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 by Jay Forrester, 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, Professor of System Dynamics and Organization Studies 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.
Practical tools and perspectives
System Dynamics is core to our way of thinking at MIT Sloan Executive Education. Many of the programs in our portfolio incorporate systems thinking, and the following courses in particular focus on real-world problem solving using this tool:
Understanding and Solving Complex Business Problems presents an introduction to System Dynamics. Through exercises and simulation models, you’ll experience the long-term side effects and impacts of decisions and understand the ways in which performance is tied to structures and policies.
Business Dynamics: MIT's Approach to Diagnosing and Solving Complex Business Problems is a week-long, hands-on program that offers a deep dive into System Dynamics, including tools and techniques that you can apply to your own business environment as soon as you complete the program.
Participants in both programs experience the Beer Game, a table game developed by Jay Forrester, that illustrates the nonlinear complexities of supply chains and the way individuals are circumscribed by the systems in which they act.
We invite you to add System Dynamics to your toolkit by enrolling in either of the programs above.