The paper presents, for consideration, the tools of systems thinking and simulation as a framework for managing the complex and dynamic process of strategy formulation, evaluation, and implementation. It addresses the question of how strategic thinkers can experience the paradigmatic shifts required to survive and prosper in the face of unremitting change, competition, and environmental turbulence. In response to this question, the paper argues that managers need to develop and cultivate a capacity to perceive and analyse relationships between their organisations and the business environment as a complex, adaptive, dynamic system containing nonlinearities, inertia, delays, and networked feedback loops. Principles of, and linkages between, systems and control theory, complexity concepts, business process orientation and simulation are explored, through discourse, within this context. The need to integrate fully operations management within the strategy development process is also emphasised. This leads to the presentation of an illustrative generic model of a marketing, production, and selling causal loop. Influence diagrams and dynamic modelling concepts are then applied to implement this representation and explore its dynamic behaviour using computer-based simulation and experimentalism as a research method. The results demonstrate how, even in a relatively simple case, nonlinearity can produce very different system behaviours depending only on minor changes in operational circumstances. The potentially counterintuitive behaviour of complex managerial systems and the implications for the strategy-making process are thereby highlighted.
Journal of Business Research – Elsevier
Published: Feb 1, 2003
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