Modelling is iterative. It begins with a concern about dynamics (performance over time) and preliminary ideas about feedback structure. Then gradually, in stages, a model takes shape that clarifies the concern and sharpens ideas about structure. The purpose is not to create a perfect model that replicates the real world situation in every detail. Rather it is to engage in a learning process using the model as an instrument for investigation, clarification and discovery.
In system dynamics, five steps of modelling can be identified as shown in Figure 5.1. Usually there is lots of to-and-fro between the steps as understanding of the situation improves by sketching diagrams, quantifying concepts, writing friendly algebra and making simulations.