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www.luxoft.com Creating a Flexible Strategy Using Causal Diagrams

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Page 1: Creating a flexible strategy using causal diagrams

www.luxoft.com

Creating a Flexible Strategy Using Causal Diagrams

Page 2: Creating a flexible strategy using causal diagrams

www.luxoft.com

Overview

Page 3: Creating a flexible strategy using causal diagrams

www.luxoft.com

Agenda

What is Causal Loop Diagram ?

How it can help you ?

How to construct CLD ?

Examples of how it helped to improve strategy ?

Simulation tool

Page 4: Creating a flexible strategy using causal diagrams

www.luxoft.com

What is Causal Loop Diagram

Page 5: Creating a flexible strategy using causal diagrams

www.luxoft.com

History

The use of nodes and arrows to construct directed graph

models of cause and effect dates back to the invention of

path analysis by Sewall Wright in 1918

Popularized in System Dynamics. Methodology and mathematical modeling technique for framing, understanding, and discussing complex issues and problems.

The first formal use of Causal Loop Diagrams was explained by Dr. Dennis Meadows at a conference for educators

Page 6: Creating a flexible strategy using causal diagrams

www.luxoft.com

Why to use that ?

Page 7: Creating a flexible strategy using causal diagrams

www.luxoft.com

Helps to see the whole

How our system is working so that we have drop in productivity ?

My concern is productivity ? How to fix that ?

YOUR CLIENT YOU

Page 8: Creating a flexible strategy using causal diagrams

www.luxoft.com

Measure your concerns qualitatively

Productivity drop? Is it subjective ?

I see drops in rate of # completed tasks and # labor costs are growing

YOUR CLIENT YOU

Page 9: Creating a flexible strategy using causal diagrams

www.luxoft.com

Align understanding of systems

In general I see that system is working this

way

I would add some more

variables to that

YOUR CLIENT YOU

Page 10: Creating a flexible strategy using causal diagrams

www.luxoft.com

Empathize

Yes, we can. Let’s think how we can

improve your strategy to

minimize risks

Unfortunately we have to cut

salaries

YOUR CLIENT YOU

Page 11: Creating a flexible strategy using causal diagrams

www.luxoft.com

Discover self-reinforcement loops

My fear is that by cutting salaries you will balance total costs for

short time

Thanks, I see that potential staff turnover will

increase total cost again

YOUR CLIENT YOU

Page 12: Creating a flexible strategy using causal diagrams

www.luxoft.com

Pro-actively improve your system

My fear is that by cutting salaries you will balance total costs for

short time

Thanks, I see that potential staff turnover will

increase total cost again

YOUR CLIENT YOU

Page 13: Creating a flexible strategy using causal diagrams

www.luxoft.com

Key elements

Page 14: Creating a flexible strategy using causal diagrams

www.luxoft.com

Capture potential variables

We have to increase number of cost

cutting initiatives because some

budget pressures

YOUR CLIENT

Cost cutting

initiatives

Total Costs

(budget)

Salary rate

Page 15: Creating a flexible strategy using causal diagrams

www.luxoft.com

Find relation between concerns

Cost cutting

initiatives

Total Costs

(budget)

Salary rate

Page 16: Creating a flexible strategy using causal diagrams

www.luxoft.com

Polarity in relations

Cost cutting

initiatives

Total Costs

(budget)

Salary rate

-

+

+

Page 17: Creating a flexible strategy using causal diagrams

www.luxoft.com

Balanced loops

Cost cutting

initiatives

Total Costs

(budget)

Salary rate

-

+

+

B

Reduce Total Costs

Page 18: Creating a flexible strategy using causal diagrams

www.luxoft.com

Further elaboration

YOU

Cost cutting

initiatives

Total Costs

(budget)

Salary rate

-

+

+

B

Reduce Total Costs

I feel something wrong with

that

Page 19: Creating a flexible strategy using causal diagrams

www.luxoft.com

Self-reinforcement loops

Cost cutting

initiatives

Total Costs

(budget)

Salary rate

-

+

+

B

Reduce Total Costs

R

Motivation to

change job

-

Stuff turnover

+

Workforce

Knowledge

-

Productivity

+

-

Page 20: Creating a flexible strategy using causal diagrams

www.luxoft.com

Delayed effect

Cost cutting

initiatives

Total Costs

(budget)

Salary rate

-

+

+

B

Reduce Total Costs

R

Motivation to

change job

-

Stuff turnover

+

Workforce

Knowledge

-

Productivity

+

-

Page 21: Creating a flexible strategy using causal diagrams

www.luxoft.com

Update you strategy

Cost cutting

initiatives

Total Costs

(budget)

Salary rate

-

+

+

B

Reduce Total Costs

R

Motivation to change

job

-

Stuff turnover

+

Workforce

Knowledge

-

Productivity

+

-

Launch motivational program

TestKnowledgebase

Reduce load

Page 22: Creating a flexible strategy using causal diagrams

www.luxoft.com

Examples

Page 23: Creating a flexible strategy using causal diagrams

www.luxoft.com

Example #1

Helped Project Manger to show stakeholders many side-effects of selected strategy

Client abandoned strategy with reducing salary

Client changed development strategy to focus only on critical business

Page 24: Creating a flexible strategy using causal diagrams

www.luxoft.com

Example #2

Helped Agile Consultant to show an importance of slack

time for learning

Client updated marketing strategy to less aggressive

Page 25: Creating a flexible strategy using causal diagrams

www.luxoft.com

Example #3

Helped to show

how new marketing

initiative would

influence company

performance

Client improved

annual strategy to

focus on service

quality, not number

of subscribers

Page 26: Creating a flexible strategy using causal diagrams

www.luxoft.com

Software simulations

Page 27: Creating a flexible strategy using causal diagrams

www.luxoft.com

http://vensim.com/

Page 28: Creating a flexible strategy using causal diagrams

www.luxoft.com

Vyacheslav Moskalenko

Luxoft Agile Practice

Luxoft Agile Coach

Kiev, Ukraine

Member of Scrum Alliance,Certified Scrum MasterCertified Scrum Professional

Member of ICAgile,Certified ICAgile Coach

Member of scrum.org,Professional Scrum Master


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