Business dynamics - Introduction
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The document discusses the challenges and complexities of learning in dynamic systems, highlighting how accelerating changes in technology, population, and economics can create unintended consequences and policy resistance. It emphasizes the importance of understanding feedback loops and dynamics in systems thinking to improve decision-making and learning processes. The need for simulation and an interdisciplinary approach is also underscored to navigate the complexities of human and natural systems.
Business dynamics - Introduction
- 2. CHAPTER I LEARNING IN AND ABOUT COMPLEX SYSTEMS S T A R T
- 3. ACCELERATING CHANGES ARE TRANSFORMING OUR WORLD Changes in: TECHNOLOGY POPULATION ECONOMIC ACTIVITY
- 4. FROM THE PROSAIC… TO THE PROFOUND
- 6. MOST OF THE CHANGES ARISES AS CONSEQUENCES OF HUMANITY ITSELF
- 7. Well-intentioned efforts to solve pressing problems lead to POLICY RESISTANCE Many times our best efforts to solve a problem actually MAKE IT WORSE
- 10. TOOLS AND PROCESSES How to move from generalizations about accelerating learning and systems thinking to tools and processes that help us understand complexity, design better operating policies, and guide change in systems from the smallest business to the planet as a whole ?
- 11. WE MUST NOT ONLY FLY BUT REDESIGN IN FLIGHT WE ARE ALL PASSENGERS ON AN AIRCRAFT
- 12. System Dynamics is a method to enhance learning in complex systems” “ SYSTEM DYNAMICS What is it?
- 13. Dinâmica dos sistemas é uma área de conhecimento que busca disponibilizar mecanismos para nos auxiliar no melhor entendimento das consequências resultantes das diversas interações cíclicas (informações de feedback) existentes entre os nós /eventos de um sistema. D E F I N I Ç Ã O D A D U P L A
- 14. INTERDISCIPLINARY System dynamics is fundamentally interdisciplinary BEHAVIOR OF COMPLEX SYSTEMS Theory of nonlinear dynamics and feedback control SYSTEM DYNAMICS BEHAVIOR OF HUMAN Cogni6ve and social psychology, economics, and other social sciences
- 15. POLICY RESISTANCE, THE LAW OF UNINTENDED CONSEQUENCES, AND THE COUNTERINTUITIVE BEHAVIOR OF SOCIAL SYSTEMS
- 16. And it will fall out as in a complica1on of diseases, that by applying a remedy to one sore, you will provoke another; and that which removes the one ill symptom produces others .. . . -‐ Sir Thomas More Anything that can go wrong WILL go wrong. -‐“Murphy”
- 17. People seeking to solve a problem o;en make it worse. Our decisions may provoke reac6ons by others seeking to restore the balance. Our policies may create unan6cipated side effects. Our aAempts to stabilize the system may destabilize it.
- 18. COUNTERINTUITIVE BEHAVIOR OF SOCIAL SYSTEMS Unexpected dynamics o;en lead to policy resistance, the tendency for interven6ons to be delayed, diluted, or defeated by the response of t h e s y s t e m t o t h e interven6on itself.
- 19. EXAMPLES 01 02 03 BIRTH RATE IN ROMANIA FIGHT AGAINST INFLATION ANTIBIOTICS VS DRUG-‐ RESISTANCE
- 20. CAUSES OF POLICY RESISTANCE
- 21. EFFECT CAUSE
- 22. WHAT DEFINES OUR PROBLEM 0,0 1,3 2,5 3,8 5,0 0 1 2 3 4 DESIRED PERCEIVED GAP
- 25. FEEDBACK vMuch of the art of system dynamics modeling is discovering and representing the feedback processes. vThe most complex behaviors usually arise from the interactions (feedbacks) among the components of the system, not from the complexity of the components themselves
- 27. The dynamics of all systems arise from the INTERACTIONS of these networks of FEEDBACKS
- 28. LEARNING IS A FEEDBACK PROCESS As dynamics arise from feedback, all learning depends on feedback WE MAKE DECISIONS THAT ALTER THE REAL WORLD WE GATHER INFORMATION FEEDBACK ABOUT THE REAL WORLD W E R E V I S E O U R UNDERSTANDING OF THE WORLD
- 29. X
- 30. DYNAMIC COMPLEXITY System dynamics emphasized the mul6loop, mul6-‐ state, nonlinear character of the feedback systems in which we live These loops react to the decision maker’s ac6ons in ways both an6cipated and unan6cipated Dynamic complexity can arise even in simple systems with low combinatorial complexity. Dynamic Complexity arises from the interactions among the agents over time. There may be posi6ve as well as nega6ve feedback loops These loops will contain many stocks (state variables) and many nonlineari6es Natural and human systems have high levels of dynamic complexity
- 31. TIME DELAYS Time delays between taking a decision and its effects on the state of the system are common and particularly troublesome. 01 02 03 Dynamic complexity not only slows the learning loop; it also reduces the learning gained on each cycle Delays reduce the number of times one can cycle around the learning loop, slowing the ability to accumulate experience, test hypotheses, and improve.
- 32. DYNAMIC COMPLEXITY SYSTEMS ARE DYNAMIC TIGHTLY COUPLED GOVERNED BY FEEDBACK NONLINEAR HISTORY- DEPENDENTSELF- ORGANIZING COUNTERINTUITIVE POLICY RESISTANT TRADE-OFFS Why dynamic complexity arises?
- 34. 01 Each link in the two feedback loops must work effectively 02 We must be able to cycle around the loops quickly FOR LEARNING TO OCCUR:
- 35. LEARNING REMAINS SLOW As the rate of change accelerates throughout society, learning remains slow, uneven, and inadequate
- 36. BARRIERS TO LEARNING DYNAMIC COMPLEXITY LIMITED INFORMATION CONFOUNDING VARIABLES AND AMBIGUITY BOUNDED RATIONALITY AND THE MISPERCEPTIONS OF FEEDBACK
- 37. ERRONEOUS INFERENCES ABOUT DYNAMICS FLAWED COGNITIVE MAPS UNSCIENTIFIC REASONING: JUDGMENTAL ERRORS AND BIASES
- 39. REQUIREMENTS FOR SUCCESSFUL LEARNING IN COMPLEX SYSTEMS Improving the Learning Process: Virtues of Virtual Worlds Pitfalls of Virtual Worlds Why Simulation Is Essential
- 40. T H A N K S F O R W A T C H I N G You can't do just one thing