SYS 681- Dynamic Modeling of Systems and Enterprises Prof. R.

Nilchiani

02-13-2012 ArashShabani

Question 1:Using the U.S. Economy as an example, and based on the complex systems characteristics detailed in Table 1-3 of the text, explain why it can be considered a complex system. For each characteristic in the table give a short paragraph of explanations and examples that illustrate your argument. As a reminder the characteristics of a complex system are: 1) Dynamic Changes in an economic system over time, particularly those reflected in the behavior of markets, businesses, and the general economy.Economic activities particularly at the U.S. Economy are non-equilibrium processes that continuously are changing.The interacting agents are heterogeneous that have to interpret the problems they face with limited information at their disposal, and institutions, price patterns, etc. to which they individually react. On the other hand, we can view the U.S. Economy as emerging from the interactions of individuals agents whose behavior is constantly evolving to adapt their strategies and actions to the changing circumstances. 2) Tightly coupled The U.S. Economy is made up of individual people, business and labor organization, and social institution. People have many different economic roles they function as consumers, workers, savers, and investors. The actors in the system interact strongly with one another and with the around world. Everything is connected to everything else. Its All Connected: The U.S. economy is an interactively complex system in which the component sectors are tightly coupled. 3) Governed by feedback Large organizations are typically governed by feedback loops on all levels. The dynamic path of the U.S. economy - Because of the tight coupling among its actors - is governed by feedback mechanisms between the routine driven decisions of the agents. 4) Non-linear The real time-series of economic data do not show the kind of regularitythat is predicted by the linear dynamical mechanistic systems. In fact,contrary to the equilibrium theory, irregular frequencies and amplitudesof economic uctuations are persistent and do not show clear convergenceor steady oscillations. 5) History-dependent Recent work on dynamic economics has stressed the fact that economic outcomes may

be history dependent. The long-term behavior of the economy will be history dependent: According to theconditions prevailing in the rst phases of development, the economy will convergeto the one or the other saddle-point. Consequently, there exists a threshold wherethe dynamics leading to these two dierent long term solutions separate. 6, 7) Self-organizing and Adaptive U.S Economy is an increasinglycomplex global economy;businesses are faced with unpredictable behaviors and fast pace of change. As a result,the emphasis in contemporary business models has shiftedfrom efciency to exibility and the speed of adaptation. The system is well known to exhibit interesting characteristics, such as robustness, capacity of self-management and self-adaptation, survivability inuncertain and dynamic environments, hence, .S Economy is self-organizing and Adaptive. 8) Counterintuitive Many of their behaviors in economy may occur unexpectedly, and they are often counterintuitive, e.g. due to feedback loops and side effects. Therefore, the response ofcomplex systems to control attempts can be very different from the intended orpredicted one. 9) Policy resistant Policy resistance arises from the mismatch between the dynamic complexity ofthe economy system and our cognitive capacity to understand that complexity. Policy resistance arises because we do notunderstand the full range of feedbacks operating in the system. 10) Characterized by tradeoff As an example, looking at the financial crises, no rapid policy changes could resolve the actual cause and stop the growth of the event. The rapid low-leverage policies could only make temporary improvement and the long-term solutions were not achieved soon.

Question 2:The Feedback Structure of Employee Motivation Read and do the challenge on employee motivation on page 147 of the text. In particular: A. Expand the causal diagram in Figure 5-8 to resolve the apparent conflict by incorporating both theories of employee motivation offered by the members of the client team. Be sure to close the loop(s) from motivation to Performance.

Unreachable Goal B. Discuss which loops dominate (i.e., are the most important) under different conditions. Althoughthe greater the performance shortfall can increase employee motivation and effort but if this stress continues uncontrolled and a fatigue point is reached, any further stress arousal will take the performance level down, ultimately leading to exhaustion, ill-health and, finally breakdown. As I mention above, although has some negative effects on hormones and employee performance but also stress can be positive in some other cases. One example of this is where sportsmen and women flood their bodies with fight-orflight adrenaline to power an explosive performance. Another example is where deadlines are used to motivate people who seem bored or unmotivated. C. Sketch the likely dynamics of the key variables for situations where thefeedbacks implicit in each of the two theories dominate. Identify an explicit time horizon over which you believe the dynamics of employee motivation play out. Anxious people perform best when they are put under little additional stress, while calm people may need additional pressure to produce a good performance. But High and continues stress reduces peoples ability to deal with their job.

D. Give at least one example of each situation from your own experience or knowledge. Discuss briefly. As a programmer I worked on eOffice project at a software company. In first phase of project we couldnt meet projects milestone and project had so delay and could not meet required performance. After that, project manager decided to increase required performance because of he thought with the method he can increase team motivation and as a result actual performance will be more. The effect of his decision was very positive on increase motivation and team productivity, but gradually team became fatigue but he continued his method. As a result team could not continue the project and project became fail. E. As a manager, how might you tell which set of loops will dominate in any particular situation? I think in the some casesperformance shortfall can be cause of elicit maximum motivation and effort but it cannot be repeated in all time.

The relationship between pressure and performance is explained in one of the oldest and most important ideas in stress management, the Inverted-U relationship between pressure and performance (see below). The Inverted-U relationship focuses on peoples performance of a task. The left hand side of the graph is easy to explain for pragmatic reasons. When there is very little pressure on us to carry out an important task, there is little incentive for us to focus energy and attention on it. This is particularly the case when there may be other, more urgent, or more interesting, tasks competing for attention.

As pressure on us increases, we enter the area of best performance. Here, we are able to focus on the task and perform well there is enough pressure on us to focus our attention but not so much that it disrupts our performance. F. What are the implications of your diagram and analysis for goal setting in organizations? You must be more specific than set goals that are ambitious but not too ambitious. Give operational guidance, that is, useful advice that managers could implement. While this is an important and useful idea, peoples evaluations of stress and performance are by necessity subjective. This has made it difficult to prove the Inverted-U idea formally. In reality, different people have different shaped and positioned inverted-Us at different times and in different circumstances. This is all part of lifes rich tapestry.