Business dynamics - Introduction
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Transcript of Business dynamics - Introduction
BUSINESS DYNAMICS
CHAPTER ILEARNING IN AND ABOUT
COMPLEX SYSTEMS S T A R T
ACCELERATING CHANGESARE TRANSFORMING OUR WORLD
Changes in:TECHNOLOGY POPULATION ECONOMIC ACTIVITY
FROM THE PROSAIC…
TO THE PROFOUND
Traditional Institutions Practices
Beliefs
ALL CHANGES CHALLENGE
MOST OF THE CHANGES ARISES AS CONSEQUENCES OF HUMANITY ITSELF
Well-intentioned efforts to solve pressing problems lead to
POLICY RESISTANCE
Many times our best efforts to solve a problem actually MAKE IT WORSE
LAW OF ACCELERATION
INTERCONNECTED WORLD
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 ?
WE MUST NOT ONLY FLY BUT REDESIGN IN FLIGHT
WE ARE ALL PASSENGERS ON AN AIRCRAFT
System Dynamics is a method to enhance learning in
complex systems ”
“
SYSTEM DYNAMICSWhat is it?
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
INTERDISCIPLINARYSystem 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
POLICY RESISTANCE, THE LAW OF UNINTENDED CONSEQUENCES, AND THE COUNTERINTUITIVE BEHAVIOR OF SOCIAL SYSTEMS
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”
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.
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.
EXAMPLES
0102 03
BIRTH RATE IN ROMANIA
FIGHT AGAINST INFLATION
ANTIBIOTICS VS DRUG-‐RESISTANCE
CAUSES OF POLICY RESISTANCE
EFFECT
CAUSE
WHAT DEFINES OUR PROBLEM
0,0
1,3
2,5
3,8
5,0
0 1 2 3 4
DESIRED
PERCEIVED
GAP
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
FEEDBACK
POSITIVE FEEDBACK
SELF-REINFORCING
NEGATIVE FEEDBACK
SELF-CORRECTING
The dynamics of all systems arise from the INTERACTIONS of these networks of
FEEDBACKS
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
X
DYNAMIC COMPLEXITYSystem 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
TIME DELAYSTime delays between taking a decision and its effects on the state of the system are common and particularly troublesome.
01
02
03Dynamic 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.
DYNAMIC COMPLEXITY
SYSTEMS ARE
DYNAMIC
TIGHTLY COUPLED
GOVERNED BY FEEDBACK
NONLINEAR
HISTORY-DEPENDENTSELF-
ORGANIZING
COUNTERINTUITIVEPOLICY
RESISTANT
TRADE-OFFS
Why dynamic complexity arises?
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:
LEARNING REMAINS
SLOWAs the rate of change accelerates throughout society, learning remains slow, uneven, and inadequate
BARRIERS TO LEARNING
DYNAMIC COMPLEXITYLIMITED INFORMATION
CONFOUNDING VARIABLES AND AMBIGUITY
BOUNDED RATIONALITY AND THE MISPERCEPTIONS OF FEEDBACK
ERRONEOUS INFERENCES ABOUT DYNAMICS
FLAWED COGNITIVE MAPS
UNSCIENTIFIC REASONING: JUDGMENTAL ERRORS AND BIASES
IMPLEMENTATION FAILURE
DEFENSIVE ROUTINES AND INTERPERSONAL IMPEDIMENTS TO LEARNING
REQUIREMENTS FOR SUCCESSFUL LEARNING IN COMPLEX SYSTEMS
Improving the Learning Process: Virtues of Virtual Worlds
Pitfalls of Virtual Worlds
Why Simulation Is Essential
T H A N K S F O R W A T C H I N G
You can't do just one thing