"System Dynamics Applications to Design User Centred Decentralised Systems: Start-up Enterprise Design Cases Using System Dynamics Approach" <Conference Information> 2018 Fall Conference of The Korea Society of Management Information Systems Session D3: Blockchain Time: 15:00 ~ 16:25, Satureday 10th November Room: #B226 School of Business, Yonsei University Full schedule: http://kmis.or.kr/kmis/file/2018_fall_program_guide.pdf

1. System Dynamics Applications
to Design User Centred Decentralised Systems
: Start-up Enterprise Design Cases Using System Dynamics Approach
Heejung Kwon, Ph.D., Creative Innovation Research Center, Yonsei Business Research Institute
Andrew Hudson-Smith, Professor of Digital Urban Systems, Centre for Advanced Spatial Analysis, The Bartlett, UCL
2018 Fall Conference of The Korea Society of Management Information Systems
Session D3: Blockchain
Time: 15:00 ~ 16:25, Satureday 10th November
Room: #B226 School of Business, Yonsei University
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2. Introduction
 Business System Analysis & Design for Industry 4.0
−The change of digital ecology
−Consumer participatory business model
−Social dynamics from the network complexity
 System Dynamics
−Futuristic enterprise design in the 4th industrial revolution ecology
−Strategic tool of a holistic approach
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3. Theoretical background
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Like all systems, the complex system is an interlocking structure of feedback
loops . . . This loop structure surrounds all decisions public or private,
conscious or unconscious. The processes of man and nature, of psychology
and physics, of medicine and engineering all fall within this structure.
-Jay W. Forrester, Urban Dynamics (1969), p. 107.

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Real World
• Unknown structure
• Time delays
• Inability to conduct
controlled experiments
Virtual World
• Unknown structure
• Variable level of complexity
• Controlled experiments
Strategy, Structure, Decision Rules
• Inability to inter dynamics from
cognitive maps
Decisions
Real World:
• Implementation
failure
• Game playing
• Inconsistency
• Performance is goal
Virtual World:
• Perfect
Implementation
• Consistent Incentives
• Consistent application
of decision rules
• Learning can be goal
Mental Models
• Misperceptions of feedback
• Unscientific reasoning
• Judgmental Biases
Information Feedback
Virtual World:
• Complete, accurate,
immediate
feedback
Real World:
• Selective perception
• Missing feedback
• Delay
• Bias, Distortion, Error
• Ambiguity
FIGURE 1-14
Idealized learning
Process [Adapted from
Sterman(2004)]
Effective learning
involves
continuous
experimentation
in both the virtual
world and real
world. Feedback
from both informs
the development
of mental
models, formal
models, and
the design of
experiments for
the next iteration.

5. Modelling is Iterative
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FIGURE 3-1
The modeling
process is
iterative.
Results of any
step can yield
insights that lead
to revisions in
any earlier step'
(indicated by the
links in the center
of the diagram).

6. Modelling is Iterative
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FIGURE 3-2
Modeling is
embedded in
the dynamics
of the system.
Effective modeling
involves constant
iteration between
experiments and
learning in the
virtual world and
experiments
and learning in
the real world.

7. Overview of the Modelling Process
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Problem Articulation
Formulating a
Dynamic
Hypothesis
Formulating a
Simulation Model
Testing
Policy Design
and Evaluation
FIGURE 2. The 5 steps of Business Dynamics Modelling Process

8. Research Method
 Data Collection
− Group : Business Model 4.0, Start-up Capstone Project Class
− Duration : 4 months (March – June 2018)
 Participants
− N=15
− Total 5 Business Cases
− Selective 3 that represent consumer participatory business cases
 Simulation Software
− Vensim 7.3
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9. Multiple Cases for Business Dynamics
Case User Model Core Feedback Stock
[A] Crowd based
psychology
consultation
 Counselee
 Counsellor
 Switching to a paid
membership
 Matching
[B] Deep learning
based weight control
service
 Food Photo App
Users
 Positive feedback
of usage numbers
that increases
analytical power
 User created
photos
 User profiles
[C] Blockchain based
knowledge service
 Influencer
 Follower
 Positive feedback
of user numbers
that heightens
crypto value
 Influencer activity
and post
 Follower activity
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CaseA

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CaseB

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CaseC

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Potential
Counselors
Contracted
Counselors
Active
Counselors
Sign-up Rate Activation Rate
Potential
Users
Free Version
User
Pro Version
User
Upgrade Rate
Join Rate
By Marketing WOM
Settlement Network
Marketing
Effectiveness M
Join Fraction
Contact Rate i
Perceived
Satisfaction S
Network Fraction
Contact Rate J
Carrying Capacity
from the List
Customer Demand
Issue Frequency
Perceived Financial
Benefits
Matching
Mapping CapacityIncome Level
FIGURE 3. Stock-and-Flow Diagram of Case A

14. Results & Conclusions
 Methodological competence of business dynamics
−Holistic view to 4th industrial revolution ecology that is composed of AI,
Blockchain, Data Science, and IoT
−Explain and visioning a decentralised enterprise and its mesh of
− Regional/Local/Peripheral
− Participatory
− Creative Values
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15. New Inquiry on Complexity and Future Dynamics

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