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Hard or Soft: Does it matter?

Hard or Soft: Does it matter?. Michael Lyons Manager, Strategic Analysis and Research. ST P R Services. Strategic Analysis Commercial Scenarios/ Futures Conceptual Models Computer Simulations Spreadsheet System Dynamics Agent-based models Game theory. The Change Process.

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Hard or Soft: Does it matter?

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  1. Hard or Soft: Does it matter? Michael Lyons Manager, Strategic Analysis and Research

  2. STPR Services • Strategic Analysis • Commercial • Scenarios/ Futures • Conceptual Models • Computer Simulations • Spreadsheet • System Dynamics • Agent-based models • Game theory

  3. The Change Process Sensing the need for change Exploring possible change strategies Deciding change strategies Planning & Implementing change Consolidating within organisation Become common practice in many organisations Change Process Strategic Models

  4. Why do models fail? • Developed after decision made (ex post justification) • Internal vs. external validity • Multiple, ill-defined objectives • Model as solution to problem –jumping to conclusions

  5. Approaches to Planning • Rationalists - find optimum strategy • Planning • Forecasts • Evolutionists - strategies emerge. • Complex world • Political processes • All rational processes irrelevant • Processualists - intermediate. • Future uncertain, but not entirely unpredictable • Scenario planning • Computer simulations: explore options

  6. Types of Models Financial Regressions Optimisation Forecasting ‘Soft’ Hard Exploratory Flight simulators Business games Conceptual models

  7. Exploratory Models • Conceptual models • clarify concepts/ relationships • common language • represent (shared) mental models • Simulations • Quantify the conceptual models • Reveal importance of different processes • Outcomes

  8. The Future Information Industry: ETSI SRC6 Model end user service broker service provider info broker info provider info owner terminal equipment supply communication and networking of information information creation support application creation information processing and storage service provision telecommunications service provision

  9. Simulations • Flight Simulators • stand-alone • key variables • Business Games • competitive • multiple strategies

  10. Pursuing a goal/ vision Planning Inventing the future Preparation Decision-taking Action Adapting to change Environmental monitoring Spotting the weak-signals Position Conversation Organisational learning/ capabilites Decision-taking Action Strategy

  11. Decision-making in a complex world: non-rational but not irrational • Rational decision-making: • Rationality, bounded rationality: • Optimisation, sufficing • Real decision-making • Role of emotion • Business strategy • Planning • Vision, ethics, culture • Experience: ‘rule of thumb’ • Habit/ tradition: learned behaviour • ‘Gut feeling’ • Why OR? • Improve decision-making • Need both soft and hard

  12. Managing Complexity changing business environment Simulations recognised strategic issue knowledge base mental models assumptions maps & diagrams executive debate & dialogue dynamic simulation models strategy for change

  13. Setting Boundaries Choice of Frames Problem Structuring(within frame) Interpreting Structure Assigning referents Defining Vision; defining problem Analysis (SSM, SODA, CM, scenarios planning) Conceptual models; Influence diagrams Exploration of conceptual model - alternative scripts. Simulations Data (market surveys etc.) Procedural intelligence

  14. Why Simulations?: Cognitive problems Issues • Most people deal with only 3-4 variables at a time, and only through 1-2 time steps (de Guess). • Effect of interdependence • Effect of delay Simplifying assumptions • Single cause/ effect • No delays • Systems simple/ independent Need simulations • Quantitative results • Reveal importance of different processes • Outcomes

  15. Exploring the Future: Scenarios Driving Forces Uncertainty Scenario 1 Alternative Futures Present Scenario 2

  16. Scenarios Planning & Modelling

  17. Models: a Process not an End What is the question? Analysis Customer Workshop Conceptual model Modelling team Construct Simulation Investigate ‘What-ifs’

  18. Benefitting from the Model • Identify the problem • Build the model with the ‘customer’ • Involve as many parties as possible • Diagrams help identify conflicting views • Where data ‘missing’ get expert advice • base case • Flight simulator: test by doing ‘what-ifs’

  19. Hard or soft: does it matter? Yes and no. • Armed camps or Complementary • Different purposes/roles: procedural levels • Soft comes first? • Better seen as a spectrum? • What are the bridges: • Model building seen as a process, not an end • Exploratory models • Complex (adaptive) systems and complexity theory • People: intermediaries • Evidence-based policy-making? • What is better decision-making? • What is OR for? • Outcomes & Values • Utilitarianism vs conviction

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