Business Dynamics Fall 2007 2 PR 40123/3 KFK PM/LM: Praktikum (E) Christoph Mandl Phone 01-8923736-0 e-mail christoph.mandl@univie.ac.at Contents Business Dynamics is a scientific approach and a set of conceptual tools that enable us to understand the dynamics of organizations and of markets and the relationship between organizational behavior patterns and organizational structure. Analyzing the effects of time delays and of feedback loops are at the core of Business Dynamics and also constitute the main difference to other disciplines of Business and Management Science. Understanding the dynamics of a market, of an organization or parts of it as results of layers of time delays and of feedback loops helps to better control or influence an organization's (strategic) development. Specific observable behaviors and phenomena of markets or of organizations, e.g. exponential growth, S-shaped growth, oscillation, collapse or chaos, can be better understood and thus managed through Business Dynamics. In this course the concepts of Business Dynamics will be learned through participation in a systemic lab, through theory and cases, through experimenting with Business Dynamics Models, through analyzing Systems Archetypes, and through reading articles. In study groups, certain aspects of Business Dynamics will be researched, written assignments prepared and presentations given and discussed with all participants. Grading The class will be graded as follows: Assignment and Presentation I 35% Assignment and Presentation II 20% Assignment and Presentation III 30% Class participation 15% Class participation It is very important that you attend every class, because we cover a great deal of material and the later classes build on work covered earlier in the semester. Cutting class will adversely affect your class participation grade and, more importantly, your own and your classmates experience in the class. If you do have to miss a session, it will be your responsibility to find out from classmates what materials were covered. I also expect you to arrive at class on time and actively stay engaged in the class discussion and learning from beginning to end! Assignment and Presentation I You are required to give a presentation of your assignment I. The presentation must take at least 35 minutes but not more than 40 minutes. Afterwards there will be time for questions. You are required to hand in your paper on which the presentation is based when you give your presentation. The topics and due dates of this assignment are on the last pages of the syllabus. The grading of the presentation will depend on the quality and clarity of thought evident in your paper and on the quality of the presentation itself. September 1, 2007 Page 1
Assignment and Presentation II Together with one colleague you are required to build, run and analyze a computer model of one Systems Archetype with Vensim. All groups of two are required to present their computer model and their analysis in a 10 minutes presentation in Class 10. You are also required to hand in a documented copy - see John Sterman, Business Dynamics, Chapter 21 Validation and Model Testing - of your Vensim model via email or via CD. Assignment and Presentation III Together with one colleague (but not the same as in assignment II) you are required to identify and describe a real world question that can best be analyzed and understood through Business Dynamics. This real world question you have to model with Vensim, validate and test it and analyze it. All groups of two are required to present their question, their computer model and their findings in a 10 minutes presentation in Class 12. You are also required to hand in a documented copy - see John Sterman, Business Dynamics, Chapter 21 Validation and Model Testing - of your Vensim model via email or via CD. Detailed Outline Class 0: October 11, 13:00 hrs, Seminarraum 3 Introduction and Assignments I Class 1: October 18, 13:00 hrs, Seminarraum 3 Fish Banks Ltd. Class 2: October 18, 14:45 hrs, Seminarraum 3 Systems Thinking and Fish Banks Ltd. Class 3: November 15, 13:00 hrs, Seminarraum 3 a) Learning in and about Complex Systems b) System Dynamics in Action Class 4: November 15, 14:45 hrs, Seminarraum 3 c) Modeling Process and Structure and Behavior of Dynamic Systems d) Causal Loop Diagrams Class 5: November 22, 13:00 hrs, Seminarraum 3 e) Stocks and Flows f) Places to Intervene in a System Class 6: November 22, 14:45 hrs, Seminarraum 3 g) What are Systems Archetypes? and Growth and Underinvestment h) Fixes that Fail and Shifting the Burden Class 7: November 29, 13:00 hrs, Seminarraum 3 i) Limits to Growth j) Drifting Goals and Escalation Class 8: November 29, 14:45 hrs, Seminarraum 3 k) Innovation Diffusion l) Tragedy of the Commons September 1, 2007 Page 2
Class 9: December 13, 13:00 hrs, Seminarraum 3 m) Path Dependence and Positive Feedback Presentation of all Assignments II Class 10: December 13, 14:45 hrs, Seminarraum 3 Presentation of all Assignments II Class 11: January 24, 13:00 hrs, Seminarraum 3 n) Validation and Model Testing Presentation of all Assignments III Class 12: January 24, 14:45 hrs, Seminarraum 3 Presentation of all Assignments III Questions and Problems In case of problems or questions you can contact me via e-mail or phone. Software Downloads You need to download Software and Models for free to build your Business Dynamics models for your assignments II and III Download Vensim Software from www.vensim.com/freedownload.html Download Vensim Documentation from www.vensim.com/documentation.html Download the Vensim Models presented in John Sterman: Business Dynamics from www.mhhe.com/business/opsci/sterman/models.mhtml Required Reading for Assignment I a) John Sterman: Business Dynamics, Chapter 1 Learning in and about Complex Systems, pp 3-39 b) John Sterman: Business Dynamics, Chapter 2 System Dynamics in Action, pp 41-81 c) John Sterman: Business Dynamics, Chapter 3 & 4 The Modeling Process & Structure and Behavior of Dynamic Systems, pp 83-133 d) John Sterman: Business Dynamics, Chapter 5 Causal Loop Diagrams, pp 137-190 e) John Sterman: Business Dynamics, Chapter 6 & 7 Stocks and Flows & Dynamics of Stocks and Flows, pp 191-262 f) Donella Meadows, Places to Intervene in a System, Whole Earth, Winter 1997, http://www.sustainabilityinstitute.org/pubs/leverage_points.pdf g) Peter Senge: The Fifth Discipline, Chapter 6 & Appendix 2 Nature s Templates & Systems Archetypes, pp 93-113 & 378-390 Gene Bellinger, Growth and Underinvestment, www.systems-thinking.org/theway/sgu/gu.htm September 1, 2007 Page 3
h) Daniel Kim, Fixes that Fail - Why Faster is Slower, www.balancedreading.com/quickfix.pdf Gene Bellinger, Fixes that Fail, www.systems-thinking.org/theway/sff/ff.htm Peter Senge et al.: The Fifth Discipline Fieldbook, Chapter 17 & 18 & 19 The Language of Systems Thinking & The Archetype Family Tree & Systems Sleuth, pp 121-161 The Water of Ayolé, http://www.greenstar.org/videos.htm Gene Bellinger, Shifting the Burden, www.systems-thinking.org/theway/ssb/sb.htm i) Peter Senge: The Fifth Discipline, Chapter 6 Nature s Templates, pp 93-113 Gene Bellinger, Limits to Growth, www.systems-thinking.org/theway/slg/lg.htm Donella H. Meadows u.a.: The Limits to Growth - The 30-Year Update, 2004 http://www.thesystemsthinker.com/v16n9.pdf j) Gene Bellinger, Drifting Goals, www.systems-thinking.org/theway/sdg/dg.htm Gene Bellinger, Escalation, www.systems-thinking.org/theway/ses/es.htm Peter Senge: The Fifth Discipline, Appendix 2 Systems Archetypes, pp 378-390 k) John Sterman: Business Dynamics, Chapter 9 S-Shaped Growth, pp 295-347 l) Gene Bellinger, Tragedy of the Commons, www.systems-thinking.org/theway/stc/tc.htm Peter Senge et al.: The Fifth Discipline Fieldbook, Chapter 17 The Language of Systems Thinking, pp 121-148 Peter Senge: The Fifth Discipline, Appendix 2 Systems Archetypes, pp 378-390 m) John Sterman: Business Dynamics, Chapter 10 Path Dependence and Positive Feedback, pp 349-406 n) John Sterman: Business Dynamics, Chapter 21 Truth and Beauty: Validation and Model Testing, pp 845-891 Recommended Reading W. Brian Arthur, Complexity and the Economy. Science, 2 April 1999, 284, 107-109, or www.santafe.edu/arthur/papers/pdf_files/econ_&_complex_web.pdf Albert-László Barabási, Linked. Plume 2003 John H. Holland, Hidden Order: How Adaptation Builds Complexity. Addison Wesley 1996 Steven Johnson, Emergence: The Connected Lives of Ants, Brains, Cities, and Software. Scribner 2002 Grégoire Nicolis and Ilya Prigogine, Exploring Complexity. Freeman 1989 Steven Strogatz, Sync: How Order Emerges from Chaos in the Universe, Nature, and Daily Life. Theia 2004 Mitchell Waldrop, Complexity: The Emerging Science at the Edge of Order and Chaos. Simon & Schuster 1993 Duncan Watts, Six Degrees: The Science of a Connected age. Norton 2004 September 1, 2007 Page 4
Recommended Websites http://web.mit.edu/jsterman/www/ http://web.mit.edu/sdg/www/index2.html www.clexchange.org www.mhhe.com/business/opsci/sterman/student.mhtml www.sd3.info www.sustainer.org www.systemdynamics.org www.systemdynamics.org/dl-introsysdyn/index.html www.systems-thinking.org www.uni-klu.ac.at/~gossimit/linklist.php September 1, 2007 Page 5