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Lecture 9

Lecture 9. James R. Burns Fall 2010. Rate Equations– EMPLOYEE SECTOR. growth rate = growth norm * Junior professionals Mature rate = Junior professionals/mature time Grow rate = growth norm * Senior professionals Retire rate = Senior professionals / work time

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Lecture 9

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  1. Lecture 9 James R. Burns Fall 2010

  2. Rate Equations– EMPLOYEE SECTOR • growth rate = growth norm * Junior professionals • Mature rate = Junior professionals/mature time • Grow rate = growth norm * Senior professionals • Retire rate = Senior professionals / work time • Death rate = retired / ret life

  3. Rate Equations– APARTMENT SECTOR • Apt const rate = (Apts desired – Apartments)/const time • Apt obs rate = Apartments / lifetime

  4. Rate Equations—HOMES SECTOR • Home const rate = (Homes desired – Homes) / const time • Home obs rate = Homes / lifetime

  5. Rate Equations—RETIREMENT SECTOR • Ret const rate = (Retire units desired – Retire units) / const time • Ret obs rate = Retire units / lifetime

  6. Auxiliary equations • Apts desired = Apts required * Junior professionals • Homes desired = Homes reqd * Senior professionals • Retire units desired = Ret reqd * Retired

  7. To do this right… • You had to recognize sectors • Sector—all the structure associated with a single flow • Apartments cannot flow into homes • Homes cannot flow into retirement units • You had to recognize the exponential smoothing structure • A desired condition • An actual condition

  8. What about the stock equations?

  9. Natural Gas problem

  10. Equations • Birth rate = population * Birth rate norm • Death rate = population * Death rate norm • Gas usage rate = gas usage normal * population * gas reserves remaining / initial gas reserves

  11. Dimensionless ratios • Doesn’t change the dimensionality of the equation, but does allow for effects to be entered

  12. Another dimensionless ratio • Rabbit populations grow rapidly with a reproduction fraction of .125 per month • When the population reaches the carrying capacity of 1000, the net growth rate falls back to zero, and the population stabilizes • Starting with two rabbits, run for 100 months with a time step of 1 month • (This model has two loops, an exponential growth loop (also called a reinforcing loop) and a balancing loop)

  13. Shifting loop Dominance • Assumes the following relation for Effect of Resources • Effect of Resources = (carrying capacity - Rabbits)/carrying capacity • This is a multiplier • Multipliers are always dimless (dimensionless) • When rabbits are near zero, this is near 1 • When rabbits are near carrying capacity, this is near zero • This will shut down the net rabbit birth rate

  14. Dimensionality Considerations • VENSIM will check for dimensional consistency if you enter dimensions • Rigorously, all models must be dimensionally consistent • What ever units you use for stocks, the associated rates must have those units divided by TIME • As we have seen before

  15. VENSIM—the view MENU ITEM

  16. New Open Save Print Cut Copy Paste Set {define dataset name} Run Synthesim Run Reality check Build windows Build output windows Control Panel VENSIM

  17. Control Panel • Variables • Time axis • Scaling • Datasets • Graphs

  18. The new leadership involves… • Managing the COMMONS • DESIGN • Purpose Story • Articulate…. • the goal, the standard, the vision • The ground-truth reality • Use the gap to produce CREATIVE TENSION

  19. What must leaders design? • Policies, strategies, “systems,” organizations, specifically • Selection policies • Vision strategies • Value systems • Culture systems • Measurement systems • Rewards systems • Criteria by which excellence will be determined

  20. Gives rise to a new discipline: Business Design • Must loose focus on the P&L statement • Look at the long term, instead • Have to get away from piecemeal reactions to problems • Have to integrate the five component technologies • Must integrate vision, values, purpose, systems thinking, and mental models • The synergy of the disciplines can propel an organization to major breakthroughs

  21. First tasks of Business Design • Design the governing ideas--purpose, vision, and core values • Building shared vision is important because it fosters a longer-term orientation and an imperative for learning • Get the systems thinking going early on • Get the concept of mental models and surfacing underlying assumptions going early as well

  22. Subsequent tasks of Business Design • Design the learning processes • Get personal mastery going

  23. The Leader as Steward • Leaders have a purpose story • This is an overarching explanation of why they do what they do • how their organizations need to evolve • how that evolution is part of something larger • Most gifted leaders have a “larger story”

  24. The Leader as Teacher • First job of leader is to define reality • Leader must help people achieve more accurate, more insightful and more empowering views of reality • Must view reality at four levels: events, patterns, structures and ultimately a “purpose story”

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