The study and management of complex feedback. Explanation of Systems Thinking of Forrester. System Dynamics.
What is Systems Thinking? Definition

Systems Thinking is an approach for studying and managing complex feedback systems, such as one finds in corporations and other social systems. In fact it has been used to describe practically every sort of feedback system.

System Dynamics is more or less the same as Systems Thinking, but emphasizes the usage of computer-simulation tools.

The term System means an interdependent group of things forming a unified pattern. Feedback refers to the situation of X affecting Y, and Y in turn affecting X. Perhaps through a chain of causes and effects. One cannot study the link between X and Y and, independently, the link between Y and X and predict how the system will behave. Only the study of the whole feedback system will lead to correct results.
 
What is System Dynamics?

System Dynamics is based on Systems Thinking, but takes the additional steps of constructing and testing a computer simulation model. The System Dynamics field developed initially from the book "Industrial Dynamics" of Jay W. Forrester.
 
Steps in the System Dynamics methodology

   1. Identify a problem,
   2. Develop a dynamic hypothesis explaining the cause of the problem,
   3. Build a computer simulation model of the system at the root of the problem,
   4. Test the model to be certain that it reproduces the behavior seen in the real world,
   5. Devise and test in the model alternative policies that alleviate the problem,
   6. Implement the solution.

Often these steps have to be reviewed and refined, going back towards an earlier step. For instance, the first problem identified may be only a symptom of a still greater problem.

 
Typical applications of System Dynamics

    * strategy and corporate planning
    * business process development
    * public management and policy
    * biological and medical modeling
    * energy and the environment
    * theory development in the natural and social sciences
    * dynamic decision making
    * complex nonlinear dynamics

Book: John Sterman -  Business Dynamics: Systems Thinking