On the Foundations of System Dynamics

1. On the Foundations of System Dynamics George P. Richardson Rockefeller College of Public Affairs and Policy University at Albany

2. Feedback loops Stocks and flows Behavior-over-time graphs System archetypes Computer simulation STELLA, Vensim, PowerSim Nonlinearity, loop dominance Compensating feedback Policy resistance Dynamic complexity What is really deeply important about systems thinking and system dynamics? …in education? …in corporate decision making and policy design? …in public policy and governance? …in theory building? Motivation

3. The Claim: The deep foundation is the Endogenous Point of View

4. Forrester’s Stated Foundations: The four threads (1958) • Advances in computing technology • Growing experience with computer simulation • Improved understanding of strategic decision making • Developments in the understanding of the role of feedback in complex systems • But it took ten more years before Forrester published the deep foundation of the system dynamics approach

5. Forrester’s Four-Tiered HierarchyUrban Dynamics, Market Growth as Influenced by Capital Investment • Closed boundary around the system • Feedback loops as the basic structural elements within the boundary • Level (stock) variables representing accumulations within the feedback loops • Rate (flow) variables representing activity within the feedback loops • Goal, Observed condition, Detection of discrepancy, Action based on discrepancy

6. Forrester’s Four-Tiered HierarchyUrban Dynamics, Market Growth as Influenced by Capital Investment • “Closed boundary around the system”! • The “Closed boundary” signifies Forrester’s Endogenous Point of View. • It comes before feedback loops, stocks and flows, graphs over time, and all the rest of what we do. • It has top billing. • It is the deep foundation of systems thinking.

7. An Example • Exogenous point of view • Sam is always mean to Pam. • It’s all his fault. • If he would be nicer, Pam’s life would be better. • Endogenous point of view • Maybe there is something Pam is doing …

8. Exogenous and Endogenous Points of View • “The fault, dear Brutus, is not in our stars, but in ourselves …” • Cassius, in Shakespeare’s Julius Caesar (1599)

9. Exogenous and Endogenous Points of View • “We have met the enemy and He is Us.” • Walt Kelly’s Pogo, originally on an Earth Day poster, 1970.

10. Exogenous and Endogenous Points of View • Man is not the creature of circumstances. Circumstances are the creatures of men. • Benjamin Disraeli, Vivian Grey, 1827

11. Feedback Loops are a Consequence of the Endogenous Point of View

12. Expanding the Boundary to Enable an Endogenous Point of View

13. Endogeneity and Feedback Feedback loops enable the endogenous point of view and give it structure. [Richardson 1991]

14. Examples • Global Warming • Flood Damage • Terrorism

15. The Global Warming Discussion

16. 400,000 Years of Temperature Data http://www.landcareresearch.co.nz/research/globalchange/climate_change.asp

17. 100 Years of Temperature Data

18. CO2 Concentration http://www.landcareresearch.co.nz/research/globalchange/climate_change.asp

19. Methane http://www.landcareresearch.co.nz/research/globalchange/climate_change.asp

20. Yes, the peaks line up. But if it’s been going on for 400,000 years, why do we now think humans are to blame?

21. Milankovitch Cycles (1,000,000 yrs)There are strong exogenous, structural effects on climate change. [Source: http://en.wikipedia.org/wiki/Malankovitch_cycles]

22. Both perspectives involve stock-and-flow / feedback dynamics • The water cycle • The carbon cycle • Heat trapping • Water vapor • Atmospheric CO2 • Other GH gases • Cloud cover • Heat reflecting • - Ice albedo • - Cloud albedo • - Aerosols

23. Both may even acknowledge reinforcing feedback loops Water vapor Cloud cover Ice albedo

24. The Global Warming Debate • Exogenous view: We are in the warm phase of a 100,000 year cycle caused by exogenous, structural characteristics • Policy implication: Adapt to the inevitable • Endogenous view: Human activity is exacerbating the natural cycle • Policy implication: Alter human habits to minimize the coming tragedies

25. Largely Exogenous Views of Terrorism (various internet sources; see paper) • Ethnicity, nationalism/separatism, poverty and economic disadvantage, globalization, (non)democracy, Western society, disaffected intelligentsia, dehumanization, and religion • Marginalization, ethnicity and nationalism, religion, cultism, free flow of weapons, training of non-military personnel, no pure democracy present • Belief causes terrorism. • Foreign domination and control of Muslim resources, the hatred of the Western way of life. alienation. poverty and illiteracy. moral decadence of the West. the West's support for Israel. • Economic deprivations, political injustices, foreign occupation and denial of fundamental rights including the right to self-determination

26. Terrorist Incidents Over Time(Source: http://www.start.umd.edu/gtd/features/GTD-Data-Rivers.aspx)

27. Endogenous View of Structure and Dynamics of Terrorist Cells Peripheral support Funding (R) Suppression activities Terrorist actions (R) (R) (B) (R) New recruits Terrorist group (R) Losses (B) Zeal (R) (R) Martyrs to the cause

28. Terrorism • Exogenous view: Violent forces exist that threaten others, and they are growing. • Policy implication: Defend to prevent harm; attack to weaken or eliminate the violent forces. • Endogenous view: Violent forces interact with defenses and attacks to create the rising tensions we observe. • Policy implication: Defend to prevent harm; minimize behaviors that create nasty reinforcing loops; maximize creation of beneficial reinforcing loops; work toward cross-cultural understandings.

29. An Exogenous View of Flood Damage Flood frequency Structural mitigation policies Flood severity Flood damage

30. Flood Damages (Deegan 2007, NOAA) • Increasing coastal populations? • Increasing severity of floods (global warming)? • 1968 National Flood Insurance legislation?

31. A Model of Floods in whichIdentical Floods Do Not Cause Identical Damage

32. Underlying Causes of Damage:Evolution of Land Use and Natural Barriers

33. An Endogenous View of Flood Damage

34. Flood Damage • Exogenous view: Floods happen sometimes; the greater the flood, the worse the damage. • Policy implication: When floods happen to occur, recover and rebuild. • Endogenous view: Damage occurs when hazard meets vulnerability; vulnerability is a result of people policies • Policy implication: Recognize human role in damage. Work with stakeholders to minimize vulnerabilities.

35. Governing • The great insight of servomechanisms engineering: • The act of trying to govern / manage / control generates system dynamics of its own. • “A closed-loop control system is thus an error-sensitive system and, being such, it acquires certain peculiarities and idiosyncrasies which, in large measure, are the reasons for this book” (Gordon Brown, 1948).

36. A Forrester Story Vividly IllustratingControl Generating Dynamics of its Own One time we were making feedback control systems with some high-powered applications – I think it was a 10-horsepower motor with a hydraulic control system to drive probably some kind of military gun mount. I remember one night I was working with it, and something went wrong. It had become unstable, and it began to go back and forth at the maximum speed that the 10-horsepower motor would drive it. Some of the hydraulic lines had broken, and it was spraying oil into the air, and I was trying to get it stopped. As I rushed over to try to turn it off, I slipped in the oil on the floor. What I remember is seeing the rainbows in the oil spray up against the lights… which is a lesson on oscillatory behavior.

37. The “X/N” Matrix Endogenous Predominant Mode of Analysis Exogenous Exogenous Endogenous True (Predominant) State of Affairs

38. Is Endogeneity the Foundation ofAll Systems Approaches? • Suggested characterization: “Systems thinking is the mental effort to uncover endogenous sources of system behavior.” • Maybe. • But certainly, the Endogenous Point of View is fundamental to systems thinking in the system dynamics tradition.

39. The Foundation of System Dynamics • Suggested definition:“System dynamics is the use of informal maps and formal models with computer simulation to uncover and understand endogenous sources of system behavior.”

40. The Foundation of System Dynamics • What do systems thinkers and system dynamicists do? • We use systems thinking, management insights and computer simulation to • hypothesize, test, and refine endogenous explanations of system change, and• to use those explanations to guide policy and decision making.