Applying System Dynamics to company strategy, help would be

[Frank]

Hi there,

I’m currently a student doing my master thesis project at a software company in Silicon Valley. My project is about further defining the business strategy for this particular company. My mentor proposed to me to use System Dynamics to solve this problem. That is how I found out about this forum.

More about what I’m trying to achieve:

My company has a number of strategic objectives. I can not disclose them here so I will use general ones:
- Enter more foreign markets
- Improve quality
- Build more products
- Go into more industries
- Increase customer satisfaction
- Get larger customers

I’m currently struggling with the fact that all of these objectives seem important but I am still trying to figure out how to prioritize/structure these objectives. Obviously resources are limited so how should they be spent in order to obtain the highest returns.
For example, when it comes to the objectives mentioned above, some objectives might be contradictory (more products could mean less quality) and some might be subsets of others (better quality would lead to higher customer satisfaction). Then there are questions like what is the effect of achieving one objective on all of the other objectives (Positive? Negative?).
From what I understand System Dynamics could help me bring more clarity into the company’s strategy.

Do you think SD is the right way? I am very new to SD, I just installed Vensim and I have no idea how to start. Since Silicon Valley companies always want things to be done yesterday , help from your side would be very much appreciated. Some basis, including the objectives mentioned above, for me to build on would be of so much help to my project.
I’d also like to point out that this is a real life problem. If I can come to a solution with SD, this solution would actually be used to run the company.

Thank you in advance for your help.

Frank

[jfolczak]

Hi Frank -

John Sterman's book, Business Dynamics, is a classic. Additionally it comes with example models in Vensim, iThink and Powersim.

It may be a difficult read but it is a valuable reference work.

Also, in this forum, there is a post/discussion about Advanced SD Textbooks (4-8-2008) that may provide you with some useful information.

[LAUJJL]

Hi Frank.

To resume your question, your company wants some hints about being more profitable in the future.
This is a too general question and cannot be modelled, or eventually by highly experts people who will make no miracles anyhow. Computer simulation can model very precise questions that will generate relatively simple and tractable models but such general questions generate the need of a model of the system that Sterman and most authors advise against doing it.
The best thing to do first would be making several brains storming meetings, taking carefully notes of all the remarks about the subjects and trying to explore qualitatively first the problematic and once this is done, exploring eventually specific questions like for instance the single problematic of finding larger customers, verifying first its utility.
After having brainstormed that single problem long enough
that would already generate a model complex enough and
could bring eventually useful insights.
Regards.
JJ

[Ralf]

Hello Frank,

JJ is quite right that you first have to express the organization's real business issue it wants to tackle or which is bothering them.

I guess it is way too early to build a working SD model - there is lots of work to be done before hand: mostly thinking;-))

Check out "[Road Maps" by Jay W. Forrester.

...and have a look at http://www.systemdynamics.org/wiki

Cheers,

Ralf