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System Dynamics

The field of System Dynamics focuses on problematic business dynamics. For example:

  • sales cannibalization: maximizing market share in transition between product generations
  • overshooting and undershooting demand with capacity and inventories

A wide variety of operational procedures can lead companies to make dynamics worse, typically through long lead times and reporting chains.

From the MIT System Dynamics Group:

"The System Dynamics Group was founded in the early 1960s by Professor Jay W. Forrester at MIT. At that time, he began applying what he had learned about systems during his work in electrical engineering to every day kinds of systems. What makes using system dynamics different from other approaches to studying complex systems is the use of feedback loops. Stocks and flows help describe how a system is connected by feedback loops which create the nonlinearity found so frequently in modern day problems. Computers software is used to simulate a system dynamics model of the situation being studied. Running "what if" simulations to test certain policies on such a model can greatly aid in understanding how the system changes over time."

See also the System Dynamics Society