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A unique framework to address complex challenges: System Dynamics

Many executives in today's complicated business world are finding they no longer have the tools and techniques needed to address complex problems. MIT Sloan Professor John Sterman says there is a solution and it's called system dynamics--a powerful framework for identifying, designing, and implementing solutions for complex challenges. A technique that was invented at MIT several decades ago, it is even more applicable today and widely used by companies, governments, and communities around the world.

Some executives think they have a separate problem related to marketing, finance, or operations--the operative word here being "separate," according to Professor Sterman. However, Sterman says, "People don't have these separate problems. We just have problems, and when we insist on dividing the world into those silos and acting locally, our problems usually get worse." The solution, he adds, and, in fact, a core idea of systems thinking is to help executives understand that they are embedded in systems that often mold their behavior in ways they don’t appreciate. Yet these same executives "are often responsible for designing the systems in which they and their direct reports operate ..."

Nelson Repenning, who is also a professor at MIT, agrees and adds that system dynamics is a technique that can help people make sense of the complexity found in modern organizations, and also help them intervene in this complexity more effectively. In addition, he says executives who embrace the systems thinking concept are often those who have reached a point where their current knowledge and tools are no longer working; they find the problems they are dealing with are more difficult and not amenable to traditional solutions. Repenning explains that system dynamics provides these managers with skills and framework so they can take better advantage of the tools they already have--and confront the complexities they face as they move up in the organization.

Applying Practical Tools and Perspectives Back at the Office

The MIT Sloan Executive Education week-long course, Business Dynamics: MIT's Approach to Diagnosing and Solving Complex Business Problems, takes a deep dive into system dynamics. This course is taught by Sterman and Repenning, as well as David Miller and Mark Paich.

Through hands-on workshops, interactive role play, mock negotiations, MIT's management flight simulators, and close interaction with the faculty, course participants address a variety of issues that range from operations to strategy to human resources in an integrated way. The program covers a variety of specific examples so that participants can apply lessons learned back at their organizations, while the curriculum addresses topics such as how to run an effective supply chain and marketing-oriented problems around launching a new product, as well as large-scale project management and service management. Participants will also experience the Beer Game, a fun exercise that simulates supply chain concepts while illustrating the aspects of system dynamics with paper, pen, and poker chips.

John Sterman is the Jay W. Forrester Professor of Management, Professor of System Dynamics and Engineering Systems, and Director of the MIT System Dynamics Group. Nelson Repenning is the School of Management Distinguished Professor of System Dynamics and Organization Studies, and Faculty Director of the MIT Executive MBA Program. Mark Paich is an MIT Sloan Senior Lecturer. David Miller is the Executive Managing Director of the Clean Energy Venture Group.

This entry was posted in on Wed May 18, 2016 by MIT Sloan Executive Education

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