4.9 System Dynamics (SD) 

System Dynamics has been defined by Starr (1980:45) as
"...an approach which uses quantitative means to investigate the dynamic behavior of socio-technical systems and their response to policy."
The words to be stressed in this definition are quantitative and behavior. In system dynamics, it is assumed that all systems may be modeled using differential equations (i.e., quantitative modeling) and simulation is employed for investigation of behavior of systems over time.

SD is one form of systems thinking (Senge et al., 1994:89). Systems thinking is (ibid.:6)

"...a way of thinking about, and a language for describing and understanding, the forces and relationships that shape the behavior of systems."
Hence, systems thinking stresses holistic thinking about systems, including enterprises, through creation of models of the system. This establishes the relevance to enterprise modeling (in addition to observed use in the Gazz project). Systems thinking is presented by Senge (1991) as the fifth and (most important) discipline required for creation of the learning organization.

The primary purpose of modeling in systems thinking is understanding, both through modeling and simulation. The first step in modeling involves building of causal loop diagrams, which are qualitative models depicting general cause-effect relationships between various factors of interest (including feedback, Senge et al., 1994:178). These models may be developed further into quantitative models suitable for simulation (differential equations stating exact quantitative relationships between variables, possibly illustrated using a stock-and-flow notation).

SD is not restricted to any particular type of work. It has been used for modeling of as different domains as gas production and transportation, evolution of societies, and resistance to change in organizations (von Stackelberg, 1994). However, as the approach focuses on systematic properties, work associated with replication risk is most appropriate.