Strategic Modelling and Business Dynamics: A Feedback Systems Approach

10.5. Model Structure Tests and the Soap Industry Model

Model structure tests build confidence in the model by demonstrating that its concepts and relationships are consistent with observations about structure and policies from the mental database of people who know the business well – in this case the senior managers from marketing, sales and manufacturing. These tests are particularly important in system dynamics because structure is central to understanding dynamic behaviour. Moreover, much of the data for identifying structure resides in the mental database as Figure 10.6 illustrates. The figure distinguishes three different types of information in the mental database: observations about structure and policies; expectations about system behaviour; and actual observed system behaviour.

Figure 10.6. Role of the Mental Data Base in Modelling and Confidence Building

Source: Jay Forrester, 1994, Policies, Decisions and Information Sources for Modelling in Modelling for Learning Organizations, Productivity Press. Reproduced by permission of Jay W. Forrester.

The mental database is particularly rich in structural detail about operations at a functional level. For example, at Old English the marketing manager could explain promotional price discounts and their impact on consumers. The factory manager knew the plant intimately and appreciated the practical difficulties in shifting ...