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

4. An Event-Oriented View of Problems

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

11. Introduction to SD

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

20. Case Study: Workforce Planning

21. Case Study: Workforce Planning

22. Case Study: Workforce Planning

23. Case Study: Workforce Planning

24. Case Study: Workforce Planning

25. Questions???
martin.kunc@managingyourcomplexity.co.uk / martin.kunc@wbs.ac.uk
Thank you