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System Dynamics Modelling for
        Business Analysts

     IIBA UK Event – Barclays, Westwood Park


                 Martin Kunc
Managing 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




 Goals

            Problem          Decision          Results

Situation
Decisions


        Goals


                        Environment

Our decisions alter our environment, leading to new decisions,

                          Decisions

                                                 Side
        Goals
                                                Effects

                        Environment


      Goals of
       Other
      Agents              Actions of
                           Others
 but also triggering side effects, delayed reactions, changes
in goals and interventions by others. These feedbacks may
    lead to unanticipated results and ineffective policies.
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
               If your audience was confused by


                                                       -

                 Market                              Unit
                 Share                           Costs



you might make the intermediate concepts explicit as follows:


                       + Production   + Cumulative
                                        Production
                          Volume                              -
                                        Experience
              Market                                         Unit
              Share                                         Costs
Introduction to SD
Introduction to SD
               Customer
                 Base
      Delay

 Customer                  Service
Satisfaction              Requests


               Service
               Quality



  Service                 Adequacy
 Resources                of Service


                Delay
Dynamics of Multiple-Loop Systems

Word of
                           Clients
                            Clients                    Clients
Mouth
                                                       losses



Sketch a graph showing the behaviour of the number of clients
over time.
Introduction to SD
• Claims unsolved, new claims, claims solved




• Employees, hiring, retiring
new      claims
claims   solved
500

      new      claims
      claims   solved
 0
Introduction to SD - Modelling
Introduction to SD - Modelling
Case Study: Workforce Planning
                   Kunc, 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

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Systems Dynamics Modelling for BAs

  • 1. System Dynamics Modelling for Business Analysts IIBA UK Event – Barclays, Westwood Park Martin Kunc Managing Complexity Ltd / Warwick Business School
  • 2. Agenda • How I knew about System Dynamics (SD) • Introduction to SD • Case Study
  • 3. 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
  • 5. Event-oriented view of the world Goals Problem Decision Results Situation
  • 6. Decisions Goals Environment Our decisions alter our environment, leading to new decisions, Decisions Side Goals Effects Environment Goals of Other Agents Actions of Others but also triggering side effects, delayed reactions, changes in goals and interventions by others. These feedbacks may lead to unanticipated results and ineffective policies.
  • 7. A System Thinking View of Problems
  • 8. 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
  • 9. 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.
  • 10. Introduction to SD If your audience was confused by - Market Unit Share Costs you might make the intermediate concepts explicit as follows: + Production + Cumulative Production Volume - Experience Market Unit Share Costs
  • 12. Introduction to SD Customer Base Delay Customer Service Satisfaction Requests Service Quality Service Adequacy Resources of Service Delay
  • 13. Dynamics of Multiple-Loop Systems Word of Clients Clients Clients Mouth losses Sketch a graph showing the behaviour of the number of clients over time.
  • 14. Introduction to SD • Claims unsolved, new claims, claims solved • Employees, hiring, retiring
  • 15. new claims claims solved
  • 16. 500 new claims claims solved 0
  • 17. Introduction to SD - Modelling
  • 18. Introduction to SD - Modelling
  • 19. Case Study: Workforce Planning Kunc, M. 2008. Achieving a balanced organizational structure in professional services firms: Some lessons from a modeling project. System Dynamics Review, 24 (2): 119– 143