Patricia Winand, SF ’13, Senior VP of Sales & Marketing, Americas at Close the Loop, first started ruminating about loops when she studied system dynamics (SD) as an MIT Sloan Fellow. “For me, SD was love at first sight because I am a very spatial person, and my brain responds best to visual stimuli. The graphic explanation of a complex problem makes it so clear.”
The beauty of system dynamics, Winand says, is that it is a wise combination of simplicity and analytical power. But although she enjoyed learning the technique, she wasn’t sure she knew how she might use the tool in the real world. “The professor who taught the course was a master at the subject, but my million-dollar question was: how can a mere mortal do it?”
After graduation, Winand realized that, indeed, system dynamics could be second nature. She found that the course had changed her mindset and that she was using SD automatically when analyzing problems and identifying their root causes. Then she joined an Australian-based company called Close The Loop (CtL), which seemed like kismet, given that it was all about loops—in this case, the recycling loop. CtL turns used printer cartridges into other products.
For Martin Capriles, SF ’05, there is something almost magical about the Beer Game, a management simulator developed in the late 1950s by Jay Forrester and his students at the MIT System Dynamics Group. The game famously puts teams of students in charge of four components of a distribution chain. Players within each component—retailer, wholesaler, distributor, and factory—receive shipments of beer, fill as much of their customers’ orders as possible, and place new orders for beer with suppliers. As students make operational decisions and review the impact of past decisions, they inevitably are dismayed by the unintended side effects of their actions.
After leaving MIT, Martin Capriles headed back to Venezuela, his home country, where he was responsible for all commercial operations for the Venezuelan subsidiary of CEMEX. Almost immediately on arriving back at the office, he realized he needed to put the Beer Game into play—this time, with real world consequences.
On the surface of it, obesity can be misunderstood as a rich nation’s disease. After all, a glance at the World Obesity Map shows that in historically famine-stricken Ethiopia, obese women account for 1% of the population, while that number skyrockets to 35% for women in the United States. But obesity is every bit as much a cultural indicator as it is an economic indicator. In Sweden, undeniably a prosperous nation, the obesity rate among women is closer to 14%.
Professor Hazhir Rahmandad, MIT Sloan School of Management Visiting Professor, is using system dynamics (SD) to create a model to track and predict U.S. adult obesity trends and recently published his findings in the American Journal of Public Health. In the article, Rahmandad and his colleagues examine the energy imbalance gap (EIG)—an individual’s average daily excess energy intake minus the total daily energy expenditure. Rahmandad believes that the EIG is at the heart of understanding obesity. It’s an essential step, he says, toward the design of obesity prevention and intervention programs targeted at specific population groups.
One of the hallmarks of system dynamics is its extraordinary flexibility as a problem-solving tool. Healthcare, education, poverty—MIT Sloan Fellows alumni have a history of applying system dynamics with marked success to a wide range of challenges. Now Graham Rong, SF ’06, has added thwarting counterfeiters to the list.
In a recent MIT Sloan Global Entrepreneurship Lab (G-Lab) project, Rong, Senior Industrial Liaison Officer at MIT, sat down to talk counterfeiting with a leading European company specializing in security products. The company wanted to produce a system for identifying counterfeit auto parts, a formidable global problem. In fact, loss from fraud in the auto parts industry exceeds $2B a year—not surprising when you realize that automotive manufacturers produce somewhere in the range of 200,000 different parts and that nearly 10 percent are being counterfeited.
You’re on the phone with a service provider waiting to complete a simple transaction, but you spend long minutes on hold between micro conversations with people who seem at a loss to help. You’re in a continuous loop of frustration and inaction, and you know there must be a better way.
No doubt there is. And one way of discovering it is through system dynamics (SD)—the analysis and redesign of any interdependent social, managerial, economic, or ecological system. System dynamics was a mid-century invention, the brainchild of MIT Sloan Professor Emeritus of Management Jay Forrester during the School’s earliest days, and the concept has gained legions of adherents over the decades.
System Dynamics at MIT Sloan
“When it comes to system dynamics,” says Professor of Management Science and Organization Studies Nelson Repenning, “MIT Sloan is both the birthplace and the current center of expertise. The toolset was invented here, and I think it’s fair to say that we continue to offer a depth, rigor, and variety of applications you can’t find anywhere else.”