APPLIES TO ACADEMIC YEAR 2015/2016

ELE 3744 Business Dynamics

Responsible for the course
Kim van Oorschot

Department
Department of Leadership and Organizational Behaviour

Term
According to study plan

ECTS Credits
7,5

Language of instruction
English

Introduction
Many of the problems organizations face arise as unanticipated side effects of their own past actions. All too often the solutions they implement to solve important problems fail, make the problem worse, or create new problems. Effective decision making and learning in a world of growing complexity requires us to think differently. We need to think outside the box and develop tools to understand this growing complexity and learn how solutions sometimes create problems instead of solving them.

This course introduces students to business dynamics as a method for analyzing and modeling business problems and strategies. This method enables us to increase our understanding of business behavior. The method also enables us to simulate organizational behavior (or the behavior of parts of an organization, like a team). These simulations allow us to create “management flight simulators” that can be used to understand the past and predict the future. As pilots learn how to fly in a flight simulator, managers learn how to make better decisions by testing out different scenarios in their management flight simulator. When we understand the past and can predict the future, we can improve business performance.

This course is especially applicable for students that want to learn a new way of thinking about business processes. Furthermore, the course gives students, interested in a future career as consultant or business analyst, a competitive edge in the job market. This new way of thinking applies to all kinds of businesses and problems; therefore, the course is suitable for students from all bachelor programmes.

Learning outcome
Acquired knowledge
After completing the course, students will be able to explain what the underlying causes are of typical business’ behavior and performance. Furthermore students will be able to understand how well-meant decisions or rules often (unintended) create business performance issues, rather than solve them.

Acquired skills
After completing the course, students will be able to develop simulation models of businesses, and perform what-if scenarios with these models. Based on the outcomes of the what-if scenarios, students will be able to develop better decisions leading to higher business performance.

Reflection
After completing the course, students will be able to reflect on their “old way of thinking” and how it differs from the new way of thinking. Students will be able to recognize when a problem is dynamic, and when they should apply the “new way of thinking”. Students will learn to look at business or social problems from a broader perspective.

Prerequisites
None.

Compulsory reading

Collection of articles:
Kim van Oorschot. 2013. Collection of articles: ELE 3744 Business Dynamics. Handelshøyskolen BI.
The collection of articles comprise:

One or two chapters from the books of:
Senge, P.M., 1990. The Fifth Discipline: The Art and Practice of the Learning Organization. New York: Currency Doubleday.
Sterman, J.D. 2000. Business dynamics – systems thinking and modeling for a complex world. Boston: Irwin McGraw-Hill.
Warren, K. 2008. Strategic Management dynamics. West Sussex: John Wiley & Sons, Ltd.

Scientific articles:
Burg, E. van, Oorschot, K.E. van. 2012. Cooperating to commercialize technology: A dynamic model of fairness perceptions, experience, and cooperation, Production and Operations Management.
Davis, J.P., Eisenhardt, K.M., Bingham, C.B. 2007. Developing theory through simulation methods. Academy of Management Review 32(2): 480-499.
Lyneis, J.M. and Ford, D.N. 2007. System Dynamics Applied to Project Management: A Survey, Assessment, and Directions for Future Research. System Dynamics Review, 23:157–189.
Oorschot, K.E. van, Akkermans, H., Sengupta, K., Wassenhove, L. van. 2013. Anatomy of a decision trap in complex new product development projects. Academy of Management Journal, 56(1).
Perlow, L.A., Okhuysen, G.A., & Repenning, N.P. 2002. The speed trap: Exploring the relationship between decision making and temporal context. Academy of Management Journal, 45(5): 931-955.
Repenning, N.P., & Sterman, J.D. 2002. Capability traps and self-confirming attribution errors in the dynamics of process improvement. Administrative Science Quarterly, 47(June): 265-295.
Rudolph, J.W., & Repenning, N.P. 2002. Disaster dynamics: Understanding the role of quantity in organizational collapse. Administrative Science Quarterly, 47(1):1-30.
Smets, L.P.M., Oorschot, K.E., Langerak, F. 2013. Don’t trust trust – A dynamic approach to controlling supplier involvement in new product development, Journal of Product Innovation Management, (forthcoming).
Sterman, J.D. 2001. System dynamics modeling: Tools for learning in a complex world. California Management Review, 43(4).

Recommended reading
Books:
Sterman, John D. 2000. Business dynamics : systems thinking and modeling for a complex world. Irwin McGraw-Hill

Course outline

• Introduction, course overview, objectives, rules of the game
• Overview of business dynamics and interrelations of business structure and behavior, causal loop diagramming
• Stocks and flows diagramming
• Typical business behavior: S-shaped growth, delays & oscillations
• Decision-making & modeling human behavior
• Supply chains
• Term paper introduction