Thinking Outside the LinesSystem dynamics can expand to embrace not just scientific but also analytic business applications
by Edilberto Casado Continued from Page 1 Since a fundamental application of the balanced scorecard is to "communicate strategic objectives" to employees in all levels in an organization, there's a special opportunity to introduce systems dynamics as a common language known by everybody, as flowcharts were a time ago the main "language" to represent business processes. So, employees will be able to understand the effects of individual, teamwork, and strategic business unit contributions; and as they gain a better understanding of the whole organization's dynamics, they'll be able to find new opportunities for contributing to enterprise objectives. Regarding the relatively low presence of system dynamics as a business tool, a partial explanation could have been the lack of easy-to-use software applications and low availability of computer power for end users. These obstacles have been removed by increases in computing power at decreasing cost and by the availability of software programs such as iThink from High Performance Systems Inc. and Vensim from Ventana Systems Inc. I must give special mention to Powersim Corp., which has a partnership agreement with SAP to embed its stand-alone product Powersim Studio within the SAP Strategic Enterprise Management suite. Toward a Strategy and Business Processes LanguageBut more computer power and easy-to-use programs aren't enough to spread the utilization of system dynamics. It will succeed when employees in all levels of the organization adopt this discipline as a regular framework. I suggest two approaches for promoting this adoption. Development of systems thinking skills. This is the most important task but, because it involves a paradigm change, people need to continuously exercise these skills until they can comfortably exist apart from the linear thinking paradigm, present in most of us. For basic skills development, Michael Goodman and Richard Karash have proposed a quick methodology that gives good results. Gunther Ossimitz cites a more detailed list of possible approaches, two of which are sensitization toward systems aspects by information campaigns (such as lectures and courses) and computer simulation games (that I extend to simulation games in general, be they computerized or not). Availability of software applications to facilitate adoption through progressive transition. It would be ideal if users could work immediately with modern system dynamics software, but experience with some of my clients shows me this software takes some time for the user to learn. However, taking advantage of the wide spread of the "spreadsheet framework" (an expression referring to the conceptualization of business models as a set of cells and formulas in a spreadsheet) already present in every organization, a convenient way to facilitate adoption of system dynamics is through software applications that combine spreadsheet with visual and equation modeling features. Regarding this type of software, the most interesting and illustrative example I've found is DS Lab, introduced in 1993 by DS Group Inc. as the "first spreadsheet without cells." DS Lab used a set of symbols (circles, triangles, arrows, and the like) that represented model elements: inputs, variables, constants, series, tables, and relations. The model results were displayed in a classical spreadsheet grid, with variable names as row headers and interval labels as column headers. The steps to create a model in DS Lab (which are the same found in modern system dynamics software) were:
Though DS Lab wasn't designed with system dynamics in mind, it was the spreadsheet closest to the actual concept of system dynamics software. Unfortunately, I've found no reference to this product in the market since 1997, and I don't know of any similar product. On the CuspSystem dynamics is a powerful complement for analytic applications and business intelligence in general. One of the most important contributions of this discipline is to make an enterprise strategy visible so all the members of an organization can understand it, validate it, and improve it. But these efforts will be successful only with a clear vision of the features, advantages, and limitations of this tool. As many people adopt the "systems thinking" paradigm as a new way to see business dynamics, we can expect important improvements in organizational performance. My vision is that in the near future, everybody in any organization around the world will talk about their "dynamic models" the way they talk today about their "spreadsheet models." Edilberto Casado [ecasado@esan.com pe] is an independent consultant in information technology with 10 years of experience working with multinational companies and private and public Peruvian organizations. RESOURCESForrester, Jay W. Industrial Dynamics, M.I.T. Press, 1961 Goodman, Michael and Richard Karash. "Six Steps to Thinking Systemically," The Systems Thinker, Pegasus Communications Inc., Vol. 6, No. 2, March 1995 Kaplan, Robert and David Norton. "The Balanced Scorecard: Measures that Drive Performance," Harvard Business Review, January-February 1992 Kaplan, Robert and David Norton. The Strategy-Focused Organization, Harvard Business School Press, 2001 Ossimitz, Gunther. "The Development of Systems Thinking Skills Using System Dynamics Modeling Tools," Institut für Mathematik, Statistik und Didaktik der Mathematik, Universität Klagenfurt, Aug. 27, 1997: www.uni-klu.ac.at/users/gossimit/sdyn/gdm_eng.htm Reddy, Ram. "Through a Lens Smartly," IntelligentCRM, March 27, 2001: www.intelligentcrm.com/feature/010327/feat1.jhtml Sterman, John. Business Dynamics: Systems Thinking and Modeling for a Complex World, Irwing McGraw-Hill, 2000 Stinson, Craig. "New Dimensions in Spreadsheets," PC Magazine, Sept. 28, 1993 High Performance Systems: www.hps-inc.com Powersim: www.powersim.com SAP: www.sap.com Ventana Systems: www.vensim.com
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