Introduction to System Dynamics

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What do I mean by System?

A System is an interconnected series of pieces that work together to achieve some objective. Economy Competitors

Culture Price Wars R&D Spending Employee Satisfaction Profit Margin Install Cycle Time Staff Skillset Morale
Market Share
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Customer Satisfaction

Growth

What is System Dynamics?

System dynamics is an approach to understanding the behavior of complex systems over time. It deals with internal feedback loops and time delays that affect the behavior of the entire system. Developed in the 1950s at MIT and used across disciplines: notably business, the urban planning, then the environment, etc.

The Study of: Complex Cause and Effect relationships over time Understanding the future consequences of todays actions Death Spirals & Virtuous Circles Business irony: Things get worse before they get better Success begets success / Success to the Successful / The Rich get Richer The Law of unintended consequences Fixes that backfire The harder you push, the harder they push back Improves in the short-term, gets worse in the long term. Tipping Points
Advanced Version: Building Management Flight Simulators
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Hierarchy of Behavior Events

East Hospital has a bug in release 4.0

Patterns

Release 4.0 was released too soon (like many releases)

Increasing Leverage as You understand and solve the deeper problem

Systems

Bringing in revenue pressures teams to release early (perhaps causing problems and reducing revenue in the future)

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Seeing the World in Loops

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An Interchange after a Team Leadership Class

Senior Leader: We were debating as a team whether we win because we are cohesive or are we cohesive because we win CEO: Which is it? Senior Leader: We decided that we win because we are cohesive

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Which Causes Which? Team Success Team Success Team Cohesion Team Cohesion

Could it be both?? Team Success

Team Cohesion

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A Feedback Loop Team Success Team Cohesion

Can be written as

Team Success

Team Cohesion

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Interchange at CEO Staff Meeting

Regional Leader: We are missing our numbers because NPIs are late

Late NPIs

Missing Numbers

Any other relation you can think of?

Late NPIs

Missing Numbers

NPI = New Product Introduction

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Another Feedback Loop

Late NPIs

Missing Numbers
Missing Numbers

Late NPIs

Limited Hiring or Backfilling

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