System Dynamics II is an advanced course that has a seminar-type approach, where students prepare and present portions of the content. Course literature is Sterman’s book, Business Dynamics. The application areas emphasize economics and business, but other important and interesting subjects has also been discussed. Some of the topics has been model testing, policy analysis, dynamics of growth, the spread of disease, and diffusion of innovation. We have gone deeper into modelling of delays, co-flows, ageing chains, non-linear relationships, decision-making, human behaviour, forecasting, supply chains, and business cycles.

With just the project assignment left I can say I have learned a lot. I have been the only distance student. Unfortunately we could not arrange for synchronous participating on my part in the discussion sessions, but discussing through list and listening to recorded sessions has worked out very well.  The teacher, Professor Wayne Wakeland, has been a great help and inspiration.

Other posts about this subject you might want to read:
System dynamics learnings so far
MIT Opencourseware SD Lecture Notes
System dynamics video course
Updates on the system dynamics course

Go deeper

What is the difference? The reason for failure is, according to Johnson, that the Lean practitioners do not go deep enough and change their underlying thinking. The followers emulate, but does not see the system change needed. Most managers believe that to increase output they can manipulate the separate parts of the business operation independently. The prevalent idea is that the financial results is an linear addition of the contribution of the parts. A company could almost be condensed to, expressed in and controlled by a spreadsheet of financial results. The company is viewed as a machine.

When the management try to improve financial results, they will probably destroy relationships; the core of true business. They might have short term improvements, but the results will be devastating in the long run. This way of thinking of a company is influenced by the old concepts of Physics about mechanical processes and has been erroneously transferred to social systems.

A living social system

This is not the Toyota way, according to Johnson. They build their business as a system that itself naturally produces results. Business is most of all a human living social system, a system of relationships and improvement lies in nurturing and reinforcing the system of relationships that produces the desired results, ultimately for the customers.

Accounting

Johnson challenges the usual management accounting practises, by saying that one-dimensional quantities can only describe a living system. They cannot successfully be used to explain what is going on or used to control multidimensional interactions going on in the business. Toyota dispenses with the usual production control and accounting control for daily operation. They do it differently. Johnson says:

The prevalence of management accounting control systems in American business probably contributes more than any single thing to the confusion of levels that causes managers to believe they can run operations mechanically by chasing financial targets, not by nurturing and improving the underlying system of human relationships from which such results emerge.

This is very interesting stuff, isn’t it? Lean thinking and systems thinking, hand in hand. It deserves a closer look, especially how Toyota implements it. Does Johnson have a too idealistic view of Toyota? He continues to discuss this subject in Profit beyond Measure. This book ended up in my wish list at Amazon immediately.