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2013/2014  KAN-CM_V89  Introduction to System Dynamics

English Title
Introduction to System Dynamics

Course information

Language English
Exam ECTS 7.5 ECTS
Type Elective
Level Full Degree Master
Duration One Semester
Course period Autumn
Changes in course schedule may occur
Thursday 08.00-10.35, week 36-41, 43-45
Thursday 08.00-09.40, week 46-48
Time Table Please see course schedule at e-Campus
Study board
Study Board for MSc in Economics and Business Administration
Course coordinator
  • Christian Erik Kampmann - Department of Innovation and Organizational Economics (INO)
Administration: Mie Maahr Hegelund, INO, mmh.ino@cbs.dk
Main academic disciplines
  • Business psychology
  • Innovation and entrepreneurship
  • Supply Chain Management and Logistics
  • Financial and management accounting
  • Statistics and mathematics
  • Corporate and Business Strategy
  • Economics, macro economics and managerial economics
  • Methodology
Last updated on 12-11-2013
Learning objectives
To be awarded the highest mark (12), the student, with no or just a few insignificant shortcomings, should be able to:
  • account for the elements of the systems approach, compare it to other social-science approaches, and discuss its strengths and weaknesses,
  • formulate simple model structures to represent a variety of (relatively well-structured) business and social issues/problems,
  • analyze the behavior of given computer models,
  • identify flaws or weaknesses in model structures and show how to resolve them,
  • show how to apply systems thinking to conceptualize and analyze less well-structured business and social problems, and
  • account for the selected specific systemic business and social phenomena encountered in the course.
Course prerequisites
Open to all CBS, DTU and UCPH graduate students.
Introduction to System Dynamics:
Examination form Written sit-in exam
Individual or group exam Individual
Assignment type Written assignment
Duration 4 hours
Grading scale 7-step scale
Examiner(s) One internal examiner
Exam period December/January and February, Exam must be on Friday December 13 9.00 - 13.00 to accomodate DTU student modular schedule.
Aids allowed to bring to the exam Limited aids, see the list below and the exam plan/guidelines for further information:
  • Books and compendia brought by the examinee
  • Notes brought by the examinee
  • Allowed dictionaries
Make-up exam/re-exam
Same examination form as the ordinary exam
If the number of registered candidates for the make-up examination/re-take examination warrants that it may most appropriately be held as an oral examination, the programme office will inform the students that the make-up examination/re-take examination will be held as an oral examination instead.
Description of the exam procedure
PC exam on CBS computers with print.
It is not allowed to bring your own PC and printer.
No access to the internet and LEARN.
Access to personal S:/drive.
Before the exam starts information can also be uploaded from a USB-key to PC, then the USB-Key should be put away during exam.
Course content and structure

A striking feature of today’s business environment is the interconnectedness and complexity of almost every aspect of business practice.  The globalized economy, the explosion in information and communication capacity, the increased concern with global environmental degradation and climate change, the opening up and acceleration of innovation and R&D, and the transformation of firm offerings from isolated products to platform-based services are some of the underlying drivers of this trend.  As a consequence, the success or failure of a firm strategy depends crucially upon how the firm interacts with surrounding entities, as well as how the internal parts of the organization interact across traditional boundaries, more than it depends upon the individual performance of these parts.  In a word, business conditions are increasingly systemic and the environment characterized by dynamic complexity.
In order to meet the challenge we must learn how to design and manage complex systems with multiple feedback effects, long time delays, and nonlinear responses to our decisions.  Yet learning in such environments is difficult precisely because we never confront many of the consequences of our most important decisions. Effective learning in such environments requires methods to develop systems thinking and tools that managers can use to accelerate learning throughout an organization.
The course introduces you to systems thinking and system dynamics modeling for the analysis of business policy and strategy.  System dynamics is a branch of systems analysis that is particularly accessible and useful for a managerial audience.  Developed at MIT's Sloan School of Management, where it remains one of the single most popular courses in the MBA program, it is a flexible, intuitive, and powerful approach to structuring managerial problems, visualizing the interconnectedness of business systems and their surrounding environment, and exploring their complex dynamic interaction through computer modeling and simulation, without the need for sophisticated mathematics or computer skills.
You will be introduced to the basic principles and techniques of system dynamics along with a string of examples of dynamic complexity in different managerial disciplines.  You will learn how to identify, analyze and effectively take account of the dynamic processes involved in areas like product development strategies, supply chain management, product life cycle assessments, the dynamics of innovation and product diffusion, platform leadership, technology launch strategies, first- and second-mover advantage, "time compression diseconomies" in product development, and the dynamics and limits of growth.  Upon completing the course, you should have a thorough understanding of the approach and an ability to recognize and deal with situations where policy interventions are likely to be delayed, diluted, or defeated by otherwise unanticipated side effects caused by dynamic complexity.
Systemic problems cross traditional discplinary boundaries and requires us to work in cross-disciplinary teams.  Therefore, the course is offered simultaneously to graduate students at CBS, the Technical University of Denmark (DTU), and University of Copenhagen Faculty of Science (UCPH), as part of the CIEL collaborative platform between the three universities.  (See http://www.cbs.dk/en/CBS-Focus/Menu/Entrepreneurship/Menu/CIEL).  To the extent possible, we will arrange for you to work in cross-disciplinary groups combining students from all three institutions.

By interacting hands on with business cases and associated computer models as 'management flight simulators' where space and time can be compressed, slowed, and stopped, you can experience the long-term side effects of decisions, systematically explore new strategies, and sharpen your strategic thinking skills in real-world situations.

Teaching methods
The course involves 12 weekly 2-hour or 3-hour classroom lectures immediately followed by 12 3-hour or 2-hour tutorial sessions where you have an opportunity to work under guidance from the instructor on the weekly homework assignments. These assignments form an essential part of the learning process, and you are encouraged to complete them and turn them in for grading and feedback (though it is not compulsory for passing the course). At the beginning of the course, you will be assigned to mixed groups from CBS, DTU and UCPH students for completing the assignments so that you may mix your backgrounds and learn from each other.
Student workload
Classroom participation 60 hours
Reading/preparation/assignments 165 hours
Further Information
The course is simultaneously listed as DTU course 02491.
Expected literature

Course textbook:  STERMAN, J.D. (2000), Business Dynamics, McGraw-Hill.

Selected additional readings:

BARRABA, V. Et al. (2002): A Multi-method Approach for Creating New Business Models: The General Motors Onstar Project, Interfaces 32 (1): 20-34.
MEADOWS, D.; RANDERS, J.; MEADOWS, D. (2004), Tools for the transition to sustainability, Ch. 8 of Limits to Growth: the 30-year update, Chelsea Green Publishing.
OLIVA, R.  (2010) Death Spirals and Virtuous Cycles:  Human Resource Dynamics in Knowledge-Based Services.  The Handbook of Service Science. P. Maglio, J. Spohrer & C. Kieliszewski. London, Springer: 321-358.
OLIVA, R., STERMAN, J. D. & GIESE, M. (2003) Limits to Growth in the New Economy: Exploring the "Get Big Fast" Strategy in e-commerce.System Dynamics Review, 19, 83-117.
PAICH, M., PECK, C. And VALANT, J. (2011), Pharmaceutical market dynamics and strategic planning: a system dynamics perspective. System Dynamics Review, 27: 47-63.
REPENNING, N. P. & STERMAN, J. D. (2002) Capability Traps and Self-Confirming Attribution Errors in the Dynamics of Process Improvement. Administrative Science Quarterly, 47, 265 - 295.
REPENNING, N.; Sterman, J. (2001), Nobody ever gets credit for fixing problems that never happened: Creating and sustaining process improvement.  California Management Review, 43(4).
STERMAN, J. (forthcoming)  Sustaining Sustainability: Creating a Systems Science in a Fragmented Academy and Polarized World.  In M. Weinstein and R.E. Turner (eds),Sustainability Science: The Emerging Paradigm and the Urban Environment. Springer.
STERMAN, J. D. (2008).  Risk Communication on Climate:  Mental Models and Mass Balance.  Science322: 53-533.
STERMAN, J. D., HENDERSON, R., BEINHOCKER, E. & NEWMAN, L. (2007) Getting Big Too Fast: Strategic Dynamics with Increasing Returns and Bounded Rationality. Management Science, 53, 683-696.
STRUBEN, J. And STERMAN, J. (2008). Transition challenges for alternative fuel vehicle and transportation systems. Environment and Planning B. 35, 1070-1097.
WALTHER, G., et al. (2010), Impact assessment in the automotive industry: mandatory market introduction of alternative powertrain technologies. System Dynamics Review, 26: 239-261

Last updated on 12-11-2013