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Business Dynamics Through Simulation: Understanding Business Complexity for Leveraging Long Lasting Solutions


Business is a System, and it is a dynamic one that needs different techniques, methodologies and even philosophies to understand and to deal with. Decision making and policy design processes in the context of such complexity, range from subjective to objective practice. One of the crucial aspects in the policy design and decision making process is obviously the policy and decision makers and their understanding about reality. Whether he/she is risk-taker or conservative, there should be a route to follow to reach less risky sound intervention. Many respectable methodologies are out there to help policy and decision makers in their intervention journey. However, most of them include linear-based thinking process to define problem and hence to choose the least risky intervention within the given circumstances and conditions. Unfortunately this kind of linear based thinking process ignores a lot of important and yet not easy to recognize aspects, such as side effects of our intervention and the unintended consequences due to the presence of delay and feedbacks within our context.

Modeling/Simulation technique such as Systems Dynamics is considered as a methodology that takes into consideration, the delay and the feedback nature that exist in our context. Accordingly any policy design and decision making methodology that neglect such features and nature will probably lead to high risk intervention.

System Dynamics will help in answering many critical questions such as: Why solutions are delayed, diluted or defeated and others fail to produce lasting results? Why many times our best efforts to solve problems by making new decision actually make it worse? Why do some firms grow while others stagnate?  How do once-dominant countries or even firms lose their competitive edge?  And how can a country or firm identify and design or redesign high-leverage actions and solutions that are not thwarted by unanticipated side effects?

Objectives and Scope

System Dynamics allows us to create ‘microworlds,’ management flight simulators where space and time can be compressed, slowed, and stopped so we can experience the long-term side effects of an intervention, systematically explore new strategies, and develop our understanding of complex systems. We use simulation models, case studies, and management flight simulators to develop principles of policy design for successful management of complex strategies.

The principal purpose of modeling is to improve our understanding of the ways in which an organization's performance is related to its internal structure and operating policies as well as those of customers, competitors, and suppliers.  During this program participants will use several simulation models to explore such strategic issues. Participants will learn to recognize and deal with situations where policy interventions are likely to be delayed, diluted, or defeated by unanticipated reactions and side effects.  They will have a chance to use state of the art software for computer simulation.

This program introduces to the participants the system dynamics modeling for the analysis of policy and strategy.  They will learn to visualize an organization in terms of the structures and policies that create dynamics and regulate performance.

System Dynamics is a paradigm and methodology for dealing with complex situations underlying business, economics, scientific, and social systems. Systems Thinking views the organization as a whole and focuses on interdependencies and links between various departments, functions and divisions and how they impact each other and the entire organization.

Key Issues to be covered:

·         What is Systems Thinking?

o   Why do we think the way we do? The origins of modern thinking

o   What is a system and what is not? Systems and non-systems

o   Why do leaders need Systems Thinking?

o   How do we make sense of the world? Four Levels of Thinking

o   Why do organizations fail?

o   How to design effective policies and strategy?

o   How to avoid between policies (strategies) conflict?

·         System Structure and Behavior over Time

o   Dynamics: Feedback Loops, Delay

o   System Archetypes

·         System Dynamics Process (5-Phase Process)

o   Phase 1: Problem Articulation

o   Phase 2: Causal Loop Diagram CLD (Dynamic Hypothesis)

§  Naming Variables and Meaning etc …

§  Naming Feedback Loops, etc.

o   Phase 3: Simulation Model (Stock & Flow Concept)

§  Introduction in Simulation     

§  Tutorial: iThink or Vensim Introduction

§  Quantification & Measurements

§  Challenges: Units, Equations, etc ..

o   Phase 4: Testing and Validation

§  Sensitivity Analysis

§  Extreme Testing

§  Decision and Policy Design

o   Phase 5: Implementation

§  Build a simple Model using Software

Expected Learning

At the conclusion of the workshop, participants will be able to use System Dynamics concepts and tools to model, simulate and explain complexity and hence to make better decision and intervention. They will be able to draft a design of new policies/strategies/decisions and or the already-existing policies/strategy in effective way. They will be able to recognize the dynamic and interdependent nature of recurring problems and to identify key leverage points for lasting decisions and solutions.

Who Should Attend

  • Executives, Senior Managers reporting to CEOs (CFO, CIO, CMO, Head of Strategy)
  • Divisional Managers of large organizations
  • Middle managers who are planned to be Executives
  • Researchers and Modelers

Duration and Delivery

This program requires 24 contact hours which will be delivered during 3 full days. The workshop will be participatory and interactive in style and will integrate presentations, group discussion, and case studies.

Special software will be used such as Vensim or/and iThink for model building and simulation.