System Dynamics Modelling Tutorial

Transcription

1 System Dynamics Modelling Tutorial Overview The work that you will do in this tutorial extends the work we have done with the causal loop diagramming. CLDs are a powerful tool for understanding the dynamics of organisational processes and interactions. They also provide insights into the policy levers that can be used in change programmes. System Dynamics modelling takes this process a step further, using Stock-Flow-Rate to simulate the structure of the CLD. The simulation quantifies the dynamics of the CLD. The simulation model then allows managers to test potential scenarios for change processes. This is a powerful tool as it allows a "flight simulator" environment in which to test, and possibly crash, ideas without destroying the organisation. This brief tutorial is designed to give you a brief overview of the technical aspects of System Dynamics modelling. The package we are using is called Insightmaker. There are a number of others available in the market: Vensim, ithink, PowerSim are three of the better known. All of the packages use the same iconography: stocks, flows and rates. This exercise has two aims: 1. To familiarise you with the mechanics of System Dynamics modelling using Insightmaker and building a model of the Rookies and Pros archetype. 2. To familiarise you with the way in which a System Dynamics model can be used as a scenario-planning tool. Rookies and Pros The terms rookies and pros originally come from the American baseball, however the dynamic applies to business, where even the most senior CEO coming into a new job spends some time as a relatively unproductive rookie. A Rookie is a newcomer, possibly quite talented, but new to playing in a major-league or working in a new job in a new organisation. It will take the Rookie some time to function as a Pro. During that time, the existing Pros will need to spend some time getting the Rookie up to speed. The causal diagram of this archetype shows the interconnections.

2 Hires S S Rookies S O Pros Quits S S Rookie Training Work to be Done S S Starting with Work to be Done, we see that increases in work (and their consequent flow on effects) lead to an increase in the number of Quits. This leads to a reduction in the number of Pros and an increase in the work that needs to be done by the remaining Pros. This can sometimes set up a vicious circle. The Quits are replaced by Hires who become Rookies who eventually become Pros and help share the workload. However, there is a delay as the Rookies graduate to become Pros. It is during this period that they are not particularly productive and serve to increase the workload for the Pros who must train them. The problem is that this sets up a vicious cycle of quits and increasing workloads. Building the Rockies and Pros model Open the Insightmaker software and clear the rabbit population model. Click the Stock icon on to the modelling desktop Click on the modelling space and a New Stock will appear. Label the Stock Rookies in the dialogue box at the top right hand corner.

3 Press Return Create another Stock called Pros. We are now going to create a flow between these two stocks. Hold your cursor over the Rookies stock and a directional arrow will appear. Drag the arrow into the Pros stock to connect the two stocks with the flow. Click on the flow and name it Up to speed in the right hand side dialogue box Create an outflow from Pros called Quits. (Hover the cursor over the stock and drag the arrow out.) Label the outflow Quits

4 We now want to create an inflow into the Rookies stock called Hires. Create an outflow from Rookies by dragging the directional arrow to the left. Click Reverse under Connections. Name the inflow Hires. We have now created the fundamental structure for the Rookies and Pros model. We need to make one small but important adjustment to these two stocks. Click on the Rookies stock to open the dialogue box Notice that in the Configuration panel Allow Negatives is set at Yes. This means that the stock can record negative values, rather like a bank account that goes into overdraft. In this case however, we cannot have a negative number of Rookies. So we must change this setting. Click on Rookies to open the Stock dialogue box. (Allow Negatives is set at Yes.) Highlight Yes in the dialogue box. Change Allow Negatives to No in the drop down Repeat this process for Pros.

5 In all the stocks we are using in the simulation you need to set Allow Negatives to No. We can now put in the dynamics that drive the behaviour of the structure. The first dynamic is that Quits drive Hires. So we need to establish a link between these two variables. Links send information. Creating a link between Quits and Hires means that information about the number of people who have quit is sent to the people who are responsible for doing the hires. The Link icon is in under Connections The process is a little bit cumbersome. To begin with you need to bend the outflow Quits. Click on the outflow Quits and a small green box will appear at the end of the outflow Drag the small green box down to bend the outflow. Click the Link function in the Connections menu. Click on the outflow Quits and the Link Arrow will appear Link Arrow

6 We create Links the same way that we create Flows by dragging the Link Arrow Drag the Link Arrow from Quits to Hires Notice the lightly dotted green line running from Quits to Hires Hold the shift key down and click on the lightly dotted green line. A small square green dot will appear on the link Drag this dot downwards align it with the Up to Speed flow. Realign the Quits outflow.

7 We have now built the basic structure of the hiring process. New staff are hired when the Pros quit. The Hires become Rookies and with experience, they become Pros. We can now put some numbers into the model to make it dynamic. Hover the cursor over the stock Rookies Click on the = sign in the top left-hand corner. This opens the Equations Editor. In this case, were going to leave the number of Rookies at zero. This is because at the beginning of the simulation period, we have no Rookies in the system. Click Apply Click the stock Pros and set the initial value at 6. This means we have six Pros working for us at the beginning of the simulation. Hover the cursor over the inflow Hires. Notice that the = sign appears at the beginning of the flow. Click on the = sign to open the Equation Editor.

8 The default value is set at zero but we want to hire people as they quit. To put this into the simulation model: Highlight the zero. Single click on Quits. This means that the number of Hires is equal to the number of Quits. Click Apply. We can now sit the equations for the Up to Speed flow between Rookies and Pros. There are two elements to this equation. The first is that all of the Rookies will become Pros. The second is that there is a delay of two months while they get up to speed. So there will be two elements to the equation. Hover the mouse over the flow Up to Speed. Open the Equation Editor by clicking the = Our equation is going to have a delay function built into it and we can search the Functions Dialogue boxes to find the delay function.

9 Functions Dialogue Select Historical. Select Delay Delay Function This delay equation will appear in the equation box Delay([Primitive], Delay Length, Default Value) Into these values Delay([Rookies], 3) We don't need a Default Value because the stock is a non-negative one. This means that any Rookies that come into the system will get up to speed and become Pros in three months. All we need to do now is to put a formula into the Quits flow. To begin with we will have no quits at all, just a team of happy campers. Is Click the Quits Equation Editor. Set Quits at zero

10 Now we can put in the other element of the model: the work that needs to be done. Create this stock flow structure. Leave Work set at its default setting of zero. Click on the stock Work to open the Work dialogue box. Change Allow Negatives to No. Link Pros with Work Done. (This allows us to link the number of Pros to the Work. In real life there would be some productivity factor but we will have a simple one-to-one relationship: one Pro does one month's worth of work) Open the Equation Editor for Work Done and set its value at Pros. (This equation establishes the one-to-one productivity rate.) Open the Equation Editor for Work In and set its value at Pulse(1, 42, 0, -1).

11 This means that at the beginning of the project (Month 1), 100 units of work, in the form of a new project, come in. We are now ready to run our first simulation. Click on the Run Simulation button in the top right-hand corner The following dialogue box will appear: Click Configure in the top right-hand corner Click the downwards arrow in the Data dialogue

12 Data Dialogue Click on Pros and Rookies and Work to select them. Click Apply. Click Run Simulation at the top right hand end of the icons bar. The following graph will appear:

13 Notice that the work is all done by Month 9. It arrived in Month 1, it began in Month 2 and the six Pros finished the 42 units of work by Month 9. No panics, no rushes, a project managers dream. Close the graph. We can now model some of the realities of project management. And begin the first stage of scenario planning. In this case, we wish to test the scenario of a one-off mass resignation occurring and what impact it will have on the workload and the project completion time. Click the Quits Equation Editor. Select the General tab. To do this you may need to scroll along the Functions Dialogue to General. Functions Dialogue Select the Pulse function. (This function allows us to pulse a one-off numerical value into the model.)

14 Enter the equation Pulse(6, 4, 0, -1) This means the resignations occur in Month 6 (Time), there are 4 of them (Height), they occur only once (Width=0), and they are not repeated (non-repeat is a negative number). The following output graph will appear. Click Configure and put Quits on the Graph. Work slows Pros decline Quits Occur!Rookies in place

15 Notice that the Quits occur in Months 6 and that the six rookies appear in Month 7. They then spend three months and training before they become Pros. So you have three months only two Pros available. In week 10, the Rookies are up to speed and they become Pros. Notice that the project has now blown out to 12 months. Also notice that things flattened out a bit around about Months 7 because of those mass resignations. The arrival of the Rookies constitutes an increase in the workload for the Pros, as they are responsible for training the Rookies. Create a Link between Rookies and Work In. Set the equation in Pulse(1, 100, 0, -1) + [Rookies] This means that each new Rookie effectively creates one person-month s worth of work for the Pros. Run the Simulation The time spent on training the Rookies has amplified the impact of the mass resignations. The project has now run out to the 15-month mark. To adjust the timescale on the graph: Click on Time Settings.

16 Time Settings Change Simulation Length to 30. Now to make things more interesting, the client has decided to introduce some project changes. Create a variable Project Changes. The link it to Work In. The the equation for Project Changes is Pulse(12, 8, 0, -1) Add that to the Work In inflow. This means that in Month 12, eight person-months of work was added to the project The equation for work in is now: Pulse(1, 42, 0, -1) + [Rookies] +[Project Changes] The inflow of work is now a pulse of work in Month 1, work related two Rookies whenever they are appointed now we have a pulse from the Project Changes.

17 Run the simulation. The project changes and the blowout on the completion date have implications for staffing. Two of the Pros had been planning to change jobs at the completion of the project. When the project changes are announced, they decided to bring their departure date forward. To model this: Create this structure.

18 The modelling software has a powerful tool for modelling the behaviour of the two Pros who decide to leave. It is called a "logic statement" or an "If-Then-Else" statement. In this case, the logic of the two Pros is "if the project changes look big enough to delay our planned departure, then we'll leave now, otherwise we'll stay." Open the equation editor for the Work Related Quits variable. Scroll to General. Logic Statement General Select If Then Else. Enter the equation: IfThenElse([Project Changes]>6, 2, 0) This means that if the project changes are more than 6 person-months of work, two Pros will leave (Quits =2). If they are not greater than 6 months, the Pros will not leave (Quits =0) Run the simulation.

19 The Project Changes have had a three-fold effect. Firstly they have increased the work to be done and pushed out the project completion time to 17 months; secondly they have slowed the rate of work as a result of the departure of the Pros and thirdly have also increased the work to be done as a result of the training that the new Rookies who were appointed. Scenario planning The reason for building simulation models is to test possible scenarios i.e. what happens if the changes to the project are greater than in the original simulation? We can look at the impact of these changes by modifying the variables in the model. We did this earlier in the model when we simulated the impact of a mass resignation by changing the variables in the Quits equation. You can change variables like this by using Sliders. This is particularly useful for managers who may not have the skills to alter variables in the model. We wish to simulate variations in the Size of Project Changes. Click on the Size of Project Changes variable. This will open the variable dialogue box on the right. Highlight No and change it to Yes in the drop-down. Click on the modelling area to close the variable dialogue box. You now have a slider to change the size of project changes.

20 Change the Size of Project Changes to 16 Run the simulation and you will see that the completion date has gone out to 18 months. You can vary the number of Pros that you start with using the same technique. Click on the Pros stock Click Show Slider Value Set the Slider Value at 10 Run the simulation. You will see that the project has now completed in Months 7. As you develop this model, you would include costings for the increased number of Pros and the cost of hiring and training Rookies, this would allow you to understand whether it is better to bring staff on before the project starts or during the project and what the costs and consequences of both would be. Understanding these costings would allow you to including your initial contract penalty clauses full project changes. Models like this are infinitely scalable and you can include whatever variables you wish, but particularly it is important to include the variables that you can actually manage. You can save your model to the InsightMaker website. Your model will be visible to all other InsightMaker users.