Strategic Modelling and Business Dynamics: A Feedback Systems Approach

3.6. Benefits of Model Building and Simulation

In this chapter we have seen what it takes to convert qualitative feedback loops into a dynamical model and simulator complete with stock accumulations, causal links, information flows and dimensionally balanced algebraic equations. There is a lot of work involved and considerable skill needed to develop robust formulations that mean the same algebraically as you intend. But the pay-off from this extra effort is well worthwhile because the result is far, far more than a diagram. It is a simulator: an inference engine to diagnose performance problems; a virtual world to experience dynamic complexity and stimulate imagination; and a laboratory to design and test new policies and strategies.

There are other benefits, too, that come from the modelling process. There is the discipline of combining operational detail with feedback systems thinking, thereby 'seeing the forest' without losing sight of the trees. There is greater clarity and precision about causality and interdependence in business and society that stems from modelling explicit stock accumulation and representing the information network that drives decision making and coordinates action. There is the opportunity (particularly for models built with management teams) to develop shared vocabulary and concepts relevant to strategy. The focus on units of measure in equation formulation sharpens people's thinking about the quantification of strategy and draws on their powerful collective ...