Wednesday, October 29, 2008

Learning Through System Dynamics as Preparation for the 21st Century

Of what use is system dynamics? You might well ask of what use is systems thinking of any sort, but I'll save that for another day.

Jay Forrester has just published "Learning Through System Dynamics as Preparation for the 21st Century" in the October 2008 issue of The Systems Thinker (Volume 19, No. 8). It's a pretty comprehensive, five-page summary of what he thinks one should get from a system dynamics education. Each objective he lists falls into one of three categories:

  1. Developing personal skills
  2. Shaping an outlook and personality to fit the 21st century
  3. Understanding the nature of systems in which we work and live

In the process, he touches on factors I've mentioned here, including its ability to provide us a more effective language for thinking, its ability to help us apply lessons from one set of experiences in another setting, its ability to help us test policies before we apply them, and its reminder that we often create our own problems by virtue of the way we respond to the environment in which we operate. That last sounded depressing when I first realized it until I also realized it meant we have a lot of ability to be able to fix those problems, too, if our policies are their cause.

He presents the case rather comprehensively. If you or your institution subscribes to The Systems Thinker, be sure to read this article. If you don't subscribe, you can purchase individual articles, too. I imagine they'll list this article on their Web site soon; I just got my subscription copy today. (Be sure to follow the terms of their licensing.)



Blogger Ralf Lippold said...

Hi Bill,

Thanks for that great post. It is always a pleasure to learn about Jay's thoughts and they fit so perfectly into the present circumstances we are all in.

The systems are boiling (economic, bank, eco, ...) and yet we haven't found the knob to turn the temperature down while we think the temperature is the one we have to have right now.

I wonder whether fish would talk about water, as they swim all day in it?

Best regards


30 October, 2008 07:37  
Blogger Bill Harris said...

Thanks for the comment, Ralf. Perhaps we should all take a day off and go sit beside a stream to ask the fish. :-)

As silly as that idea may sound, it may contain a bit of utility. One of the engineering rules of thumb for feedback systems is that reducing the gain around feedback loops may make them more stable. Yet, especially in this election season in the USA, we seem to respond to problems by cranking up the gain, by talking or acting even more strongly in response to the current situation.

I'm not writing about the economic rescue packages (I haven't really delved into them), and rules of thumb only suggest action in complex, high-impact systems, they don't mandate it. As hard as it is, though, backing away from panicked reactions may be the best thing we can do, as long as we don't use that as an excuse to hide our heads in the sand.

So go sit by a stream and meditate / reflect / muse today. :-)


30 October, 2008 08:10  
Blogger Innovative Thinking said...

I think that the present financial meltdown is a classic case of an undamped oscillation of a system. Hence we would have to introduce damping in the system. Damping is something that goes against the motion and it is proportional to the velocity or if the speed is high it should be proportional to square of the velocity. Hence instead of offering rescue packages to dying organizations we should allow the organizations to die a natural death to quickly stabilize the system again. I know it is a hard choice but that is what should be done otherwise the economic system would die its own death.
dibyendu de

01 November, 2008 00:20  
Blogger Bill Harris said...

dibyendu de, thanks for your comments. The behaviors we've seen certainly look as if they could come from an underdamped system. It would be interesting to see a simplified system diagram of the economic system and then to try our various ideas to improve / fix it on the system we've described in the diagram. In addition to adding dampening, reducing the gain around feedback loops is another rule of thumb that sometimes works to reduce oscillations.

I wonder if it might be even more effective to change the structure of the feedback system. This current system may show cycles or even bubbles, and adding damping or reducing gains may reduce its tendency to those behaviors. Figuring out how much to dampen or how much to reduce gains (the amount of our reaction to events, for example) may be a bit subjective in a complex managed system as we have here.

I conjecture that one of its characteristics we've created is a positive feedback loop that strives to grow economic behavior. Would we benefit by driving the system with a goal-seeking loop instead, one that tries to match supply with demand rather one that tries to grow supply and let the market realities limit that growth? Thoughts?

01 November, 2008 21:53  
Blogger Innovative Thinking said...

Bill, I completely agree with your thinking that we need to change the structure of the feedback loop to gain long term stability and avoid such traps. Your idea to change the structure is excellent and probably the right thing to do.

It seems to me that there are in fact two positive feedback loops. The one that is apparent is the 'economic growth loop' that as you rightly say, would be limited by the market realities. The other positive feedback loop which arises as a consequence of the previous loop is the 'buying loop in times of abundance'. One loop tries to reinforce the other until underdamped oscillations are set up in the system (behaving like a coupled in-phase vibration)since the stiffness of the total system is low enough to limit the reinforcing behaviour.

Hence as you suggest we should strive to change the structure of the loops to that of a 'goal seeking loop' where the supply tries to match the demand with the minimum expenditure of energy (no energy loss) and having a small response delay time built into the system.

By doing so, we would avoid the in-phase coupling of the two loops to set up sympathetic underdamped oscillations of the system.

In fact, with an appropriate time delay we would automatically cancel out the undue resonant vibrations (gains)of individual feedback loops and achieve a balancing system rather than a reinforcing system.

The unnecessary gain -- reactions or emotional buying selling would automatically reduce and induce people to save and then spend without being too emotional about a purchase or a sale. These would be more rational based on informed decisions.

At the same time, we would also be able to avoid the inflationary pressures, which we might accidentally induce if we exactly match the supply with the demand without the response time delay.

The other important thing apart from the goal seeking feedback loops with time delay response is to establish the goal seeking feedback loops with the minimum energy requirement with the minimum energy loss in the system. This would ensure sustainablity of our future economic system and balance our constantly increasing demand from nature.

There is another interesting part of the model. That is to understand the source of the disturbance. By understanding the source of the disturbance the economic model would vary from country to country. For example, the source of the problem in the US is internal so we would have to place more absorbtion capacity into the system. While for India, China, Brazil, South Africa, Japan or Russia we might have to auto isolation system in case the disturbances are felt. Hence the model would have to be first custom built for each nation and then optimized as a global systems for the smooth functioning of the world wide economy. However, the development of the individual models would depend on which nation is the predominating economic force of the day. For example, presently it is the US.

Another interesting part of the models would be the role of manufacturing industries in the entire system. Too often, we place undue stress on the growth of financial organisations and stock markets. This is perhaps not the right perspective. The important but often overlooked component in the system is the manufacturing organisation. It must follow the balancing loop model otherwise the whole thing would fall apart and the manufacturing organisations would fail as well. Once the manufacturing industries adopt the balancing loop, the economy would be in a balanced state. It is also clear by this logic that driving out manufacturing industries from a country (as the US has done) is actually going to prove deterimental to the overall health of any national economy.

What do you think? It might be very worthwhile to develop the new model and structure to save ourselves this repeated embarrasment of depressive economic cycles appearing with a cycle time of approximately 30 to 40 years and hurting the people of the world and making their lives miserable and poor. The frequency seems to be increasing over time. We know that at higher frequencies even a small increase in the amplitude of oscillation can bring about the collapse of the entire system very easily. Now is the time to act.

But the point is as to how do we make economists, policy makers and captains of industries understand, develop and apply the model to make it a success.

Anyway, whatever it might be, there seems to be nothing that stops us from making new models and testing them out and predicting the outcome of the model. Then we might leave it to others to see the light of the day and save the world and its people.

Further thoughts!


02 November, 2008 00:42  
Blogger Bill Harris said...

dibyendu, thanks; you made me think.

While I have written about growth here a few times, wondering if we may have outlived the time in which a strong focus on business growth is useful, I had neglected the demand side. As the US comic strip character Pogo said in the 1960s, "We have met the enemy and he is us." Not surprisingly, we the consumer play at least an equal role in this.

You suggest the utility of an explicit model, and I agree. I think the transition from dominant growth feedback loops to dominant goal-seeking feedback loops could be accompanied by some degree of turmoil as we figure everything out, and some careful thought (and modeling) could help make it go more smoothly.

Thanks for your contribution. Other thoughts? Others' ideas?

02 November, 2008 12:15  

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