoport Francisco Varela John N. Warfield Norbert Wiener

Complex system is a system comprised of interconnected simple parts, that together exhibit a high degree of complexity from which emerges a higher order behavior. Examples of complex systems include ant-hills, ants themselves, human economies, climate, nervous systems, cells and
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stock in business and social accounting refers to the value of an asset at a balance date (or point in time), while a flow refers to the total value of transactions (sales or purchases, incomes or expenditures) during an accounting period.
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nonlinear system is a system which is not linear i.e. a system which does not satisfy the superposition principle. Less technically, a nonlinear system is any problem where the variable(s) to be solved for cannot be written as a linear sum of independent components.
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Systems theory is an interdisciplinary field of science. It studies the nature of complex systems in nature, society, and science. More specificially, it is a framework by which one can analyze and/or describe any group of objects that work in concert to produce some result.
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chaos theory describes the behavior of certain nonlinear dynamical systems that under specific conditions exhibit dynamics that are sensitive to initial conditions (popularly referred to as the butterfly effect).
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Social dynamics is the study of the ability of a society to react to inner and outer changes and deal with its regulation mechanisms. Social dynamics is a mathematically inspired approach to analyse societies, building upon systems theory and sociology.
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Integration is a process of combining or accumulating. It may also refer to:

The bringing together of two or more economies, cultures, religions (usually called syncretism), etc.

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See Language (journal) for the linguistics journal.

A language is a system of symbols and the rules used to manipulate them. Language can also refer to the use of such systems as a general phenomenon.
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Parsimony is a 'less is better' concept of frugality/economy/stinginess or caution in arriving at a hypothesis or course of action. The word derives from Middle English parcimony, from Latin parsimonia, from parsus, past participle of parcere:
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Process (lat. processus - movement) is a naturally occurring or designed sequence of changes of properties or attributes of an object or system^[1]^[2]^[3]^[4]^[5]^[6]^[7].
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An adaptation is a positive characteristic of an organism that has been favored by natural selection.^[1] The concept is central to biology, particularly in evolutionary biology.
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worldwide view.

2nd millennium
Centuries: 19th century - 20th century - 21st century

1920s 1930s 1940s - 1950s - 1960s 1970s 1980s
1950 1951 1952 1953 1954
1955 1956 1957 1958 1959

- -
- The 1950s
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Jay Wright Forrester (born 14 July 1918, Climax, Nebraska) is a pioneer American computer engineer, systems scientist and was professor at the MIT Sloan School of Management.
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The MIT Sloan School of Management is one of the five schools of the Massachusetts Institute of Technology, located in Cambridge, Massachusetts, USA. It is one of the world's leading business schools, conducting research and teaching in finance, entrepreneurship, marketing,
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Electrical engineering (sometimes referred to as electrical and electronic engineering) is an engineering field that deals with the study and/or application of electricity, electronics and electromagnetism.
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19th century - 20th century - 21st century
1920s 1930s 1940s - 1950s - 1960s 1970s 1980s
1953 1954 1955 - 1956 - 1957 1958 1959

Year 1956 (MCMLVI
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19th century - 20th century - 21st century
1920s 1930s 1940s - 1950s - 1960s 1970s 1980s
1954 1955 1956 - 1957 - 1958 1959 1960

Year 1957 (MCMLVII
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A causal loop diagram(CLD) is a diagram that aids in visualizing how interrelated variables affect one another. The diagram consists of a set of nodes representing the variables connected together.
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spreadsheet is a rectangular table (or grid) of information, often financial information. The word came from "spread" in its sense of a newspaper or magazine item (text and/or graphics) that covers two facing pages, extending across the center fold and treating the two pages as one
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Population dynamics is the study of marginal and long-term changes in the numbers, individual weights and age composition of individuals in one or several populations, and biological and environmental processes influencing those changes.
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Ecology (also known as Oekologie, Okology, or Oekology^[1],from Greek: οίκος, oikos, "household"; and λόγος, logos
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Economics is the social science that studies the production, distribution, and consumption of goods and services. The term economics comes from the Greek for oikos (house) and nomos (custom or law), hence "rules of the house(hold).
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Systems thinking is an approach to integration that is based on the belief that the component parts of a system will act differently when isolated from the system's environment or other parts of the system.
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A mental model is an explanation in someone's thought process for how something works in the real world. It is a kind of internal symbol or representation of external reality, hypothesized to play a major role in cognition and decision-making.
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computer simulation, a computer model or a computational model is a computer program that attempts to simulate an abstract model of a particular system. Computer simulations have become a useful part of mathematical modelling of many natural systems in physics
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For other uses, see Model.

An abstract model (or conceptual model) is a theoretical construct that represents something, with a set of variables and a set of logical and quantitative relationships between them.
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