This presentation briefly introduces System Dynamics (SD) as an approach to understanding the behavior of complex systems over time.

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System dynamics- Farzad Pargar
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System dynamics- Farzad Pargar
What is a system?
A set of elements that is coherently organized and interconnected in a
structure that produces a characteristic set of behaviors.
Static system
 The output of the system depends only on the current input.
 The output does not change with the time if the input is held constant
(time-invariant)
Dynamic system
 The output of the system depends on the current and the previous input.
 The output changes with the time even if the input is constant (time
varying)4
SYSTEM
SYSTEM CLASSIFICATION: STATIC vs. DYNAMIC SYSTEMS

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System dynamics- Farzad Pargar
System dynamics (SD) is a methodology to explore complexity,
interconnectedness, and change over time.
 Developed in the late 1950s by MIT Professor Jay Forrester.
 SD is an extension of systems thinking.
 With SD we can analyze the possible effects of our models, given
different assumptions, policies, constraints, etc.
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WHAT IS SYSTEM DYNAMIC SIMULATION?

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WHAT IS SYSTEM DYNAMIC SIMULATION?
System dynamics requires a modeler to think about the system that he or
she wants to model as a number of interacting feedback loops and stocks
and relevant flows affecting them.
SD suggests you to …
• Model the system as a causally closed structure that defines its own behavior.
• Discover the system's feedback loops (circular causality). Feedback loops are the
heart of system dynamics.
• Identify stocks (accumulations) and flows that affect them.

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System dynamics is typically used in long-term, strategic models, and it
assumes high levels of object aggregation.
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WHAT IS SYSTEM DYNAMIC SIMULATION?
PARADIGM COMPARISON

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DO I NEED TO HAVE PROGRAMMING SKILLS?

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Systems Thinking (ST):
The process of understanding how things influence one another within a
whole. [Wikipedia]
System Dynamics (SD):
An approach to understanding the behavior of complex systems over time. It
deals with internal feedback loops and time delays that affect the behavior
of the entire system. [Wikipedia]
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SYSTEMS THINKING AND SYSTEM DYNAMICS
DEFINITIONS

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System dynamics- Farzad Pargar
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WHAT IS THE DIFFERENCE BETWEEN ST AND SD?
Systems thinking and system dynamics are two sides of the same coin.
 Systems thinking focusses on exploring interrelationships, including
creating causal loop diagrams and behavior over time graphs, without the
need for computer software.
 System dynamics employs systems thinking outputs such as causal loop
diagrams to focus on building and analyzing stock and flow

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System dynamics -which incorporates systems thinking- teaches us better
thinking. It results in better analysis and greater understanding.
 1st step: How to think? ST
 2nd step: How to model? SD
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SYSTEMS THINKING AND SYSTEM DYNAMICS
A TWO-STEP APPROACH

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STEP 1:
Systems Thinking

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How to decrease high rate of obesity in a city?
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SYSTEMS THINKING
A WAY TO MAXIMIZE PROGRAM EFFECTIVENESS

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An approach for developing models to promote our understanding of events,
patterns of behavior resulting in the events, and even more importantly, the
underlying structure responsible for the patterns of behavior.
Seeking to understand system behavior by examining the whole instead of
by analyzing the parts.
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WHAT IS SYSTEMS THINKING?
DEFINITION

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WHY TAKE A SYSTEMIC VIEW?
SYSTEMS THINKING
Drawing by Lewin; @1976 The new York magazine. Inc.

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WHY TAKE A SYSTEMIC VIEW?
SYSTEMS THINKING
Drawing by Lewin; @1976 The new York magazine. Inc.

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WHY TAKE A SYSTEMIC VIEW?
SYSTEMS THINKING
Delays
Velocity
Strength
Drawing by Lewin; @1976 The new York magazine. Inc.

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WHAT IS THINKING?
MENTAL MODELS
Kanizsa Triangle
What we see in the image is not
merely the sum of all its parts.
We see something more.
We actually perceive objects
that are not really there.

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“Thinking consists of two activities: constructing mental models and then
simulating them in order to draw conclusions and make decisions.” – Barry
Richmond
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WHAT IS THINKING?
MENTAL MODELS

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 Our human mental models (beliefs), along with structure, determine
system behavior.
 We have high leverage to influence behavior at the structural level, but
little, if any, reacting to events.
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WHERE MIGHT A SMALL CHANGE HAVE A DESIRED EFFECT?
LEVERAGE POINT
EVENTS
PATTERNS
OFEVENTS
High
Leverage to Influence
Low
SYSTEM
STRUCTURE
MENTAL
MODELS

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EXAMPLE: SYSTEM STRUCTURE DETERMINES BEHAVIOUR
SYSTEM STRUCTURE vs. VISION & MISSION
understand
structure
understand
behavior
design
policy

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PROBLEM SOLVING: PEST CONTROL
Problem: Insect “A” is damaging crops
Traditional Analysis Approach: Spray pesticide to kill the insects
Insect “A” Population Insect “B” Population
Pesticide Application Insect “A” Declines Crops Flourish
OVER TIME…
Insect “B” Population Explodes Crops Damaged Even More

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“The problems we have
created in the world
today will not be solved
by the level of thinking
that created them.”
--Albert Einstein
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Thinking in Systems

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14 HABITS OF SYSTEMS THINKER

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Step 2:
System Dynamics

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MODELING SYSTEMS
WHAT IS A MODEL?
 Everything we think we know about the world is a model.
 Good models are simple, yet capture the essentials!
We are in a

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MODELING SYSTEMS
“Essentially, all models
are wrong, but some
are useful.”
--George Box (Emeritus
Professor of Statistics,
University of Wisconsin-
Madison)

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The basic building blocks of dynamic models are stocks, flows, and loops.
 Stocks are denoted with squares, flow with a valve, and dynamic variables
with circles.
 Arrows denote causal dependencies in the model.
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SD MODELING
STOCK AND FLOW DIAGRAM

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System dynamics- Farzad Pargar
 Stocks (also known as levels, accumulations, or state variables) are the
foundation of any system and are the elements that you can see, feel,
count, or measure.
 Stocks do not have to be physical.
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STOCKS

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 Flows, also known as rates, change the value of stocks. In turn, stocks in
a system determine the values of flows.
 A stock is the present memory of the changing flows within the system.
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FLOWS

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 A feedback loop is formed when changes in a stock affect the flows into
or out of the stock.
 Balancing feedback loops (-) are stability seeking and try to keep a stock
at a certain level or within a certain range.
 Reinforcing feedback loops (+) occur when a system element has the
ability to reproduce itself or grow at a constant fraction of itself
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LOOPS

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REINFORCING AND BALANCING FEEDBACK LOOPS
LET’S TAKE A MINUTE TO FOCUS ON THE MEANING OF THE + AND THE –

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ANOTHER EXAMPLE
GROWTH OF POPOULATION THROUGH BIRTH
Causal Loop diagram:
Stock and Flow diagram:

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MODELS ARE NOT ALWAYS SO SIMPLE!
COUNTERINSURGENCY STRATEGY (COIN)

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EXAMPLE- CHICKEN AND EGG PROBLEM

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Assuming the birth and death loops, can you predict the population of
chickens after 10 months? Draw an stock and flow diagram!
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EXAMPLE- CHICKEN AND EGG PROBLEM

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 Bass Diffusion Model was developed by Frank Bass. It describes the
process of how new products get adopted in a population.
 The process is described as follows:
 The model describes a product diffusion process. Potential adopters of a product are
influenced into buying the product by advertising and by word of mouth from adopters –
those who have already purchased the new product.
 Adoption of a new product driven by word of mouth is likewise an epidemic. Potential
adopters come into contact with adopters through social interactions. A fraction of these
contacts results in the purchase of the new product.
 The advertising causes a constant fraction of the potential adopter population to adopt each
time period.
 Can you draw a conceptual model for Bass diffusion model?
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EXAMPLE: BASS DIFFUSION MODEL
DIFFUSION of a NEW PRODUCT, INNOVATION, or IDEA

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 Can you draw a conceptual model for Bass diffusion model?
 Follow the Bass Diffusion tutorial in Anylogic. You’ll find a step-by-step
instructions for creating the model in Anylogic’s HelpTutorialsBass
Diffusion (System dynamics)
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EXAMPLE: BASS DIFFUSION MODEL
DIFFUSION of a NEW PRODUCT, INNOVATION, or IDEA

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IMPLEMENTING BASS DIFFUSION IN ANYLOGIC
SD MODELING

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Takeaways
 System dynamics is highly visual. Implicit mental models are made explicit and
thus easier to share, understand, and critique. It result in better analysis and
greater understanding.
Themes for the learning diary
 Explain main features of systems thinking and system dynamics
 Pros and cons of SD in comparison with discrete event and agent-based simulation
Group work exercise:
 How would you further develop the Bass diffusion model?
 How would you develop a system dynamic model to address complex health
problems such as obesity or depression.
Describe what helps or hinders the success of considered interventions or policies in
your model. Identify the leverage points.
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SUMMARY

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LOVE AS A COMPLEX SYSTEM
COMPLEX PROBLEM NEEDS SYSTEM THINKING

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 Borshchev A. (2013) The big book of simulation modelling: multimethod
modeling with Anylogic 6. Anylogic North America.
 Grigoryev I (2016) Anylogic 7 in three days: A quick course in simulation
modeling.
 Senge, P. (1990). The Fifth Discipline: The Art and Practice of the
Learning Organization
 Sterman, J. (2000). D., Business Dynamics: Systems Thinking and
Modeling for a Complex World
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REFERENCES

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Thanks for your attention.
Any questions?
farzad.pargar@oulu.fi