systems dynamics modelling for bas

System Dynamics Modelling for Business Analysts

IIBA UK Event – Barclays, Westwood Park

Martin KuncManaging Complexity Ltd / Warwick Business School

Agenda

• How I knew about System Dynamics (SD)

• Introduction to SD

• Case Study

How I knew about System Dynamics (SD)1994 – Started working at Arthur Andersen Business Consulting Practice

– In one of the many training activities, we were introduced to

An Event-Oriented View of Problems

Event-oriented view of the world

Situation

Goals

Problem Decision Results

SideEffectsGoals

Decisions

Environment

Goals ofOther

Agents Actions ofOthers

but also triggering side effects, delayed reactions, changesin goals and interventions by others. These feedbacks may

lead to unanticipated results and ineffective policies.

Our decisions alter our environment, leading to new decisions,

Goals

Decisions

Environment

A System Thinking View of Problems

How I knew about System Dynamics (SD)1997 – MBA, Course on System Dynamics Modelling

2000 – Ph.D., London Business School System Dynamics Modelling and Strategy

2003 – Project in Marketing

2005 – Project in Workforce Planning

2007 – Project in Supply Chain Redesign– Wine Tourism in Chile – Marketing

2010 – Pharmaceutical Industry – Pricing and Competition

Introduction to SD• Two main components:

• Feedback is one of the two main concepts of system dynamics theory.

• Stocks and Flows are the second central concept of system dynamics theory.

Introduction to SD

Market

Share

Unit

Costs

-

MarketShare

UnitCosts

ProductionVolume -

++ CumulativeProductionExperience

If your audience was confused by

you might make the intermediate concepts explicit as follows:

Introduction to SD

Introduction to SDCustomer

Base

ServiceResources

ServiceQuality

CustomerSatisfaction

Adequacyof Service

ServiceRequests

Delay

Delay

Dynamics of Multiple-Loop Systems

Sketch a graph showing the behaviour of the number of clients over time.

ClientsWord of Mouth Clients Clients

losses

• Claims unsolved, new claims, claims solved

• Employees, hiring, retiring

Introduction to SD

newclaims

claimssolved

newclaims

claimssolved

500

0

Introduction to SD - Modelling

Introduction to SD - Modelling

Case Study: Workforce PlanningKunc, M. 2008. Achieving a balanced organizational structure in professional services firms: Some lessons from a modeling project. System Dynamics Review, 24 (2): 119–143

Case Study: Workforce Planning

Case Study: Workforce Planning

Case Study: Workforce Planning

Case Study: Workforce Planning

Case Study: Workforce Planning

Questions???

martin.kunc@managingyourcomplexity.co.uk / martin.kunc@wbs.ac.uk

Thank you