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Systems Thinking, System
Dynamics, Simulation
James R. Burns
Summer II 2008
Course Content Structure—see
Syllabus
• System Dynamics
• Continuous Deterministic Simulation
– VENSIM
• Systems Thinking
• Goldratt
• Discrete Stochastic Simulation
– PROMODEL
Goals of this course relative to
SYSTEM DYNAMICS…
• To learn how to solve problems, not just
study interesting situations
• To learn the basics of causal modeling
– known as Causal Loop Diagramming, CLD
• To learn how transfer CLD’s to Stock & Flow
Diagrams, SFDs
• To learn how to implement SFD’s in VENSIM
More Goals of this course
relative to system dynamics….
• To learn how to parameterize a VENSIM
model
• To learn how to validate a VENSIM model
• To learn how to conduct what-if
experiments
• To learn some basic structures,
procedures in VENSIM
Goals of this course relative to
SYSTEMS THINKING…
• To learn Senge’s five disciplines
• How to build a learning organization
• How to challenge mental models
• Master the seven laws of systems thinking
• Understand the principle of leverage
• Master the FIVE DISCIPLINES
• Understand openness, localness, a manager’s
time, micro-worlds, archetypes
How do these goals align with
your…
• goals for the course
• expectations for the course in general?
Would you like to ….
• Learn the basics of SD modeling and the
use of VENSIM?
• learn about the Archetypes?
• learn how to recognize and apply the
Archetypes
What kinds of processes,
systems?
• Energy and natural resources
• Global warming
• Agricultural processes
• Project management
• Enronitus
• Growth and over-investment
• WHAT ELSE?
Project proposal is due Sept (Tuesday)
Requirements for Completion
• Midterm worth 30%
• Final worth 30%
• Homework worth 10%
• Term project worth 20%
• Presentation worth 5%
• Class participation worth 5%
Pace
• More relaxed
• No ties
• Driven more by the needs of the students
Grades??!!
• If you satisfactorily complete all the work
required in this course, you will get at least
a B
– My guarantee
– If you turn in unsatisfactory work, I will ask you
to redo it
• To get an A you must have a course grade
above 89.999
Term Project
• You get to choose the topic
• Topic is Due on 9-13
• Will ask you to turn-in as homework your
– Causal loop diagram
– Stock-and-flow diagram
Definitions and Terms
• ST--Systems Thinking
• SD--Systems Dynamics
• CLD--Causal Loop Diagram
• BOT--Behavior Over Time Chart
• SFD--Stock & Flow Diagram
– Also called Forrester Schematic, or simply “Flow
Diagram”
• quantity--any variable, parameter, constant, or
output
• edge--a causal link between quantities
Senge’s Five Disciplines
• Personal Mastery
• because we need to be the very best we can be
• Mental Models
• because these are the basis of all decision-making
• Shared Vision
• because this galvanizes workers to pursue a common goal
• Team Learning
• because companies are organized into teams
• Systems Thinking
• because this is the only tool for coping with complexity
System Dynamics Software
• STELLA and I think
– High Performance Systems, Inc.
– best fit for K-12 education
• Vensim
– Ventana systems, Inc.
– Free from downloading off their web site:
www.vensim.com
– Robust--including parametric data fitting and
optimization
– best fit for higher education
• Powersim
– What Arthur Andersen was using
What is system dynamics?
• A way to characterize systems as stocks and
flows between stocks
• Stocks are variables that accumulate the affects
of other variables
• Rates are variables that control the flows of
material into and out of stocks
• Auxiliaries are variables the modify information
as it is passed from stocks to rates
A Simple Methodology
• Collect info on the problem
• List variables on post-it notes
• Describe causality using a CLD
• Translate CLD into SFD
• Enter into VENSIM
• Perform sensitivity and validation studies
• Perform policy and WHAT IF experiments
• Write recommendations
Causal Modeling
• A way to characterize the physics of the
system
• Lacking: a Newton to describe the
causality in these systems, to
characterize the physics in these
processes—that’s what you will be
doing
What systems, processes
• Socioeconomic systems
• Energy/Environment/Economy systems
• Biological systems
• Managerial systems
• Socio-psychological systems
• Human-interaction systems
• Organizational systems
Energy systems
• We are very interested in developing a
current national energy model and have a
start on that based on earlier work that I did
years ago at Sandia National Laboratories
Biological systems
Key Benefits of the ST/SD
• A deeper level of learning
– Far better than a mere verbal description
• A clear structural representation of the
problem or process
• A way to extract the behavioral
implications from the structure and data
• A “hands on” tool on which to conduct WHAT
IF
Stock and Flow Notation--
Quantities
• STOCK
• RATE
• Auxiliary
Stock
Rate
i1
i2
i3
Auxiliary
o1
o2
o3
Stock and Flow Notation--
Quantities
• Input/Parameter/Lookup
• Have no edges directed toward them
• Output
• Have no edges directed away from them
i1
i2
i3
Auxiliary
o1
o2
o3
Inputs and Outputs
• Inputs
• Parameters
• Lookups
• Outputs
Input/Parameter/Lookup
a
b
c
Stock and Flow Notation--edges
• Information
• Flow
a b
x
Some rules
• There are two types of causal links in
causal models
– Information
– Flow
• Information proceeds from stocks and
parameters/inputs toward rates where it is
used to control flows
• Flow edges proceed from rates to states
(stocks) in the causal diagram always
Systems Thinking basics
• Effects are spatially and temporarily
separated from their causes
• Today’s problems are yesterday’s solutions
• Complexity coping requires understanding
dynamic complexity, not detail complexity
Nature’s Templates: the
Archetypes
• Structures of which we are unaware hold
us prisoner
• The swimmer scenario
• Certain patterns of structure occur again
and again: called ARCHETYPES
We are creating a “language”
• reinforcing feedback and balancing feedback are
like the nouns and verbs
• systems archetypes are the basic sentences
• Behavior patterns appear again in all disciplines-
-biology, psychology, family therapy, economics,
political science, ecology and management
• Can result in the unification of knowledge across
all fields
Recurring behavior patterns
• Do we know how to recognize them?
• Do we know how to describe them?
• Do we know how to prescribe cures for
them?
• The ARCHETYPES describe these recurring
behavior patterns
The ARCHETYPES
• Provide leverage points, intervention junctures at
which substantial change can be brought about
• Put the systems perspective into practice
• About a dozen systems ARCHETYPES have been
identified
• All ARCHETYPES are made up of the systems
building blocks: reinforcing processes,
balancing processes, delays
Before attacking the ARCHETYPES
we need to understand simple
structures
• The reinforcing feedback loop
• The balancing feedback loop
ARCHETYPE 1: LIMITS TO GROWTH
• A reinforcing process is set in motion to
produce a desired result. It creates a
spiral of success but also creates
inadvertent secondary effects (manifested
in a balancing process) that eventually
slow down the success.
• All growth will eventually run up against
constraints, impediments
Management Principle relative
to ARCHETYPE 1
• Don’t push growth or success; remove the
factors limiting growth
ARCHETYPE 1: LIMITS TO GROWTH
• Useful in all situations where growth
bumps up against limits
• Firms grow for a while, then plateau
• Individuals get better for a while, then their
personal growth slows.
• Falling in love is kind of like this
• The love begins to plateau as the couple get to
know each other better
Structure
state of stock
growing action slowing action
Balancing
Reinforcing
Understanding the Structure
• High-tech orgs grow rapidly because of
their ability to introduce new products
• This growth plateaus as lead times become
too long
How to achieve Leverage
• Most managers react to the slowing growth by
pushing harder on the reinforcing loop
• Unfortunately, the more vigorously you push the
familiar levels, the more strongly the balancing
process resists, and the more futile your efforts
become.
• Instead, concentrate on the balancing loop--
changing the limiting factor
• This is akin to Goldratt’s Theory of Constraints--remove the
bottleneck, the impediment
Applications to Quality Circles
and JIT
• Quality circles work best when there is even-
handed emphasis on both balancing and
reinforcing loops
• JIT has had to focus on recalcitrant suppliers
• THERE WILL ALWAYS BE MORE LIMITING PROCESSES
• When one source of limitation is removed, another will
surface
• Growth eventually WILL STOP
Create your own LIMITS TO
GROWTH story
• Identify a limits to growth pattern in your
own experience
• Diagram it
– What is growing
– What might be limitations
– Example--the COBA and University capital
campaigns
– NOW, LOOK FOR LEVERAGE
Test your LIMITS TO GROWTH
model
• Talk to others about your perception
• Test your ideas about leverage in small
real-life experiments
• Run and re-run the simulation model
• Approach possible resistance and seek
WIN-WIN strategies with them
ARCHETYPE 2: shifting the burden
• An underlying problem generates symptoms that
demand attention. But the underlying problem is
difficult for people to address, either because it
is obscure or costly to confront. So people “shift
the burden” of their problem to other solutions--
well-intentioned, easy fixes that seem extremely
efficient.
Shifting the burden scenario,
continued
• Unfortunately, the easier solutions only
ameliorate the symptoms; they leave the
underlying problem unaltered. The
underlying problem grows worse and the
system loses whatever abilities it had to
solve the underlying problem.
The Stereotype Structure
Problem
Symptomatic Solution
Fundamental Solution
Side effect
BALANCING
BALANCING
REINFORCING
Symptiom-Correcting
Process
Problem-Correcting
Process
Addictioin Loop
Special Case: Eroding Goals
• Full employment meant 4% unemployment
in the 1960s, but 6 to 7% unemployment in
the early 1980’s
• Gramm-Rudman bill called for reaching a
balanced budget by 1991, but this was
shifted to 1993 and from 1993 to 1996 and
from 1996 to 1998
• “If all else fails, lower your goals..”
EXAMPLE
Alcohol
Stress/Depression
Reduce workload
Health
BALANCING
BALANCING
Alcohol
Stress/Depression
Reduce workload
Health
BALANCING
BALANCING
Another Example
Costs of Higher Ed not funded by State or Students
Raise tuition, add course fees, etc.
Lower enrollments
Perceived cost to the stude
Still Another Example
Heroics and Overtime
Project Delayed
Efectiveness of PM practices
Reward for heroic behavior
Improvement of processes/practices
Symptom-correcting
process
Problem-correcting
Process
Addiction Loop
Still other Problems
• What about retention of students
• The perceived fix is raise the admission
standards
• What about drug-related crime
• The perceived fix is to remove the drugs
from the street
“Shifting the Burden” is an
insidious problem
• Is has a subtle reinforcing cycle
• This increases dependence on the
symptomatic solution
• But eventually, the system loses the ability
to apply the fundamental solution
• The system collapses
Senge Says
• Today’s problems are yesterday’s solutions
• We tend to look for solutions where they
are easiest to find
HOW TO ACHIEVE LEVERAGE
• Must strengthen the fundamental response
– Requires a long-term orientation and a shared
vision
• Must weaken the symptomatic response
– Requires a willingness to tell the truth about
these “solutions”
Create your own “Shifting the
Burden” Story
• Is there a problem that is getting gradually worse over
the long term?
• Is the health of the system gradually worsening?
• Is there a growing feeling of helplessness?
• Have short-term fixes been applied?
• The local Mexican restaurant problem of using coupons to generate
business and then can’t get away from using the coupons because
their customer base is hooked on coupons
To structure your problem
• Identify the problem
• Next, identify a fundamental solution
• Then, identify one or several symptomatic
solutions
• Finally, identify the possible negative “side
effects” of the symptomatic solution
Review
• We have now seen two of the basic systems
archetypes.
– The Limits to Growth Archetype
– The Shifting the Burden Archetype
• As the archetypes are mastered, they become
combined into more elaborate systemic descriptions.
• The “sentences” become parts of paragraphs
• The simple stories become integrated into more
involved stories
Robust Loops
• In any loop involving a pair of
quantities/edges,
• one quantity must be a rate
• the other a state or stock,
• one edge must be a flow edge
• the other an information edge
CONSISTENCY
• All of the edges directed toward a quantity
are of the same type
• All of the edges directed away from a
quantity are of the same type
Rates and their edges
q1
q2
q3
RATES
q4
q5
q6
Information
edges
Flow edges
Parameters and their edges
PARAMETER
q1
q2
q3
Information
edges
Stocks and their edges
q1
q2
q3
STOCK
q4
q5
q6
Flow edges Information edges
Auxiliaries and their edges
AUXILIARY
q1
q2
q3
q4
q5
q6
Information
edges
Information
edges
Outputs and their edges
OUTPUT
q1
q2
q3
Information
edges
STEP 1: Identify parameters
• Parameters have no edges directed toward
them
STEP 2: Identify the edges
directed from parameters
• These are information edges always
STEP 3: By consistency identify
as many other edge types as you
can
STEP 4: Look for loops involving a
pair of quantities only
• Use the rules for robust loops identified
above
q1
q2
q3 q4
q5
q6
q7
q8
q3
q6
q2
q7
q1
q4
q5 q8
Distinguishing Stocks & Flows by
Name
NAME UNITS Stock or flow
• Revenue
• Liabilities
• Employees
• Depreciation
• Construction starts
• Hiring
• material standard of living
The VENSIM User Interface
• The Time bounds Dialog box
A single-sector exponential
growth model
• Einstein said the most powerful force in the
world was compound interest
• interest taken in relation to principal
• Each stock requires an initial value
interest prinicipal
Interest rate
R
Principal
Interest
Interest rate
Let’s DO IT
• Create the stock principal
• Include the rate interest
• Include the information connector
• Initialize the stock
• Simulate
John vs. Jack
• Each works for 30 years before retiring
• John makes $2000 contributions to his IRA
each year for the first five years and none
there after.
• Jack makes $2000 contributions to his IRA
each year beginning in year six and
continuing through year 30
• Each IRA yields a 15% compounded return
• Which turns out to be larger?
John vs. Jack--two interest accounts.mdl
Principal
Interest
Interest rate
Principal 0
Interest 0
Interest rate 0
contributions
contributions 0
<Time>
John
Jack
John vs. Jack
800,000
400,000
0
0 6 12 18 24 30
Time (Year)
Principal : int1
Principal 0 : int1
Contributions of John vs. those of Jack
2,050
1,525
1,000
475
-50
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30
Time (Year)
contributions : int1
contributions 0 : int1
Another single-sector
Exponential growth Model
• Consider a simple population with infinite
resources--food, water, air, etc. Given,
mortality information in terms of birth and
death rates, what is this population likely to
grow to by a certain time.
• A population of 200,000, growing at 1.3% a
year.
• A population of 1.6 billion with a birth rate
norm of .04 and a death rate norm of .028
Experiments with growth models
• Models with only one rate and one state
• Average lifetime death rates
• Models in which the exiting rate is not a
function of its adjacent state
Example:
• Build a model of work flow from work
undone to work completed.
• This flow is controlled by a “work rate.”
• Assume that are 1000 days of undone work
• Assume the work rate is 20 completed days
a month
• Assume the units on time are months
• Assume no work is completed initially.
Solving the problem of negative
stock drainage
• pass information to the outgoing rate
• use the IF THEN ELSE function
Shifting loop Dominance
• Rabbit populations grow rapidly with a
reproduction fraction of .125 per month
• When the population reaches the carrying
capacity of 1000, the net growth rate falls
back to zero, and the population stabilizes
• Starting with two rabbits, run for 100
months with a time step of 1 month
• (This model has two loops, an exponential
growth loop (also called a reinforcing loop)
and a balancing loop)
Shifting loop Dominance
• Assumes the following relation for Effect of
Resources
• Effect of Resources = (carrying capacity -
Rabbits)/carrying capacity
• This is a multiplier
• Multipliers are always dimless (dimensionless)
• When rabbits are near zero, this is near 1
• When rabbits are near carrying capacity, this is
near zero
– This will shut down the net rabbit birth rate
Rabbits
Net Rabbit Birth rate
Effect of resources
Carrying capacity
Normal Rabbit Growth Rate
B
R
Rabbits
1,000
40
0
0
0 20 40 60 80 100
Time (Month)
Rabbits : rab1
Net Rabbit Birth rate : rab1
Dimensionality Considerations
• VENSIM will check for dimensional
consistency if you enter dimensions
• Rigorously, all models must be
dimensionally consistent
• What ever units you use for stocks, the
associated rates must have those units
divided by TIME
• An example follows
Cascaded rate-state (stock)
combinations
• In the oil exploration industry, unproven
reserves (measured in barrels) become
proven reserves when they are discovered.
The extraction rate transforms proven
reserves into inventories of crude. The
refining rate transforms inventories of
crude into refined petroleum products. The
consumption rate transforms refined
products into pollution (air, heat, etc.)
Another cascaded rate-stock
combination
• Population cohorts. Suppose population is
broken down into age cohorts of 0-15, 16-
30, 31-45, 46-60, 61-75, 76-90
• Here each cohort has a “lifetime” of 15
years
• Again, each rate has the units of the
associated stocks divided by time
A single-sector Exponential
goal-seeking Model
• Sonya Magnova is a resources planner for a
school district. Sonya wishes to a maintain a
desired level of resources for the district.
Sonya’s new resource provision policy is
quite simple--adjust actual resources AR
toward desired resources DR so as to force
these to conform as closely as possible. The
time required to add additional resources is
AT.
The Sector Approach to the
Determination of Structure
• What is meant by “sector?”
• What are the steps
– to determination of structure within sectors
– to determination of structure between sectors
Definition of sector
• All the structure associated with a single
flow
• Note that there could be several states
associated with a single flow
– The next sector in the pet population model
has three states in it
Sector Methodology, Overall
• Identify flows (sectors) that must be
included within the model
• Develop the structure within each sector of
the model.
– Use standard one-sector sub-models or
develop the structure within the sector from
scratch using the steps in Table 15.5
Sector Methodology, Overall
Cont’d
• Develop the structure between all sectors
that make up the model
• Implement the structure in a commercially
available simulation package
Steps Required to Formulate the
Structure for a Sector from
Scratch
• Specify the quantities required to
delineate the structure within each sector
• Determine the interactions between the
quantities and delineate the resultant
causal diagram
• Classify the quantity and edge types and
delineate the flow diagram
• Resource, facility and infrastructure (desks,
chairs, computers, networks, labs, etc.) needs for
an educational entity are driven by a growing
population that it serves. Currently, the
population stands at 210,000 and is growing at
the rate of two percent a year. One out of every
three of these persons is a student.
• One teacher is needed for every 25 students.
Currently, there are 2,300 actual teachers; three
percent of these leave each year. Construct a
structure for each that drives the actual level
toward the desired level. Assume an adjustment
time of one year. Set this up in VENSIM to run for
25 years, with a time-step of .25 years.
• One teacher is needed for every 25 students. One-
hundred square feet of facility space is needed
for each student. Thirty-five hundred dollars in
infrastructure is needed for each student.
Currently, there are 2,300 teachers; three percent
of these leave each year. Currently, there is five
million sq. ft of facility space, but this becomes
obsolescent after fifty years. Currently, there is
$205,320,000 in infrastructure investment, but
this is fully depreciated after ten years. For each
of infrastructure, teachers and facility space,
determine a desired level or stock for the same.
Construct a structure for each that drives the
actual level toward the desired level.
• Set this up in VENSIM to run for 25 years, with a
time-step of .25 years. Assume adjustment times
of one year. DETERMINE HOW MUCH IN THE WAY OF
FACILITIES, TEACHERS AND INFRASTRUCTURE ARE
NEEDED PER YEAR OVER THIS TIME PERIOD.
What are the main sectors and how
do these interact?
• Population
• Teacher resources
• Facilities
• Infrastructure
Factors affecting teacher
departures
• Inside vs. outside salaries
• Student-teacher ratios
• How might these affects be included?
Teacher departure description
• It is known that when the ratio of average
“inside the district” salary is comparable to
outside salaries of positions that could be
held by teachers, morale is normal and
teacher departures are normal
• When the inside-side salary ratio is less
than one, morale is low and departures are
greater than normal
• The converse is true as well
Teacher departure description
• When student-teacher ratios exceed the
ideal or desired student teacher ratio,
which is twenty four, morale is low and
again departures are greater than normal
• The converse is true as well
A Two-sector
Housing/population Model
• A resort community in Colorado has
determined that population growth in the
area depends on the availability of housing
as well as the persistent natural
attractiveness of the area. Abundant
housing attracts people at a greater rate
than under normal conditions. The
opposite is true when housing is tight. Area
Residents also leave the community at a
certain rate due primarily to the availability
Two-sector Population/housing
Model, Continued
• The housing construction industry, on the
other hand, fluctuates depending on the
land availability and housing desires.
Abundant housing cuts back the
construction of houses while the opposite
is true when the housing situation is tight.
Also, as land for residential development
fills up (in this mountain valley), the
construction rate decreases to the level of
the demolition rate of houses.
What are the main sectors and
how do these interact?
• Population
• Housing
What is the structure within each
sector?
• Determine state/rate interactions first
• Determine necessary supporting
infrastructure
– PARAMETERS
– AUXILIARIES
What does the structure within
the population sector look like?
• RATES: in-migration, out-migration, net
death rate
• STATES: population
• PARAMETERS: in-migration normal, out-
migration normal, net death-rate normal
What does the structure within
the housing sector look like?
• RATES: construction rate, demolition rate
• STATES: housing
• AUXILIARIES: Land availability multiplier,
land fraction occupied
• PARAMETERS: normal housing construction,
average lifetime of housing
• PARAMETERS: land occupied by each unit,
total residential land
What is the structure between
sectors?
• There are only AUXILIARIES, PARAMETERS,
INPUTS and OUTPUTS
What are the between-sector
auxiliaries?
• Housing desired
• Housing ratio
• Housing construction multiplier
• Attractiveness for in-migration multiplier
• PARAMETER: Housing units required per
person
Nature’s Templates: the
Archetypes
• Structures of which we are unaware hold
us prisoner
• The swimmer scenario
• Certain patterns of structure occur again
and again: called ARCHETYPES
We are creating a “language”
• reinforcing feedback and balancing
feedback are like the nouns and verbs
• systems archetypes are the basic
sentences
• Behavior patterns appear again in all
disciplines--biology, psychology, family
therapy, economics, political science,
ecology and management
• Can result in the unification of knowledge
Recurring behavior patterns
• Do we know how to recognize them?
• Do we know how to describe them?
• Do we know how to prescribe cures for
them?
• The ARCHETYPES describe these recurring
behavior patterns
The ARCHETYPES
• provide leverage points, intervention
junctures at which substantial change can
be brought about
• put the systems perspective into practice
• About a dozen systems ARCHETYPES have
been identified
• All ARCHETYPES are made up of the systems
building blocks: reinforcing processes,
balancing processes, delays
Before attacking the ARCHETYPES
we need to understand simple
structures
• the reinforcing feedback loop
• the balancing feedback loop
• THE DEMO
ARCHETYPE 1: LIMITS TO GROWTH
• A reinforcing process is set in motion to
produce a desired result. It creates a
spiral of success but also creates
inadvertent secondary effects (manifested
in a alancing process) that eventually slow
down the success.
Management Principle relative
to ARCHETYPE 1
• Don’t push growth or success; remove the
factors limiting growth
ARCHETYPE 1: LIMITS TO GROWTH
• Useful in all situations where growth
bumps up against limits
• Firms grow for a while, then plateau
• Individuals get better for a while, then their
personal growth slows.
• Falling in love is kind of like this
• The love begins to plateau as the couple get to
know each other better
Structure
state of stock
growing action slowing action
Balancing
Reinforcing
Understanding the Structure
• High-tech orgs grow rapidly because of
ability to introduce new products
• This growth plateaus as lead times become
too long
How to achieve Leverage
• Most managers react to the slowing growth by
pushing harder on the reinforcing loop
• Unfortunately, the more vigorously you push the
familiar levels, the more strongly the balancing
process resists, and the more futile your efforts
become.
• Instead, concentrate on the balancing loop--
changing the limiting factor
• This is akin to Goldratt’s Theory of Constraints--remove the
bottleneck, the impediment
Applications to Quality Circles
and JIT
• Quality circles work best when there is even-
handed emphasis on both balancing and
reinforcing loops
• JIT has had to focus on recalcitrant suppliers
• THERE WILL ALWAYS BE MORE LIMITING PROCESSES
• When once source of limitation is removed, another will
surface
• Growth eventually WILL STOP
Create your own LIMITS TO
GROWTH story
• Identify a limits to growth pattern in your
own experience
• Diagram it
– What is growing
– What might be limitations
– Example--the COBA and University capital
campaigns
– NOW, LOOK FOR LEVERAGE
Test your LIMITS TO GROWTH
model
• Talk to others about your perception
• Test your ideas about leverage in small
real-life experiments
• Run and re-run the simulation model
• Approach possible resistance and seek
WIN-WIN strategies with them
ARCHETYPE 2: shifting the burden
• An underlying problem generates
symptoms that demand attention. But the
underlying problem is difficult for people to
address, either because it is obscure or
costly to confront. So people “shift the
burden” of their problem to other solutions-
-well-intentioned, easy fixes that seem
extremely efficient. Unfortunately the
easier solutions only ameliorate the
symptoms; they leave the underlying
The Stereotype Structure
Problem
Symptomatic Solution
Fundamental Solution
Side effect
BALANCING
BALANCING
REINFORCING
Symptiom-Correcting
Process
Problem-Correcting
Process
Addictioin Loop
Special Case: Eroding Goals
• Full employment meant 4% unemployment
in the 60’s, but 6 to 7% unemployment in the
early 1980’s
• Gramm-Rudman bill called for reaching a
balanced budget by 1991, but this was
shifted to 1993 and from 1993 to 1996 and
from 1996 to 1998
• “If all else fails, lower your goals..”
“Shifting the Burden” is an
insidious problem
• Is has a subtle reinforcing cycle
• This increases dependence on the
symptomatic solution
• But eventually, the system loses the ability
to apply the fundamental solution
• The system collapses
Senge Says
• Today’s problems are yesterday’s solutions
• We tend to look for solutions where they
are easiest to find
HOW TO ACHIEVE LEVERAGE
• Must strengthen the fundamental response
– Requires a long-term orientation and a shared
vision
• Must weaken the symptomatic response
– Requires a willingness to tell the truth about
these “solutions”
Create your own “Shifting the
Burden” Story
• Is there a problem that is getting gradually worse
over the long term?
• Is the overall health of the system gradually
worsening?
• Is there a growing feeling of helplessness?
• Have short-term fixes been applied?
• The Casa Olay problem of using coupons to generate business
and then can’t get away from using the coupons because their
customer base is hooked on coupons
To structure your problem
• Identify the problem
• Next, identify a fundamental solution
• Then, identify one or several symptomatic
solutions
• Finally, identify the possible negative “side
effects” of the symptomatic solution
Review
• We have now seen two of the basic systems
archetypes.
– The Limits to Growth Archetype
– The Shifting the Burden Archetype
• As the archetypes are mastered, they
become combined into more elaborate
systemic descriptions.
• The basic “sentences” become parts of
paragraphs
Seeing Structures, not just Trees
• Helps us focus on what is important and
what is not
• Helps us determine what variables to focus
on and which to pay less attention to
Lecture 1--Aug 29.ppt11111111111111111111111111111

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Lecture 1--Aug 29.ppt11111111111111111111111111111

  • 1. Systems Thinking, System Dynamics, Simulation James R. Burns Summer II 2008
  • 2. Course Content Structure—see Syllabus • System Dynamics • Continuous Deterministic Simulation – VENSIM • Systems Thinking • Goldratt • Discrete Stochastic Simulation – PROMODEL
  • 3. Goals of this course relative to SYSTEM DYNAMICS… • To learn how to solve problems, not just study interesting situations • To learn the basics of causal modeling – known as Causal Loop Diagramming, CLD • To learn how transfer CLD’s to Stock & Flow Diagrams, SFDs • To learn how to implement SFD’s in VENSIM
  • 4. More Goals of this course relative to system dynamics…. • To learn how to parameterize a VENSIM model • To learn how to validate a VENSIM model • To learn how to conduct what-if experiments • To learn some basic structures, procedures in VENSIM
  • 5. Goals of this course relative to SYSTEMS THINKING… • To learn Senge’s five disciplines • How to build a learning organization • How to challenge mental models • Master the seven laws of systems thinking • Understand the principle of leverage • Master the FIVE DISCIPLINES • Understand openness, localness, a manager’s time, micro-worlds, archetypes
  • 6. How do these goals align with your… • goals for the course • expectations for the course in general?
  • 7. Would you like to …. • Learn the basics of SD modeling and the use of VENSIM? • learn about the Archetypes? • learn how to recognize and apply the Archetypes
  • 8. What kinds of processes, systems? • Energy and natural resources • Global warming • Agricultural processes • Project management • Enronitus • Growth and over-investment • WHAT ELSE? Project proposal is due Sept (Tuesday)
  • 9. Requirements for Completion • Midterm worth 30% • Final worth 30% • Homework worth 10% • Term project worth 20% • Presentation worth 5% • Class participation worth 5%
  • 10. Pace • More relaxed • No ties • Driven more by the needs of the students
  • 11. Grades??!! • If you satisfactorily complete all the work required in this course, you will get at least a B – My guarantee – If you turn in unsatisfactory work, I will ask you to redo it • To get an A you must have a course grade above 89.999
  • 12. Term Project • You get to choose the topic • Topic is Due on 9-13 • Will ask you to turn-in as homework your – Causal loop diagram – Stock-and-flow diagram
  • 13. Definitions and Terms • ST--Systems Thinking • SD--Systems Dynamics • CLD--Causal Loop Diagram • BOT--Behavior Over Time Chart • SFD--Stock & Flow Diagram – Also called Forrester Schematic, or simply “Flow Diagram” • quantity--any variable, parameter, constant, or output • edge--a causal link between quantities
  • 14. Senge’s Five Disciplines • Personal Mastery • because we need to be the very best we can be • Mental Models • because these are the basis of all decision-making • Shared Vision • because this galvanizes workers to pursue a common goal • Team Learning • because companies are organized into teams • Systems Thinking • because this is the only tool for coping with complexity
  • 15. System Dynamics Software • STELLA and I think – High Performance Systems, Inc. – best fit for K-12 education • Vensim – Ventana systems, Inc. – Free from downloading off their web site: www.vensim.com – Robust--including parametric data fitting and optimization – best fit for higher education • Powersim – What Arthur Andersen was using
  • 16. What is system dynamics? • A way to characterize systems as stocks and flows between stocks • Stocks are variables that accumulate the affects of other variables • Rates are variables that control the flows of material into and out of stocks • Auxiliaries are variables the modify information as it is passed from stocks to rates
  • 17. A Simple Methodology • Collect info on the problem • List variables on post-it notes • Describe causality using a CLD • Translate CLD into SFD • Enter into VENSIM • Perform sensitivity and validation studies • Perform policy and WHAT IF experiments • Write recommendations
  • 18. Causal Modeling • A way to characterize the physics of the system • Lacking: a Newton to describe the causality in these systems, to characterize the physics in these processes—that’s what you will be doing
  • 19. What systems, processes • Socioeconomic systems • Energy/Environment/Economy systems • Biological systems • Managerial systems • Socio-psychological systems • Human-interaction systems • Organizational systems
  • 20. Energy systems • We are very interested in developing a current national energy model and have a start on that based on earlier work that I did years ago at Sandia National Laboratories
  • 22. Key Benefits of the ST/SD • A deeper level of learning – Far better than a mere verbal description • A clear structural representation of the problem or process • A way to extract the behavioral implications from the structure and data • A “hands on” tool on which to conduct WHAT IF
  • 23. Stock and Flow Notation-- Quantities • STOCK • RATE • Auxiliary Stock Rate i1 i2 i3 Auxiliary o1 o2 o3
  • 24. Stock and Flow Notation-- Quantities • Input/Parameter/Lookup • Have no edges directed toward them • Output • Have no edges directed away from them i1 i2 i3 Auxiliary o1 o2 o3
  • 25. Inputs and Outputs • Inputs • Parameters • Lookups • Outputs Input/Parameter/Lookup a b c
  • 26. Stock and Flow Notation--edges • Information • Flow a b x
  • 27. Some rules • There are two types of causal links in causal models – Information – Flow • Information proceeds from stocks and parameters/inputs toward rates where it is used to control flows • Flow edges proceed from rates to states (stocks) in the causal diagram always
  • 28. Systems Thinking basics • Effects are spatially and temporarily separated from their causes • Today’s problems are yesterday’s solutions • Complexity coping requires understanding dynamic complexity, not detail complexity
  • 29. Nature’s Templates: the Archetypes • Structures of which we are unaware hold us prisoner • The swimmer scenario • Certain patterns of structure occur again and again: called ARCHETYPES
  • 30. We are creating a “language” • reinforcing feedback and balancing feedback are like the nouns and verbs • systems archetypes are the basic sentences • Behavior patterns appear again in all disciplines- -biology, psychology, family therapy, economics, political science, ecology and management • Can result in the unification of knowledge across all fields
  • 31. Recurring behavior patterns • Do we know how to recognize them? • Do we know how to describe them? • Do we know how to prescribe cures for them? • The ARCHETYPES describe these recurring behavior patterns
  • 32. The ARCHETYPES • Provide leverage points, intervention junctures at which substantial change can be brought about • Put the systems perspective into practice • About a dozen systems ARCHETYPES have been identified • All ARCHETYPES are made up of the systems building blocks: reinforcing processes, balancing processes, delays
  • 33. Before attacking the ARCHETYPES we need to understand simple structures • The reinforcing feedback loop • The balancing feedback loop
  • 34. ARCHETYPE 1: LIMITS TO GROWTH • A reinforcing process is set in motion to produce a desired result. It creates a spiral of success but also creates inadvertent secondary effects (manifested in a balancing process) that eventually slow down the success. • All growth will eventually run up against constraints, impediments
  • 35. Management Principle relative to ARCHETYPE 1 • Don’t push growth or success; remove the factors limiting growth
  • 36. ARCHETYPE 1: LIMITS TO GROWTH • Useful in all situations where growth bumps up against limits • Firms grow for a while, then plateau • Individuals get better for a while, then their personal growth slows. • Falling in love is kind of like this • The love begins to plateau as the couple get to know each other better
  • 37. Structure state of stock growing action slowing action Balancing Reinforcing
  • 38. Understanding the Structure • High-tech orgs grow rapidly because of their ability to introduce new products • This growth plateaus as lead times become too long
  • 39. How to achieve Leverage • Most managers react to the slowing growth by pushing harder on the reinforcing loop • Unfortunately, the more vigorously you push the familiar levels, the more strongly the balancing process resists, and the more futile your efforts become. • Instead, concentrate on the balancing loop-- changing the limiting factor • This is akin to Goldratt’s Theory of Constraints--remove the bottleneck, the impediment
  • 40. Applications to Quality Circles and JIT • Quality circles work best when there is even- handed emphasis on both balancing and reinforcing loops • JIT has had to focus on recalcitrant suppliers • THERE WILL ALWAYS BE MORE LIMITING PROCESSES • When one source of limitation is removed, another will surface • Growth eventually WILL STOP
  • 41. Create your own LIMITS TO GROWTH story • Identify a limits to growth pattern in your own experience • Diagram it – What is growing – What might be limitations – Example--the COBA and University capital campaigns – NOW, LOOK FOR LEVERAGE
  • 42. Test your LIMITS TO GROWTH model • Talk to others about your perception • Test your ideas about leverage in small real-life experiments • Run and re-run the simulation model • Approach possible resistance and seek WIN-WIN strategies with them
  • 43. ARCHETYPE 2: shifting the burden • An underlying problem generates symptoms that demand attention. But the underlying problem is difficult for people to address, either because it is obscure or costly to confront. So people “shift the burden” of their problem to other solutions-- well-intentioned, easy fixes that seem extremely efficient.
  • 44. Shifting the burden scenario, continued • Unfortunately, the easier solutions only ameliorate the symptoms; they leave the underlying problem unaltered. The underlying problem grows worse and the system loses whatever abilities it had to solve the underlying problem.
  • 45. The Stereotype Structure Problem Symptomatic Solution Fundamental Solution Side effect BALANCING BALANCING REINFORCING Symptiom-Correcting Process Problem-Correcting Process Addictioin Loop
  • 46. Special Case: Eroding Goals • Full employment meant 4% unemployment in the 1960s, but 6 to 7% unemployment in the early 1980’s • Gramm-Rudman bill called for reaching a balanced budget by 1991, but this was shifted to 1993 and from 1993 to 1996 and from 1996 to 1998 • “If all else fails, lower your goals..”
  • 48. Another Example Costs of Higher Ed not funded by State or Students Raise tuition, add course fees, etc. Lower enrollments Perceived cost to the stude
  • 49. Still Another Example Heroics and Overtime Project Delayed Efectiveness of PM practices Reward for heroic behavior Improvement of processes/practices Symptom-correcting process Problem-correcting Process Addiction Loop
  • 50. Still other Problems • What about retention of students • The perceived fix is raise the admission standards • What about drug-related crime • The perceived fix is to remove the drugs from the street
  • 51. “Shifting the Burden” is an insidious problem • Is has a subtle reinforcing cycle • This increases dependence on the symptomatic solution • But eventually, the system loses the ability to apply the fundamental solution • The system collapses
  • 52. Senge Says • Today’s problems are yesterday’s solutions • We tend to look for solutions where they are easiest to find
  • 53. HOW TO ACHIEVE LEVERAGE • Must strengthen the fundamental response – Requires a long-term orientation and a shared vision • Must weaken the symptomatic response – Requires a willingness to tell the truth about these “solutions”
  • 54. Create your own “Shifting the Burden” Story • Is there a problem that is getting gradually worse over the long term? • Is the health of the system gradually worsening? • Is there a growing feeling of helplessness? • Have short-term fixes been applied? • The local Mexican restaurant problem of using coupons to generate business and then can’t get away from using the coupons because their customer base is hooked on coupons
  • 55. To structure your problem • Identify the problem • Next, identify a fundamental solution • Then, identify one or several symptomatic solutions • Finally, identify the possible negative “side effects” of the symptomatic solution
  • 56. Review • We have now seen two of the basic systems archetypes. – The Limits to Growth Archetype – The Shifting the Burden Archetype • As the archetypes are mastered, they become combined into more elaborate systemic descriptions. • The “sentences” become parts of paragraphs • The simple stories become integrated into more involved stories
  • 57. Robust Loops • In any loop involving a pair of quantities/edges, • one quantity must be a rate • the other a state or stock, • one edge must be a flow edge • the other an information edge
  • 58. CONSISTENCY • All of the edges directed toward a quantity are of the same type • All of the edges directed away from a quantity are of the same type
  • 59. Rates and their edges q1 q2 q3 RATES q4 q5 q6 Information edges Flow edges
  • 60. Parameters and their edges PARAMETER q1 q2 q3 Information edges
  • 61. Stocks and their edges q1 q2 q3 STOCK q4 q5 q6 Flow edges Information edges
  • 62. Auxiliaries and their edges AUXILIARY q1 q2 q3 q4 q5 q6 Information edges Information edges
  • 63. Outputs and their edges OUTPUT q1 q2 q3 Information edges
  • 64. STEP 1: Identify parameters • Parameters have no edges directed toward them
  • 65. STEP 2: Identify the edges directed from parameters • These are information edges always
  • 66. STEP 3: By consistency identify as many other edge types as you can
  • 67. STEP 4: Look for loops involving a pair of quantities only • Use the rules for robust loops identified above
  • 70. Distinguishing Stocks & Flows by Name NAME UNITS Stock or flow • Revenue • Liabilities • Employees • Depreciation • Construction starts • Hiring • material standard of living
  • 71. The VENSIM User Interface • The Time bounds Dialog box
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  • 75. A single-sector exponential growth model • Einstein said the most powerful force in the world was compound interest • interest taken in relation to principal • Each stock requires an initial value interest prinicipal Interest rate R Principal Interest Interest rate
  • 76. Let’s DO IT • Create the stock principal • Include the rate interest • Include the information connector • Initialize the stock • Simulate
  • 77. John vs. Jack • Each works for 30 years before retiring • John makes $2000 contributions to his IRA each year for the first five years and none there after. • Jack makes $2000 contributions to his IRA each year beginning in year six and continuing through year 30 • Each IRA yields a 15% compounded return • Which turns out to be larger?
  • 78. John vs. Jack--two interest accounts.mdl Principal Interest Interest rate Principal 0 Interest 0 Interest rate 0 contributions contributions 0 <Time> John Jack
  • 79. John vs. Jack 800,000 400,000 0 0 6 12 18 24 30 Time (Year) Principal : int1 Principal 0 : int1
  • 80. Contributions of John vs. those of Jack 2,050 1,525 1,000 475 -50 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 Time (Year) contributions : int1 contributions 0 : int1
  • 81. Another single-sector Exponential growth Model • Consider a simple population with infinite resources--food, water, air, etc. Given, mortality information in terms of birth and death rates, what is this population likely to grow to by a certain time. • A population of 200,000, growing at 1.3% a year. • A population of 1.6 billion with a birth rate norm of .04 and a death rate norm of .028
  • 82. Experiments with growth models • Models with only one rate and one state • Average lifetime death rates • Models in which the exiting rate is not a function of its adjacent state
  • 83. Example: • Build a model of work flow from work undone to work completed. • This flow is controlled by a “work rate.” • Assume that are 1000 days of undone work • Assume the work rate is 20 completed days a month • Assume the units on time are months • Assume no work is completed initially.
  • 84. Solving the problem of negative stock drainage • pass information to the outgoing rate • use the IF THEN ELSE function
  • 85. Shifting loop Dominance • Rabbit populations grow rapidly with a reproduction fraction of .125 per month • When the population reaches the carrying capacity of 1000, the net growth rate falls back to zero, and the population stabilizes • Starting with two rabbits, run for 100 months with a time step of 1 month • (This model has two loops, an exponential growth loop (also called a reinforcing loop) and a balancing loop)
  • 86. Shifting loop Dominance • Assumes the following relation for Effect of Resources • Effect of Resources = (carrying capacity - Rabbits)/carrying capacity • This is a multiplier • Multipliers are always dimless (dimensionless) • When rabbits are near zero, this is near 1 • When rabbits are near carrying capacity, this is near zero – This will shut down the net rabbit birth rate
  • 87. Rabbits Net Rabbit Birth rate Effect of resources Carrying capacity Normal Rabbit Growth Rate B R
  • 88. Rabbits 1,000 40 0 0 0 20 40 60 80 100 Time (Month) Rabbits : rab1 Net Rabbit Birth rate : rab1
  • 89. Dimensionality Considerations • VENSIM will check for dimensional consistency if you enter dimensions • Rigorously, all models must be dimensionally consistent • What ever units you use for stocks, the associated rates must have those units divided by TIME • An example follows
  • 90. Cascaded rate-state (stock) combinations • In the oil exploration industry, unproven reserves (measured in barrels) become proven reserves when they are discovered. The extraction rate transforms proven reserves into inventories of crude. The refining rate transforms inventories of crude into refined petroleum products. The consumption rate transforms refined products into pollution (air, heat, etc.)
  • 91. Another cascaded rate-stock combination • Population cohorts. Suppose population is broken down into age cohorts of 0-15, 16- 30, 31-45, 46-60, 61-75, 76-90 • Here each cohort has a “lifetime” of 15 years • Again, each rate has the units of the associated stocks divided by time
  • 92. A single-sector Exponential goal-seeking Model • Sonya Magnova is a resources planner for a school district. Sonya wishes to a maintain a desired level of resources for the district. Sonya’s new resource provision policy is quite simple--adjust actual resources AR toward desired resources DR so as to force these to conform as closely as possible. The time required to add additional resources is AT.
  • 93. The Sector Approach to the Determination of Structure • What is meant by “sector?” • What are the steps – to determination of structure within sectors – to determination of structure between sectors
  • 94. Definition of sector • All the structure associated with a single flow • Note that there could be several states associated with a single flow – The next sector in the pet population model has three states in it
  • 95. Sector Methodology, Overall • Identify flows (sectors) that must be included within the model • Develop the structure within each sector of the model. – Use standard one-sector sub-models or develop the structure within the sector from scratch using the steps in Table 15.5
  • 96. Sector Methodology, Overall Cont’d • Develop the structure between all sectors that make up the model • Implement the structure in a commercially available simulation package
  • 97. Steps Required to Formulate the Structure for a Sector from Scratch • Specify the quantities required to delineate the structure within each sector • Determine the interactions between the quantities and delineate the resultant causal diagram • Classify the quantity and edge types and delineate the flow diagram
  • 98. • Resource, facility and infrastructure (desks, chairs, computers, networks, labs, etc.) needs for an educational entity are driven by a growing population that it serves. Currently, the population stands at 210,000 and is growing at the rate of two percent a year. One out of every three of these persons is a student. • One teacher is needed for every 25 students. Currently, there are 2,300 actual teachers; three percent of these leave each year. Construct a structure for each that drives the actual level toward the desired level. Assume an adjustment time of one year. Set this up in VENSIM to run for 25 years, with a time-step of .25 years.
  • 99. • One teacher is needed for every 25 students. One- hundred square feet of facility space is needed for each student. Thirty-five hundred dollars in infrastructure is needed for each student. Currently, there are 2,300 teachers; three percent of these leave each year. Currently, there is five million sq. ft of facility space, but this becomes obsolescent after fifty years. Currently, there is $205,320,000 in infrastructure investment, but this is fully depreciated after ten years. For each of infrastructure, teachers and facility space, determine a desired level or stock for the same. Construct a structure for each that drives the actual level toward the desired level.
  • 100. • Set this up in VENSIM to run for 25 years, with a time-step of .25 years. Assume adjustment times of one year. DETERMINE HOW MUCH IN THE WAY OF FACILITIES, TEACHERS AND INFRASTRUCTURE ARE NEEDED PER YEAR OVER THIS TIME PERIOD.
  • 101. What are the main sectors and how do these interact? • Population • Teacher resources • Facilities • Infrastructure
  • 102. Factors affecting teacher departures • Inside vs. outside salaries • Student-teacher ratios • How might these affects be included?
  • 103. Teacher departure description • It is known that when the ratio of average “inside the district” salary is comparable to outside salaries of positions that could be held by teachers, morale is normal and teacher departures are normal • When the inside-side salary ratio is less than one, morale is low and departures are greater than normal • The converse is true as well
  • 104. Teacher departure description • When student-teacher ratios exceed the ideal or desired student teacher ratio, which is twenty four, morale is low and again departures are greater than normal • The converse is true as well
  • 105. A Two-sector Housing/population Model • A resort community in Colorado has determined that population growth in the area depends on the availability of housing as well as the persistent natural attractiveness of the area. Abundant housing attracts people at a greater rate than under normal conditions. The opposite is true when housing is tight. Area Residents also leave the community at a certain rate due primarily to the availability
  • 106. Two-sector Population/housing Model, Continued • The housing construction industry, on the other hand, fluctuates depending on the land availability and housing desires. Abundant housing cuts back the construction of houses while the opposite is true when the housing situation is tight. Also, as land for residential development fills up (in this mountain valley), the construction rate decreases to the level of the demolition rate of houses.
  • 107. What are the main sectors and how do these interact? • Population • Housing
  • 108. What is the structure within each sector? • Determine state/rate interactions first • Determine necessary supporting infrastructure – PARAMETERS – AUXILIARIES
  • 109. What does the structure within the population sector look like? • RATES: in-migration, out-migration, net death rate • STATES: population • PARAMETERS: in-migration normal, out- migration normal, net death-rate normal
  • 110. What does the structure within the housing sector look like? • RATES: construction rate, demolition rate • STATES: housing • AUXILIARIES: Land availability multiplier, land fraction occupied • PARAMETERS: normal housing construction, average lifetime of housing • PARAMETERS: land occupied by each unit, total residential land
  • 111. What is the structure between sectors? • There are only AUXILIARIES, PARAMETERS, INPUTS and OUTPUTS
  • 112. What are the between-sector auxiliaries? • Housing desired • Housing ratio • Housing construction multiplier • Attractiveness for in-migration multiplier • PARAMETER: Housing units required per person
  • 113. Nature’s Templates: the Archetypes • Structures of which we are unaware hold us prisoner • The swimmer scenario • Certain patterns of structure occur again and again: called ARCHETYPES
  • 114. We are creating a “language” • reinforcing feedback and balancing feedback are like the nouns and verbs • systems archetypes are the basic sentences • Behavior patterns appear again in all disciplines--biology, psychology, family therapy, economics, political science, ecology and management • Can result in the unification of knowledge
  • 115. Recurring behavior patterns • Do we know how to recognize them? • Do we know how to describe them? • Do we know how to prescribe cures for them? • The ARCHETYPES describe these recurring behavior patterns
  • 116. The ARCHETYPES • provide leverage points, intervention junctures at which substantial change can be brought about • put the systems perspective into practice • About a dozen systems ARCHETYPES have been identified • All ARCHETYPES are made up of the systems building blocks: reinforcing processes, balancing processes, delays
  • 117. Before attacking the ARCHETYPES we need to understand simple structures • the reinforcing feedback loop • the balancing feedback loop • THE DEMO
  • 118. ARCHETYPE 1: LIMITS TO GROWTH • A reinforcing process is set in motion to produce a desired result. It creates a spiral of success but also creates inadvertent secondary effects (manifested in a alancing process) that eventually slow down the success.
  • 119. Management Principle relative to ARCHETYPE 1 • Don’t push growth or success; remove the factors limiting growth
  • 120. ARCHETYPE 1: LIMITS TO GROWTH • Useful in all situations where growth bumps up against limits • Firms grow for a while, then plateau • Individuals get better for a while, then their personal growth slows. • Falling in love is kind of like this • The love begins to plateau as the couple get to know each other better
  • 121. Structure state of stock growing action slowing action Balancing Reinforcing
  • 122. Understanding the Structure • High-tech orgs grow rapidly because of ability to introduce new products • This growth plateaus as lead times become too long
  • 123. How to achieve Leverage • Most managers react to the slowing growth by pushing harder on the reinforcing loop • Unfortunately, the more vigorously you push the familiar levels, the more strongly the balancing process resists, and the more futile your efforts become. • Instead, concentrate on the balancing loop-- changing the limiting factor • This is akin to Goldratt’s Theory of Constraints--remove the bottleneck, the impediment
  • 124. Applications to Quality Circles and JIT • Quality circles work best when there is even- handed emphasis on both balancing and reinforcing loops • JIT has had to focus on recalcitrant suppliers • THERE WILL ALWAYS BE MORE LIMITING PROCESSES • When once source of limitation is removed, another will surface • Growth eventually WILL STOP
  • 125. Create your own LIMITS TO GROWTH story • Identify a limits to growth pattern in your own experience • Diagram it – What is growing – What might be limitations – Example--the COBA and University capital campaigns – NOW, LOOK FOR LEVERAGE
  • 126. Test your LIMITS TO GROWTH model • Talk to others about your perception • Test your ideas about leverage in small real-life experiments • Run and re-run the simulation model • Approach possible resistance and seek WIN-WIN strategies with them
  • 127. ARCHETYPE 2: shifting the burden • An underlying problem generates symptoms that demand attention. But the underlying problem is difficult for people to address, either because it is obscure or costly to confront. So people “shift the burden” of their problem to other solutions- -well-intentioned, easy fixes that seem extremely efficient. Unfortunately the easier solutions only ameliorate the symptoms; they leave the underlying
  • 128. The Stereotype Structure Problem Symptomatic Solution Fundamental Solution Side effect BALANCING BALANCING REINFORCING Symptiom-Correcting Process Problem-Correcting Process Addictioin Loop
  • 129. Special Case: Eroding Goals • Full employment meant 4% unemployment in the 60’s, but 6 to 7% unemployment in the early 1980’s • Gramm-Rudman bill called for reaching a balanced budget by 1991, but this was shifted to 1993 and from 1993 to 1996 and from 1996 to 1998 • “If all else fails, lower your goals..”
  • 130. “Shifting the Burden” is an insidious problem • Is has a subtle reinforcing cycle • This increases dependence on the symptomatic solution • But eventually, the system loses the ability to apply the fundamental solution • The system collapses
  • 131. Senge Says • Today’s problems are yesterday’s solutions • We tend to look for solutions where they are easiest to find
  • 132. HOW TO ACHIEVE LEVERAGE • Must strengthen the fundamental response – Requires a long-term orientation and a shared vision • Must weaken the symptomatic response – Requires a willingness to tell the truth about these “solutions”
  • 133. Create your own “Shifting the Burden” Story • Is there a problem that is getting gradually worse over the long term? • Is the overall health of the system gradually worsening? • Is there a growing feeling of helplessness? • Have short-term fixes been applied? • The Casa Olay problem of using coupons to generate business and then can’t get away from using the coupons because their customer base is hooked on coupons
  • 134. To structure your problem • Identify the problem • Next, identify a fundamental solution • Then, identify one or several symptomatic solutions • Finally, identify the possible negative “side effects” of the symptomatic solution
  • 135. Review • We have now seen two of the basic systems archetypes. – The Limits to Growth Archetype – The Shifting the Burden Archetype • As the archetypes are mastered, they become combined into more elaborate systemic descriptions. • The basic “sentences” become parts of paragraphs
  • 136. Seeing Structures, not just Trees • Helps us focus on what is important and what is not • Helps us determine what variables to focus on and which to pay less attention to