QUERY "System Dynamics Inside" - articulating business models (SD6660)

[SDMAIL Richard Stevenson]

Posted by  Richard Stevenson <rstevenson at valculus.com>

There are significant new pressures on companies - and finance officers in 
particular -  to articulate and communicate their business models more 
clearly.  See this short recent article.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/exclusions/bizschool/nosplit/23/BSSessay123.xml

Summary: "Companies aim to create and sustain long-term shareholder value.  
But markets are driven by fear and greed. Stuck in the middle are managers, 
especially chief financial officers (CFOs) who have to balance long-term 
planning with short-term market behaviour".

I believe that system dynamics has potentially a huge role to play in 
addressing these important new business issues.

But perhaps not as a 'headline' method.  The language and technology of SD 
is just too different ever to be accepted directly by business people - as 
50 frustrating years of 'pushing' the method to business clearly demonstrates.  
Frankly, the impact on business overall has been minimal.  And simply calling 
the same method 'strategy dynamics' has not changed much, either.

Maybe it's time for SD to accept that the method is not the message. It's a 
bit like accepting that a processor is not a computer - the "Intel inside" 
message has been much more successful for Intel than direct promotion of 
their chips could ever have been.  Who needs a chip, by itself?

Likewise, I suggest that SD needs to subordinate itself to a more global business 
message.  And that message is " all companies need to be better at explaining the 
business models of their companies - consistently and constantly".  SD (or even 
strategy dynamics) is central to this need - but it is not the whole solution, by 
any means.  Rather, SD needs to be incorporated within a more global method that 
articulates strategy, finance, valuation and performance management as an 
integrated whole.

As a first response, I have written a position paper entitled "The Value Cycle; an 
integrated strategy and finance architecture" that can be downloaded free from our 
website at www.valculus.com.  Alternatively, I will be pleased to send a copy direct 
to all inquirers.

This is in no sense intended to be an academic paper.  In the first place -  it's an 
invitation to all SD practitioners who care about better and more transparent 
business planning, to comment and suggest whether the ideas (a) have merit and 
(b) could be taken forward,

Richard

Richard Stevenson
Valculus Ltd
UK
Posted by  Richard Stevenson <rstevenson at valculus.com>
posting date  Mon, 15 Oct 2007 12:41:37 +0100