Volume 21 – Number 4 October 2008
On Sunday July 20, 2008, many conference participants came together to attend the 9th PhD Colloquium of the Student Chapter of the System Dynamics Society. The colloquium was organized by Nici Zimmermann and Cecile Emery and attracted about 80 participants. This highly interactive event provided a platform for students to present their current work - research proposals and dissertation work in progress. The purpose of the day was to enable the students to receive valuable feedback from professors and peers, to get to know each other, and to learn in a pleasant atmosphere. David Lane's talk on "bad presentation skills" as well as a panel discussion on "publishing strategies" helped make it an insightful and enjoyable day.
Five doctoral students presented their work in plenary presentations, and seven students in a poster session in the afternoon. The poster session provided the opportunity for a one-to-one exchange with the presenters, and the plenary allowed for half an hour of discussion time for each presenter. The students came together from multiple countries - the USA and Western Europe, and also from Australia and the Middle East. The participants' geographic diversity yielded a rich mix of research interests that were discussed throughout the day. Topics included business and management applications, ecology, and health issues.
The five plenary presentations started with a presentation by Christian Lehr on supply chains. He analyzes closed-loop supply chains and simulates manufacturers' policy options of using new raw materials or recycled products. Subsequently Adel Alhuraibi's research was discussed. He hypothesizes that capacity fluctuations and delays have detrimental effects on customer satisfaction and supports his work with the study of two banks in Yemen. Asmeret Bier showed work in the ecology area and on thermal pollution - a simulation game that allows participants to explore trading options and their outcome for the water quality of a river. Rosie Sadsad addressed health issues. She explained chances that arise from the use of electronic health record systems to prevent adverse drug use that appears frequently in elderly patients. Michael Quigley's research revealed the differences in goals and reality in higher education enrollment in UK universities and explained dynamically why these goals are not met.
The core of the PhD Colloquium was surrounded by a talk and a panel discussion. In the morning, David Lane opened the Colloquium with a presentation on "How to Give a Bad Presentation". He presented negative rules that are best avoided when talking to an audience as well as positive lessons to remember. The day closed with a panel discussion on "Publishing Strategies", moderated by Peter Milling. Brian Dangerfield, John Morecroft, Brad Morrison, and Hazhir Rahmandad discussed their experience. They provided insights and gave background information into their own publishing strategies in general and specifically for System Dynamics Review. They particularly emphasized the importance of tailoring publishable work to the respective system dynamics or non-modeling audience. The feedback for this whole-day event was highly positive from the side of the students as well as from the audience. Students appreciated the interaction with more experienced system dynamicists who provided much feedback, and the wider audience regarded the Colloquium as a successful learning experience. Presenters used the PhD Colloquium not only to gain feedback on their work, but also to establish close relationships among the attending PhD students.
1. System Dynamics, RBV and Behavioral Theories of Firm Performance: Lessons from People Express, John Morecroft
1. John Morecroft presented a paper that elaborates on the connection between current topics in the main strategy literature and System Dynamics. According to him, in recent years several scholars and practitioners have proposed a combination of System Dynamics and the resource-based view of the firm, an approach which tries to explain competitive advantage by means of distinctive resources. Kim Warren's work about competitive strategy dynamics is but one example. Moreover, Morecroft emphasized the useful overlap between System Dynamics and the strategy research about dominant logic, an inquiry to explain bounded rational behavior of top management decision makers. He uses the well-known people express case as an example for the applicability of both the resource-based view and the dominant logic approach to explain company performance over time. No more than three interacting feedback loops are required to create the case's overshoot behaviour. In summary, the usefulness of System Dynamics for strategy research is shown based on two exemplary approaches.
2. Strategic planning tries to understand the connections between a corporation and its environment. Ideally, the interrelations in the corporation-environment system are researched comprehensively and known before a strategic planning instance occurs. The idea of the paper is to create a quantitative meta-model of this corporation-environment system to serve as a frame or reference for a new planning instance or for ex-post control purposes. The authors use PIMS (performance impact measurement study), a quantitative database of corporate performance, and develop a composite strategic planning framework. This framework draws on the data from the PIMS database, quantifies the linkages between important concepts and shows a way how to include the numerical data in a Meta-System Dynamics model for strategic planning. The paper concludes with a discussion about theoretical necessities and relevant criteria of the new and rich approach to quantify System Dynamics models.
Dyadic Communication to Monitor Project Scope: Social Construction of Meaning in an Aerospace Program, by Don Greer, Laura Black, Navid Ghaffarzadegan, and David Andersen
This paper addresses the crucial issue of communication dynamics among organizational units in large and complex projects. The research is based on the case study of a large system acquisition in the US Aerospace program. Actors interact across organizations, generating a communication process which contributes to build the socially constructed meaning, and, thus, to aligning objectives and co-ordinate behaviors.
Many questions were addressed concerning the model and the simulation results.
The Role of Goal Setting Practice on Sales and on the Broader Commercial System: A Case Study, by Francesco Ceresia
Goal-setting's role in motivation theory is well known as a field for interesting simulations and experiments. The strength of this research is the integration of tangible and intangible components of the goal- setting process and the relationships with other business variables and processes. The integrative nature of the model captured the interest of the audience, which addressed many questions about the model validation.
Introducing in a Non-Profit Organization a CSR Strategy through a Learning Oriented Perspective. The EMMSANAR Case-Study, by Enzo Bivona and Sonia Herrera Daza
CSR (Corporate social responsibility) should be easy to integrate in a non-profit organization, due to the social dimension of its constituency. "Do not speak so soon" is what Enzo and Sonia seem to tell us with their model, particularly when this issue concerns a large co-operative organization with dynamic relationships between headquarters and its local units.
The audience focused on the implications for the long-term development of the focal organization. The case showed how social strategy and governance issues can impact investments and, thus, influence the organization's survival.
Analyzing Grading and Promotion Using System Dynamics Modeling, by Izidean Aburawi
Human resource management is a traditional field of application of system dynamics. This paper describes how system dynamics can be used as a tool to model and analyze human resource planning issues, such as staff shortage, staff promotion, and training. The model is built on a case study of a petrochemical company; thus, simulations use real data. Simulation findings are helpful to design human resource planning strategies.
The poster session covered a variety of topics within organizational dynamics broadly defined from human resource management, centre-periphery relationships, goal setting impact over organizational behavior, and the impact of communication and social construction in aligning individual objectives and behavior.
Overall I noticed a fresh debate going on during the session.
I have also noticed a preference for human resource management and organizational behavior topics over organizational transformation and organizational dynamics (narrowly defined). Clearly the two poles of organizational dynamics (behavior and organization transformation) are interconnected, and system dynamics can provide a useful approach to study the link between the two.
Let me add a personal conclusion. Once we consider individual actors participating in (living) the transformation process, we are led to look at time multiplicity and at multiple time coordination. This can be an intriguing challenge for system dynamics modelers.
Synopsis: In this session two posters were presented. Dynamic Simulation of Construction Waste in Macao, by Kampeng Lei, Lianggang Lu, Waikin Chan is a poster which analyzes the tendency of the construction waste volume in Macao from 2006 to 2025. During the analysis many factors are taken into consideration, like the area of Macao, average stay time of tourists, population density, etc. Simulation and statistical analysis are the basic tools of the study. With the result of the simulation runs they make some predictions for the year 2025 about the construction volumes. The other poster is Modeling Spiral of Silence Process: A Case-Study of Iran Presidential Elections 1997, by Arash Farsi, Anahita Khojandi, Leila Soltani. They have studied on the political tendency of people in Iran, based on the data before and after the Presidential elections in 1997. They say that the number of supporters of the Reformists has increased considerably after the election.
Synopsis: This session introduced a new concept to the conference program: an opportunity for authors to present work that is still under development to seek feedback on its direction from other system dynamicists. Developmental papers are not reviewed through the normal conference submission system, nor are they published in the proceedings. More time is given to each presentation to allow for the exchange of ideas.
First, Alan Graham presented Four Grand Challenges for System Dynamics: Initial Work and Needed Evolution. In response to Jay Forrester's challenge at the 2007 conference to "move the field off its present plateau," Graham urged system dynamicists to address four serious global issues: insurgency and good governance, energy and global warming, harmonious Chinese growth, and crises of financial interdependency. Graham further outlined steps for making system dynamics models valued guides to action in these areas.
Next, Heiko Breitsohl presented Legitimacy Crises and Organizational Behavior. Breitsohl is considering how organizations respond to potentially devastating incidents such as industrial accidents, scandals, corruption and product failures and the degree to which those responses are perceived as appropriate to the stakeholders. Inappropriate responses can threaten the legitimacy of the organization.
Synopsis: The session, chaired by Emmanuel Adamides, contained three papers dealing with analysis of various aspects of the market structure and behavior. The topics covered in the session included duopoly market analysis, business model analysis and sales policy analysis.
Bernhard Kleer from the University of Stuttgart presented the paper Market Development of Airline Companies: A System Dynamics View on Strategic Movements co-authored by Eva-Maria Cronrath and Alexander Zock from the European Center for Aviation Development. The authors considered a single route between two cities served by two airline companies. They modeled and analyzed the impact of entry and exit of a low-cost carrier on a full-service incumbent while considering various market scenarios and airline policies.
Oliver Grasl from Transentis Management Consulting presented the paper Business Model Analysis: A Multi-Method Approach. He proposed a structured framework for formal analysis of a firm's business model combining Unified Modeling Language to capture the structural and behavioral aspects of a business model, and system dynamics to model the value creation dynamics. For the sake of illustration, the author used the proposed framework to analyze the business model of a small, partner-managed, professional services firm.
Hamid Foroughi presented the paper How Price Fluctuations Are Influenced by the Response of Intermediaries to Different Sales Methods co-authored by a team of his co-workers from the Iran Khodro Co., namely Arash Agha Gholizade Khiavi, Shahram Abyari, Arsalan Paleshi, and Mahdi Moafi Madani. The team analyzed the impact of various car sales policies on the behavior of market intermediaries and the associated price volatility. They developed a system dynamics model, both to gain more insight into the current behavior and to change the attitude of key decision-makers authorized to change the sales policies.
In the session on modeling adaptive networks and diffusion dynamics, three interesting and well designed research projects were presented. First, Georges Romme presented the results of a collaboration with Henk Akkermans on How Partnership Behavior Evolves in Networks. This research, based on a consulting project case, studies how transaction networks evolve between suppliers and OEMs. In a generic model the authors investigate how each of the suppliers shapes decisions to sell to an OEM or not. The decisions impact the probability of future partnership, thus leading to path dependent relationships in formation of network ties. The authors argue similar dynamics were in action when Nokia and Ericsson reacted differently to a failure in one of the part manufacturer's plants, letting Nokia forge new ties quickly and gain significantly over Ericsson in the handset market.
In the second paper, Ross Hammond presented his collaborative research with Joshua Epstein, Jon Parker, and Derek Cummings, from the Brookings institute, on the impact of fear dynamics on diffusion of disease. This research studies how fear spreads in the presence of disease and how fear may impact the dynamics of diffusion of disease itself as people may isolate themselves (thus reducing disease diffusion speed) or flee (and thus increase diffusion speed as distant locations get infected faster). The results show that even small levels of fleeing reaction can significantly exacerbate epidemics, while self-isolation has a strong dampening effect. These results highlight the significance of including behavioral feedbacks in dynamic models of epidemics.
Finally, Gonenc Yucel presented his work with Cornelia Van Daalen on the impact of actor-heterogeneity in modeling socio-technical transitions. They built three different models of transition from sail to steam ship and studied the capability of these models in capturing historical data as well as alternative modes of behavior. While even the simplest model did a very good job in fitting historical data, breaking it down into different market segments/actor groups brought in additional insights not obvious in the simpler model. However, going into more detail and capturing each shipping company in a segment had little additional value.
The first paper in the session was presented by Alan McLucas from Campbell, Australia, who wrote the paper with Naeem Khan. The paper presents a case study on the application of the Vee model of systems engineering to the system dynamics modeling of Dryland Salinity in Australia. McLucas began his presentation by explaining that Dryland salinity is a messy problem. Since European settlement in Australia, millions of trees have been cut down, which means that one million square kilometers of woods have been thinned or removed. Most of this process took place in the Murray Darling Basin. The paper presents a system dynamics model of the causes and consequences of this process to contribute to strategies to solve the problem. The model integrates insights from systems engineering with system dynamics. The researchers discuss the validation and verification of the model, to which they argue techniques from systems engineering contribute essentially.
The second paper in the session was presented by Krystyna Stave from Las Vegas, USA, who wrote the paper with doctoral student Michael Dwyer. The doctoral thesis the paper is based on took up the challenge of testing the different effects of group model building and traditional facilitation on the quality of group decision-making. The name of the paper is Group Model Building Wins: the Results of a Comparative Analysis. The researchers compared the input, content, and output of two real world stakeholder projects on urban growth in Las Vegas. They collected data from minutes, written documents, and direct observations. By systematically comparing the cases on the basis of qualitative methods, they discovered that group model building much more strongly supports stakeholders to talk about the causes of a problem than traditional facilitation. Traditional facilitation supports talking about alternatives. Moreover, group model building supports the division of the talking about causes, consequences, and solutions over different phases of the decision-making, while with traditional decision-making these phases stick together.
The third paper in the session was presented by Bent Erik Bakken from Oslo, Norway. The paper is titled System Dynamics War Stories and reflects upon the amount of success of eighteen cases of applied system dynamics in which the author was involved over the last twenty years. He discussed examples of system dynamics application on the supply of officers to the Norwegian army, of Russian economic development, and of the parameters of office rents between 1990 and 1999. The purpose of most cases was to help particular organizations, although some cases were also performed for more academic reasons. The researcher evaluates the client acceptance, the client change, and overall success of the efforts. He argues that client acceptance is the only significant indicator for the success of cases. Clients are often uncomfortable with the results and this negatively influences change opportunities.
The session, which was attended by about 35 people, ended with the opportunity to ask questions. The first question was to Krystyna: How was the data collected on the process of the decision-making? Krystyna answered that in addition to interviews, participant observation was performed and videos were taped.
The second question was to Bent: How many of the twenty cases were publicly available to the academic society? Bent answered that some cases for private organizations have to remain confidential, but fifteen cases are publicly accessible. However, twelve of them are only published in the Norwegian language.
Synopsis: This session took place at Omikron 2, Athenaeum Intercontinental Hotel, Athens Greece on Monday July 21 2008 and featured three presentations. The first paper: Human Perceptions of Climate Change was presented by Varun Dutt in which an interactive simulation based on the "bathtub" metaphor was built using the Dynamic Integrated Climate Economy model (DICE)-1992and used to examine the effects of the emissions of anthropogenic carbon dioxide in the atmosphere. The second paper titled: Simulation of Drainage Systems in Unsteady State Condition, Using system Dynamics was presented by Hamed Nozari. He presented a systems dynamics technique which was used to simulate the performance of a drainage system in unsteady state conditions, showing how the model in this paper could be used to predict many hydrological parameters such as water table fluctuation, drainage discharge, upward flux, evapotranspiration, deep percolation, infiltration, runoff, soil moister content and unsaturated hydraulic conductivity on the basis of variation of soil moister content. The last paper: System Dynamics Model of Southwestern New Mexico Hydrology to Assess Impact of the 2004 Arizona Water Settlements Act was presented by Leonard Malczynski. He presented the results of a collaborative modeling approach that is inclusive, multidisciplinary, quantitative, and transparent to all interested parties and showed how such an approach could be used to find collaborative solutions that cross institutional and political boundaries.
The System Dynamics Newsletter is published four times a year by the System Dynamics Society.