Strategic Modelling and Business Dynamics: A Feedback Systems Approach

1.6. Preview of the Book and Topics Covered

The fisheries simulator demonstrates a general point that dynamic complexity within business and social systems make management and strategy development difficult. The performance of firms and industries over time rarely unfolds in the way we expect or intend. The purpose of strategic modelling and business dynamics is to investigate dynamic complexity by better understanding how the parts of an enterprise operate, fit together and interact. By modelling and simulating the relationships among the parts we can anticipate potential problems, avoid strategic pitfalls and take steps to improve performance.

The rest of the book demonstrates the art and science of system dynamics modelling. Chapter 2 introduces causal loop diagrams as a powerful conceptual tool to visualise interdependencies and take a strategic overview of operations. Chapter 3 introduces the additional concepts and tools required to translate causal loops into algebraic models and simulators. Chapter 4 provides an opportunity to experiment with a simulator and gain insight into cyclical dynamics by 'managing' the water temperature in an imaginary hot water shower. At first glance, World of Showers is far removed from the worlds of business or public policy, but the gaming simulator vividly illustrates the coordination problem at the heart of balancing loop dynamics found in many practical management situations. Players can also redesign the shower model to improve personal ...