FUBUTEC 2013, 9th Future Business Technology Conference University of Lincoln, United Kingdom, June 10-12, 2013 F UTURE D ECISION -M AKERS AND C OMPLEXITY : L EARNING PROBLEM STRUCTURING THROUGH S YSTEM D YNAMICS Eliseo Vilalta-Perdomo, Lincoln Business School University of Lincoln, UK

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 Rationale Aim : This paper deals with the challenge of introducing our students, future decision-makers, to the process of simulating complex behaviours. Proposal : To engage students in a real research project in order to learn complex problem structuring through System Dynamics (SD). Contribution : The effectiveness and efficiency of different SD educational approaches can be evaluated by means of Forrester’s criteria.

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 Decision–making Traditional approach “I keep six honest working men (They taught me all I knew); Their names are What and Why and When And How and Where and Who”. Kipling R. (1902) ‘The Elephant's Child’, Just So Stories

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 Limitations to decision–making Interpretations of ‘complexity’ 1. Detailed complexity Environments constituted by immense amounts of actors interacting through (almost) infinite relationships. 2. Dynamic complexity Subtle changes recognizable only after it is too late to react. Emergency Unexpected side-effects

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 Complexity awareness: System Dynamics as a possibility System dynamics (SD) is a computer-aided approach to policy analysis and design. It applies to dynamic problems arising in complex social, managerial, economic, or ecological systems — literally any dynamic systems characterized by interdependence, mutual interaction, information feedback, and circular causality (System Dynamics Society, 2013)

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 Complexity awareness: Aspects of reality explored through SD Business dynamics (Forrester 1961, Sterman 2002; Morecroft 2007; Warren 2008) Organizational behaviour (Senge 1992) Urban viability (Forrester 1969) Sustainability (Forrester 1973, Meadows et al, 1993) Systems thinking (Kauffman 1980)

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 SD capabilities Why to teach SD? Organising descriptive information Retaining richness of the real process Building on the experiential knowledge of managers Revealing the variety of dynamic behaviours according to different policies (Forrester, 1989)

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 SD capabilities Organising descriptive information Traditional approach: To provide order to observations before these are collected –i.e. use authority (Zeeuw, 2001). – Quality (Deming, Juran and Ishikawa) to systematize observations and coordinate organizational actions for improvement. – System (Ackoff, Beer, Checkland or Friend) to identify how to induce certain kind of interaction between diverse elements that constitutes an organization, to improve also the organizations’ performance. SD approach : To organize what we observe through ‘generic structures’ –i.e. ‘system archetypes’ (Senge, 1992; Wolstenhome, 2003). – Behaviours such as exponential growth, goal seeking or oscillation are simulated through accumulators (‘levels’), rates of changes (´flows’), and mutual interactions (‘feedback’).

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 SD capabilities Retaining richness of the real process Traditional approach: To select a section of reality, to identify its characteristics, and to extend this characterization to other parts of it. – Statistics and Probability: Limitation unable to look at emergent behaviours SD approach: To identify which elements and/or interactions trigger preferred behaviours – Systems thinking: SSM, VSM, CHS, Interactive Planning – Complex systems: Chaos theory, Complex Adaptive Systems

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 SD capabilities Building on the experiential knowledge Traditional approach: To separate knowledge from action, and thus the bearer of knowledge from the influence of his own intervention. SD approach: Learning by doing – e.g. simulation

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 SD capabilities Behaviours related to different policies Traditional approach: Impossibility Theorem (Arrow, 1950); Non-technical problem (Hardin, 1968); Wicked problems (Rittel and Webber, 1973) SD approach: Testing different scenarios / configurations – e.g. simulation – Key objectives: To define new policies and evaluate their impact. To increase understanding and also learning, ‘insight generation capacity’ – Main challenge: to make it more accessible to the widest range of scholars, students and policy makers.

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 Teaching SD Sizing the task: What is SD?

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 Teaching SD Sizing the task: What is SD for?

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 How to teach SD? Traditional approach 1.Define problems dynamically, in terms of graphs over time. 2.Strive for an endogenous, behavioural view of the dynamics of the system. 3.Think of all concepts in the real system as continuous quantities interconnected in loops of information feedback and circular causality. 4.Identify independent stocks or accumulations (levels) in the system and their inflows and outflows (rates). 5.Formulate a behavioural model –i.e. computer simulation model expressed in nonlinear equations. 6.Derive understandings and applicable policy insights from model outcomes. 7.Implement changes resulting from model-based understandings and insights.

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 How to teach SD? PSM approach We induce our students to engage in a process of research. To define a problem to be solved (problem-based learning, PBL). To introduce a case to be studied (method of cases, MC). To enrol students in a project (project-oriented learning). Problem Structuring Methods: Family of participatory and interactive methods whose purpose is to assist groups of diverse composition tackle a complex problematic situation of common interest (Rosenhead 2009)

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 How to teach SD? PSM approach - Example El Bosque de la Primavera - protected area of 30 thousand hectares. The lung of Guadalajara (Mexico) 5 million inhabitants The students’ project: – identification of different variables that affect the viability of the forest. – exploring diverse policies and their impact in the forest density. – conduct several meetings with the ‘clients’ - engaged research. – SD modelling (urbanization, geothermal stations, material banks, illegal hunting, uncontrolled exploitation, excessive pasturing, fires, and motorcycling)

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 How to teach SD? PSM approach - Example Model outcomes were a surprise for ‘clients’: – Amount and size of the fires not related to visitors, but to weather. Winter rather than Summer the dangerous period, as then it is the dry season in Mexico. – Impact of reforestation. More effective and efficient to increase the reforestation than buying equipment to reduce fires – Fires (related to natural causes) are healthy to forest ecosystems – Restricting access policies are not effective measures – e.g. reducing visitors’ quotas

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 How to teach SD? PSM approach – Other examples Different regional/municipal issues: Pollution impact of a refinery in the city of Salamanca Water consumption in Irapuato Future education requirements in Zapopan Public transport in Guadalajara Deterioration of the Chapala Lake

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 How to teach SD? Any advantages/disadvantages Traditional Aim: Model about something Effective: to solve well-defined problems Efficient: it reduces variability and increases standardization in the teaching process Problem Structuring Method Aim: Model for something Effective: to build models with people unfamiliar with SD Efficient: students learn at first-hand how to deal with a complex situations, and ‘clients’ usually become surprised by the outcomes (insight generation)

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 How to teach SD? Conclusions SD is an effective and efficient way to teach and learn how to model complex behaviours. – First, it let us to introduce and test what is known in different scenarios and situations. – Second, it allows bringing new experiences to what is known. – Third, it can be used to teach and learn reducing potential damages to the real situation.

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 How to teach SD? Future activities Criteria to test if SD as a PSM is a more effective and efficient educational approach. Initial exploration To conduct SD education through a formal process of research To involve students in the development of ‘models for something’: – Effective, some knowledge is acquired and – Efficient, enough to avoid future errors by doing right actions in the present

FUBUTEC 2013, 9th Future Business Technology ConferenceUniversity of Lincoln, Lincoln, United Kingdom, June 10-12, 2013 Thanks for your attention Any questions or comments?