Report from the 2012 Annual Gathering

Annual Gathering 2012

THEME : Exploring Alternative Futures.
VENUE: London South Bank University
DATE: 9th/10th February 2012

The 14th Annual Gathering of the UK Chapter of the System Dynamics Chapter was held on February 9th and 10th at London South Bank University on the broad theme of ‘Exploring Alternative Futures’.  With an increased attendance from the previous year, there were three main speakers on the afternoon of Thursday 9 February 2012, followed by the Steer Davies Gleave prize presentation.  After an evening meal enjoyed at a nearby Italian restaurant, the Friday sessions included an interactive seminar and a series of short presentations by software vendors, followed by a student colloquium and the AGM.

Modelling a sustainable economy.
Emanuele Campiglio of the New Economics Foundation described work in progress to build a macroeconomic model of the UK economy in order to explore alternatives to existing economic paradigms.  The aim of the project is to explore how a modern developed economy might produce high employment without compromising environmental sustainability.  The concept has been based on Peter Victor’s low-growth system dynamics model of the Canadian economy.  The system dynamics model has been built around a core using conventional economic theory (standard production functions and aggregate demand relationships). Currently the model covers only the UK economy. Future work could include 1) application to other countries 2) explicit inclusion of the banking sector and international trade 3) more detailed modelling of relationships with stock-flow structures to avoid over-use of auxiliary variables.
Modeling a Sustainable Economy

Connecting SD with Strategy and Finance
Richard Stevenson of Cognitus gave his views on why he thought attempts to popularise system dynamics with mainstream management using ‘systems thinking’ and ‘strategy dynamics’ have fallen short.  He believes system dynamics has remained relatively obscure because it has not connected with the hard business realities of value creation and standard financial measurement.  Addressing this gap, the Business Value Cycle is proposed as a universal business model.  Strategy is then viewed as a balanced management of resources to create financial value.  The concept of the Business Value Cycle draws together insights from strategy dynamics, valuation and balanced management. One key idea Richard advocated was to generate outputs from SD models that are directly compatible with reports that finance people are used to seeing.  Richard  illustrated the application of the Business Value Cycle with a case study from the pharmaceutical industries where his approach had helped to make a major disinvestment decision.
Modeling Strategy and Business Value

Place your bets: what’s happening to gold?
Maurice Glucksman and Bianca Granara of Hamilton Ventures conducted real-time research with the audience based on their experience of advising a client on the gold investment market.

The price of gold has been increasing markedly over recent years. Investors often express widely divergent views on how the price might change in future based on speculative and intangible factors but rarely recognise  the long term drivers of supply and demand.

The presentation invited the audience to make predictions to mirror those made on “prediction markets” and then to bet on the future price of gold, using real money. This yielded a distribution of the predicted future price in 2014 that was approximately Normal.  An assessment based on some system dynamics modelling of the industry was then presented and the same question was posed to the audience, who were again invited to bet with real money.   With new information available, the result was a downward skew in the audience’s range of price predictions.  Winners were decided and their winnings collected, but it remains to be seen if their cash will be invested in gold.
What’s happening to gold? Place your bets

Steer Davies Gleave prize presentation:

Symmetric Partnership / Department of Health
The Steer Davies Gleave system dynamics prize is awarded annually for the best application of system dynamics modelling to a topic of wide public interest.  The winning entry this year was from the Symmetric Partnership, for their work on the “Alcohol Systems Model”, carried out for the Department of Health.  The prize was accepted by Douglas McKelvie on behalf of Symmetric Partnership, after which he gave a presentation describing the work.  At its heart was a four stock model that simulated how people move between different states of alcohol dependency, with various costed interventions available to slow down or reverse their transition to increased alcohol use. Douglas showed how the model can be used to assess intervention strategies, comparing outcomes against costs.  Although a spreadsheet model had been available previously, the new model included explicit dynamic relationships, and was capable of showing how there can be delays between initial investment and the resulting benefits, such as savings from fewer hospital admissions.  The model is now available for use by Primary Care Trusts.

Managing strategy in the asset-intensive utilities industry.
On  Friday morning, Bob Thurlby presented work on a four stock model of aging assets based on his extensive experience in the utilities industries.  Managing assets is a matter of balancing the allocation of resources between maintenance, refurbishment and replacement policies while also complying with external regulatory targets for performance.  The audience was invited to experiment with a microworld simulation to attempt to achieve a maximum net cash flow within regulatory constraints.  The session ended with a discussion on emerging threats and the tasks of managing risks and achieving resilience in the face of climate change, cyber-attacks and terrorism.
Risk and Resilience of the Critical National Infrastructure

Presentations by software vendors
Next came a series of presentations from SD software vendors to show how their products are evolving.   The vendors included Insight Maker, Sysdea by Strategy Dynamics Ltd, Goldsim, AnyLogic and Powersim. A paper flyer was distributed describing the new features available in isee Systems’software: ithink and Stella version 10.  An interesting theme was the growing availability of web-based modelling systems requiring no software installation.

Student colloquium
Along with poster presentations by other students, Matt Montgomery of Halcrow presented his work as part of his Engineering Doctorate at the Bristol University Systems Centre on systems-based sustainable design, construction and maintenance in the engineering and infrastructure industries. The “HalSTAR Systems” process enables users to efficiently and effectively identify context specific sustainability related issues and identify their indirect, secondary and cumulative effects. It allows causal loop diagrams to be produced, highlighting systemic behaviour and allowing negative effects to be mitigated and synergies to be enhanced. HalSTAR Systems is being designed into a piece of software which allows inter-project learning and the sharing of knowledge and risks between project teams
UKSD event – A system dynamics approach for sustainability

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