System dynamics

Why is achieving innovation so difficult? Why do many efforts to produce impactful and lasting results fail? Why is building sustainable organizational capabilities for achieving impact a challenge? How can we design effective, high-impact policies without unforeseen side effects?

Environmental stress and accelerating economic, social, and technological changes challenge managers and policymakers to learn how to design and manage high-leverage and robust strategies and policies. Thus, it is a growing requirement for us to learn how to design and manage complex systems with multiple feedback effects, long-time delays, and nonlinear responses to our decisions. However, learning in such situations is tough since we often don't face the full consequences of our decisions. To promote effective decisions, we need tools for system thinking, dynamic complexity analysis, and accelerated organizational learning.

This course introduces the students to systems thinking for organizational policies and strategies with a specific focus on innovation and sustainability issues. They will learn to visualize an organization and its broader environment in terms of the structures and policies, which create dynamics and regulate performance. They will also perform dynamic analysis to examine the long-term side effects of decisions, systematically explore new strategies, and develop their understanding of complex systems.

On this basis, in the first lectures of the course, we will deal with a variety of subjects related to systems thinking, such as policy resistance, positive and negative feedback, bounded rationality, misperceptions of feedback, fundamental modes of dynamic behavior (exponential growth, oscillation) and causal loop diagramming. Then, we will discuss data collection and analyses for model building, pointing at various methods, including but not limited to, focus groups, interviews, and the Gioia method (assumed prerequisite knowledge), to develop grounded models. Participatory system dynamics model building, as an invaluable way to increase stakeholder engagement in model building, will also be focused on in this vein to help students learn how to build models to address issues and challenges in different organizations. We then continue with formal system dynamics modeling, by dealing with stocks and flows diagramming, the mathematical relationship between stocks and flows (integration and differentiation), delays, modeling human behavior (micro-level), modeling supply chains (meso-level), technological innovation systems (macro-level).

In the next part of the course, students will perform a group assignment in which a system dynamics model is developed based on a case description of innovation and sustainability business processes. With this model, students will better understand the mechanisms underlying the behavior of the system, and develop scenarios to improve its performance.

By the end of this course, students will be able to:

1. explain how the internal structure of businesses, and societal, environmental, and economic systems create the behavior and performance of these systems.
2. apply principles of policy and business design for the successful management of complex integrative strategies.
3. can identify and analyze situations in which interventions and their outcomes are prone to be delayed, diluted, or defeated by unexpected reactions and unintended consequences.
4. can apply a range of systems dynamics tools, such as causal loop diagrams, stock-and-flow mapping, and formal mathematical modelling for modeling human behavior, supply chains, and technological innovation systems.
5. can evaluate the feedback behavior of systems through simulation analysis.
6. have basic knowledge about data collection for system dynamics model building and participatory system dynamics modeling.
7. can model basic complex systems and mathematically simulate their behavior.

You must meet one of the following collections of requirements

• Collection 1
• Completed Final examination Bsc program
• Collection 2
• Completed Pre-Master

• J.D. Sterman, Business Dynamics - Systems Thinking and Modeling for a Complex World, 2000, McGraw-Hill
• Vensim PLE (Ventana Systems) https://vensim.com Free to use software package, with the academic PLE licence.