Table of Contents
Foreword
Preface & Acknowledgements
How to Use This Book
Chapter 1 The Appeal and Power of Strategic Modelling
Introduction
A New Approach to Modelling
The Puzzling Dynamics of International Fisheries
Model of a Natural Fishery
Simulated Dynamics of a Natural Fishery
Operating a Simple Harvested Fishery
Harvesting in Bonavista, Newfoundland ? A Thought Experiment
A Start on Analysing Dynamics and Performance Through Time
Saving Bonavista ? Using Simulation to Devise a Sustainable Fishery
Dynamic Complexity and Performance Through Time
Cunning Fish ? A Scenario with Reduced Dynamic Complexity
Preview of the Book and Topics Covered
Appendix - Archive Materials from World Dynamics
References
Chapter 2 Introduction to Feedback Systems Thinking
Ways of Interpreting Situations in Business and Society
Event-Oriented Thinking
Feedback Systems Thinking ? An Illustration
A Shift of Mind
The Invisibility of Feedback
A Start on Causal Loop Diagrams
Structure and Behaviour Through Time - Feedback Loops and the Dynamics of a Slow- to-Respond Shower
Processes in a Shower ?System?
Simulation of a Shower and the Dynamics of Balancing Loops
From Events to Dynamics and Feedback ? Drug Related Crime
A Feedback View
Scope and Boundary of Factors in Drug Related Crime
An Aside - More Practice with Link Polarity and Loop Types
Purpose of Causal Loop Diagrams ? A Summary
Feedback Structure and Dynamics of a Technology-Based Growth Business
Causal Loop Diagrams ? Basic Tips
Meaning of Arrows and Link Polarity
Drawing, Identifying and Naming Feedback Loops
References
Chapter 3 Modelling Dynamic Systems
Asset Stock Accumulation
Accumulating a ?Stock? of Faculty at Greenfield University
Asset Stocks in a Real Organisation ? BBC World Service
The Coordinating Network
Modelling Symbols in Use: A Closer Look at Drug Related Crime
Equation Formulations
Drug Related Crime
Funds Required to Satisfy Addiction
Street Price and Price Change
Allocation of Police
Experiments with the Model of Drug Related Crime
A ?Tour?of the Model, Escalating Crime
Drilling Down to the Equations
Anomalous Behaviour Over Time and Model Boundary
Benefits of Model Building and Simulation
References
Chapter 4 World of Showers
Getting Started
Taking a Shower in World of Showers A
Taking a Shower in World of Showers B
Re-Designing Your World of Showers
Reflections on World of Showers
Metaphorical Shower Worlds in GlaxoSmithKline, IBM and Harley-Davidson
Inside World of Showers
A Tour of Formulations in the Comfort-Seeking Loop of the Hidden Shower
Simulations of World of Showers B
References
Chapter 5 Cyclical Dynamics and the Process of Model Building
An Overview of the Modelling Process
Dynamic Hypothesis and Fundamental Modes of Dynamic Behaviour
Team Model Building
Employment and Production Instability ? Puzzling Performance Over Time
Dialogue About Production Control
Thought Experiment: a Surprise Demand Increase in an Ideal Factory
Equation Formulations and Computations in Production Control
Forecasting Shipments ? Standard Formulations for Information Smoothing
Inventory Control ? Standard Formulations for Asset Stock Adjustment
Desired Production
The Computations Behind Simulation
Modelling Workforce Management and its Effects on Factory Production Dynamics
Dialogue About Workforce Management
Operating Constraint Linking Workforce to Production
Simulation of the Complete Model: A Surprise Demand Increase in a Factory Where Production is Constrained by the Size of the Workforce
Pause for Reflection
Equation Formulations in Workforce Management
Departure Rate ? Standard Formulation for Stock Depletion
Hiring ? Standard Formulations for Asset Stock Replacement and Adjustment
Workforce Planning
Chronic Cyclicality in Employment and Production and How to Cure It
The Curious Effect of Randomness in Demand
Industry Cyclicality and Business Cycles
Policy Formulation and What-Ifs to Improve Factory Performance
Modelling for Learning and Soft Systems
A Second Pause for Reflection: System Dynamics and Soft Systems
A Link to Soft Systems Methodology
Alternative Views of a Radio Broadcaster
Appendix 1: Model Communication and Policy Structure Diagrams
Appendix 2: The Dynamics of Information Smoothing
References
Chapter 6 The Dynamics of Growth from Diffusion
Stocks and Flows in New Product Adoption ? A Conceptual Diffusion Model
The Bass Model ? An Elegant Special Case of a Diffusion Model
The Dynamics of Product Adoption by Word-of-Mouth
The Need to Kick-Start Adoption
The Complete Bass Diffusion Model With Advertising
The Dynamics of Product Adoption by Word-of-Mouth and Advertising
A Variation on the Diffusion Model: The Rise of Low-Cost Air Travel in Europe
easyJet - A Bright Idea, But Will it Work?
Visualising the Business: Winning Customers in a New Segment
Visualising Retaliation and Rivalry
Feedback Loops in the easyJet Model
Strategy and Simulation of Growth Scenarios
Using the Fliers Simulator to Create Your Own Scenarios
Simulation, Predictions and Scenarios
Conclusion
Appendix: More About the Equation Formulations and Boundary of the Fliers Model
Back to the Future ? from easyJet to People Express
References
Chapter 7 Managing Business Growth
A Conceptual Model of Market Growth and Capital Investment
Background to the Case
Adopting a Feedback View
Formulation Guidelines for Portraying Feedback Structure
Review of Operating Policies and Information Flows in the
Market Growth Model
Customer Ordering
Sales Force Expansion
Budgeting
Capital Investment
Goal Formation
An Information Feedback View of Management and Policy
Information Available to Decisionmakers and Bounded Rationality
Nature of Decision Making and the Decision Process
Policy Structure and Formulations for Sales Growth
Sales Force Hiring ? Standard Stock Adjustment Formulation
Sales Force Budgeting ? Revenue Allocation and Information Smoothing
Order Fulfilment ? Standard Stock Depletion Formulation
Customer Ordering
Policy Structure and Formulations for Limits to Sales Growth
Customer Response to Delivery Delay ? Non-Linear Graphical Converter
Customers? Perception of Delivery Delay ? Information Smoothing
Order Fulfilment and Capacity Utilization
Policy Structure and Formulations for Capital Investment
Assessment of Delivery Delay
Goal Formation ? Weighted Average of Adaptive and Static Goals
Production Capacity ? Two-Stage Stock Accumulation
Simulation Experiments
Simulation of Sales Growth Loop
Strength of Reinforcing Loop
Simulation of Sales Growth and Customer Response Loops
Simulation of the Complete Model with Sales Growth, Customer Response and Capacity Expansion Loops all Active ? The Base Case
Redesign of the Investment Policy
Top Management Optimism in Capital Investment
High and Unyielding Standards ? A Fixed Operating Goal for Delivery Delay
Policy Design, Growth and Dynamic Complexity
Conclusion
Overview of Policy Structure
Growth and Underinvestment at People Express?
More Examples of Growth Strategies that Failed or Faltered
Appendix - Gain of a Reinforcing Loop
References
Chapter 8 Industry Dynamics ? Oil Price and the Global Oil Producers
Problem Articulation ? Puzzling Dynamics of Oil Price
Towards a Dynamic Hypothesis
Model Development Process
A Closer Look at the Stakeholders and Their Investment Decisionmaking
Investment by the Independent Producers
Development Costs
Policy Structure and Formulations for Upstream Investment ? Fractional Asset Stock Adjustment
Oil Price and Demand
The Swing Producer
Quota Setting
The Opportunists
Russian Oil - Incorporating the Unforeseen
Connecting the Pieces - A Feedback Systems View
Two Invisible Hands and More
The Visible Hand of OPEC
Webs of Intrigue - Inside OPEC?s Elegant Bargaining Rooms
A Simple Thought Experiment: Green Mindset and Global Recession
Using the Model to Generate Scenarios
Archive Scenario 1: 10 Year Supply Squeeze Followed by Supply Glut
Archive Scenario 2: Quota Busting in a Green World
Contemporary Scenario: Asian Boom with Quota Busting, Cautious Upstream Investment and Russian Oil
A Contemporary High Price Scenario ? What Does it Take to Push Oil Price Over $60 per Barrel?
Devising New Scenarios
Effect of Global Economy and Environment on Demand
Cartel Quota Bias
Opportunists? Capacity Bias
Oil Price Bias
Capex Optimism
Time to Build Trust in Russia (only in Oil World 1995)
The Oil Producers? Microworld
References
Chapter 9 Public Sector Applications of Strategic Modelling
Urban Dynamics ? Growth and Stagnation in Cities
Urban Model Conceptualisation
Policy Implications of Urban Dynamics
Medical Workforce Dynamics and Patient Care
Background
Medical Workforce Planning Model
Quality of Patient Care
Base Run ? Changing Composition of the Medical Workforce
Base Run ? Quality of Patient Care
Intangible Effects of the European Working Time Directive
Modelling Junior Doctor Morale
Overview of the Complete Model
The Formulation of Work-Life Balance and Flexibility
Simulations of the Complete Model
Fishery Dynamics and Regulatory Policy
Fisheries Management
A Simple Harvested Fishery - The Biological Problem of Balancing the Catch with Fish Regeneration
A Harvested Fishery with Endogenous Investment - The Economic and Human Behaviour Problem of Coping with a Tipping Point
Simulated Dynamics of a Harvested Fishery with Endogenous Investment
Control and Regulation ? Policy Design for Sustainable Fisheries
Formulation of Deployment Policy
Stock and Flow Equations for Ships at Sea, Ships in Harbour and Scrap Rate
Simulated Dynamics of a Regulated Fishery - the Base Case
Policy Design ? A Higher Benchmark for Fish Density
Dynamics of a Weakly Regulated Fishery
Policy Design - Lower Exit Barriers Through Quicker Scrapping of Idle Ships
Sustainability, Regulation and Self-Restraint
Conclusion
Appendix on Alternative Simulation Approaches
From Urban Dynamics to SimCity
Discrete-Event Simulation and System Dynamics
Conclusions on Alternative Approaches to Simulation Modelling
References

Chapter 10 Model Validity, Mental Models and Learning
Mental Models, Transitional Objects and Formal Models
Models of Business and Social Systems
Tests for Building Confidence in Models
Model Confidence Building Tests in Action: A Case Study in Fast-Moving Consumer Goods
Soap Market Overview
The Modelling Project
Model Structure Tests and the Soap Industry Model
Boundary Adequacy and Structure Verification Tests Applied to a Simple Soap Model
A Refined View of the Market
Managerial Decision-Making Processes in the Old English Bar Soap Company
Managerial Decision-Making Processes in Global Personal Care
Managerial Decision-Making Processes in Supermarkets
Equation Formulation Tests and the Soap Industry Model
Substitution of Bar Soap by Shower Gel
Brand Switching Between Competing Bar Soap Products
Model Behaviour Tests and Fit to Data
Tests of Fit on Simulations of the Soap Industry Model - The Base Case Showing Simulated Performance of the Market Under Normal Operating Policies
Tests of Learning from Simulation
Comparing Simulations with Expectations and Interpreting Surprise Behaviour
Partial Model Tests to Examine Pet Theories and Misconceptions
Family Member Tests
Policy Implication Tests
Understanding Competitive Dynamics in the Fast-Moving Consumer Goods Industry
Summary of Confidence Building Tests
Conclusion ? Model Fidelity and Usefulness
References