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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.
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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
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