• 1) account for the elements of the systems approach, i.e.,
• a) understand how many modern products and services have systemic features and define what is meant by this concept using concrete examples,
• b) describe and discuss the philosophical and methodological principles underlying the systems approach and system dynamics,
• c) relate the tenets of system dynamics to the challenges to rational decision making, forecasting, learning, and policy design in complex systems,
• 2) use the analytical tools of system dynamics on a basic level, i.e.,
• a) account for and explain the significance of structural elements such as stocks, flows, feedback loops, delays, and nonlinear relationships and analyze the dynamic behvior of simple feedback systems made up of these elements,
• b) account for principles of model formulation and testing and discuss the application of these principles in concrete examples,
• c) account for generic structures underlying archetypical system phenomena such as oscillation, drift to low performance, "shifting-the-burden" and addictive behavior, carrying capacity overshoot and collapse, diffusion dynamics, "time-compression diseconomies", and technology lock-in, and illustrate the appearance of these phenomena in different fields,
• d) analyze the outcomes of relatively simple pre-formulated case study models
• 3) demonstrate how the systems approach may be applied to real-world managerial issues, i.e.,
• a) reformulate a given issue in terms of its systemic aspects, b) formulate hypotheses of key feedback mechanisms and system elements that may impinge on the issue
• c) sketch how the problem may be incorporated in a computer model, and d) discuss possible insights yielded by the analysis.

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.

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