System dynamics and strategy simulation
System dynamics (SD) is a proven, scientific approach for understanding the behaviour of complex systems over time, using simulation.
"System dynamics deals with how things change through time, which includes most of what most people find important. It uses computer simulation to take the knowledge we already have about details in the world around us and to show why our social and physical systems behave the way they do. System dynamics demonstrates how most of our own decision-making policies are the cause of the problems that we usually blame on others, and how to identify policies we can follow to improve our situation."
(Source: Jay W. Forrester, Emeritus Professor of Management, Sloan School Massachusetts Institute of Technology)
SD was first developed at the Massachusets Institute of Technology (MIT) in the 1950’s and has since been applied extensively in many spheres of science and research, including many applications in business and public policy.
The distinguishing characteristics of SD are (a) the use of feedback and resources to describe system structure and behaviour, (b) the essential simplicity of the SD "language", overlaying an extremely powerful analytical toolset and, (c) the universal applicability of the approach to describe the behaviour of any type of dynamic system.
System dynamics in strategy. In response to a specific strategy concern or interest, the relevant structure of an organisation is described by the different resources that it comprises and the interdependencies between those resources, using a simple visual language (a "system map"). Specialised software is used to convert system maps directly into simulations that describe the inferred behaviour over time. Different strategy/policy options are explored in scenarios - partly by parameterisation, but essentially through structural alterations to the system map and simulation.
There are many sources of information about system dynamics on the internet. For general information and sources see:
International System Dynamics Society (ISDS)
What's in a name? System dynamics, systems thinking, business dynamics or strategy dynamics?
Don't be confused. Over the past twenty years or so, the essence of system dynamics in business has been "packaged" in several directions - in particular the systems thinking movement and the strategy dynamics movement. Some academics use the term business dynamics. Whilst each of these approaches has some distinctive features, even academics and experienced practitioners often use the terms interchangeably. It is enough for the layman to regard them each simply as branches of the all-embracing method of system dynamics.
System dynamics software
A number of companies produce specialist system dynamics software. The fundamental structure of each is the same - the language of resources and feedback - but the characteristics and capabilities vary widely. Here we provide links to each of the main software companies: