System Dynamics and the O-O-D-A Maneuver

1. System Dynamics and the O-O-D-A Maneuver Winning Through Software(Explicit) Competence And Intuitive(Implicit) Competence Clarence J. Maday Professor Emeritus Mechanical and Aerospace Engineering North Carolina State University CJMaday 2012

2. MOTIVATION • Here is my current view on the unification of the many flavors of the month in the business and management literature. . All of them can be regarded an subsets of Systems Dynamics and Boyd’s OODA Maneuver. For completeness I add Goldratt’s thought processes for change management. Of course, change management can be seen as a subset of System Dynamics. Donnella H. Meadows emphasizes the dynamics of change. She brings together the disparate views of systems. In her ‘Thinking in Systems’ she opens with a 1979 quote from Russell Ackoff:”Managers are not confronted with problems that are independent of each other, but with dynamic situations that consist of complex systems of changing problems that interact with each other. I call such situations messes…. Managers do not solve problems, they manage messes.” I suggest that Ackoff’s managers were not fluent with Forrester’s Industrial Dynamics (1961).The work of Forrester, Sterman and, more recently, Boyd brings order to these “messes”. See especially Sterman’s Business Dynamics and the archived journals of the Systems Dynamics Society. • I’ve minimized the Cynefin Framework content….it’s a subset of the OODA maneuver. • I recommend Chet Richards web site, Fast Transients. The name is most appropriate. • Change is a dynamic process as seen in OODA and Systems Dynamics, both supported by Newton’s Calculus and “Laws” of Motion. CJMaday 2012

3. SUGGESTED PROTOCOL 1. STATE GOAL(S) -- MAY BE TIME DEPENDENT -- SHORT TERM AND LONG TERM 2. MODEL THE SYSTEM (INTUITIVE OR DIGITAL), APPLY O – O – D -- A 3. SIMULATE 4. MEASURE THE STATE; CASH, MATERIEL AND INFORMATION -- OBSERVE 5. WHAT TO CHANGE IN STATE AND/OR MODEL TO ACHIEVE GOALS - ORIENT 6. PRIORITIZE CHANGES – STRATEGY – DECIDE WHICH CHANGES TO IMPLEMENT 7. TACTICS – BUSINESS DYNAMICS -- ACT MODEL ACTUAL SIMULATE iThink - Monte Carlo 8. RESULTS – OBSERVE AGAIN MODEL ACTUAL 9. RETURN TO 1. AND REPEAT AS NECESSARY CJMaday 2012

4. SUMMARY PREVIEW Intuition, Feedback and Feedforward OBSERVE Current Reality STRATEGY DECIDE What to Change TACTICS ACT Implement Changes • SYSTEM • (BUSINESS) • DYNAMICS • MODEL • ACTUAL • RESULTS • MODEL • ACTUAL COMPARE Goal(s) What to Change to ORIENT CJMaday 2012

5. SUMMARY • Set Goals ( Legally, Ethically and Morally) • Victory • Money • Mislead or Confuse Opponent • Your Goal? • Compare Goals With Current Reality – OBSERVE; then Work to Realize the Goals –ORIENT Yourself • HOW? • Set your Strategy – What to Do? Make Changes that Produce the Most Return. CJMaday 2012

6. SUMMARY (cont) • Available Tactics - Factory Physics which Include or is Augmented with • Constraints Management (TOC) • Drum-Buffer-Rope • Lean • 6 Sigma • Slack • Finite Capacity Scheduling (FCS) • CONWIP • JIT • Kanban CJMaday 2012

7. SUMMARY (cont) • Available Tactics (cont) • QFD • MRP I and II • ERP • Cynefin Framework • Efficiency • Cash Flow • Materiel Flow • Information Flow • ……. • ……. CJMaday 2012

8. SUMMARY (cont) • DECIDE which tactics to use and how much of each • Determine Investment Required • Estimate Outcome, Payoff • ACT • OBSERVE • Model Predicted Results • Actual Results • Make Cash, Materiel and Information Flow Analyses • Repeat Process CJMaday 2012

9. INTUITIVE COMPETENCEand SOFTWARE COMPETENCE • Rizzo points out • that humans handle small systems; such as cars, bicycles, some aspects of flight and video games. This uses intuitive competence. • that humans cannot handle large systems; such as open loop unstable aircraft, power plants, large airports, etc. This requires modeling competence (aka decision-by-wire or software competence) CJMaday 2012

10. BACKGROUND • Forrester’s Industrial Dynamics -- 1961, Sterman’sBusiness Dynamics -- 2000 • Deming’s PDCA (including DMAIC) -- 1950’s … • Profound Knowledge • Hopp and Spearman, Factory Physics, 3rd Edition, 2008 • Boyd’s O-O-D-A Maneuver – Implicit Cascaded Feedback Dynamics, Intuitive Application of the Principle of Optimality -- 1996 • Rizzo’s Model-Predictive Control -- 2010 • Goldratt’s TOC & TP -- 1984 + ….. • Casparis’ Management Dynamics -- 2004 • Debra Smith’s The Measurement Nightmare -- 2000 CJMaday 2012

11. OVERVIEW • Merge/Integrate Business Dynamics, Factory Physics, and O-O-D-A to form an innovative and winning strategy in competition. O-O-D-A contains much, if not all, of Sun Tzu’s Art of War and Deming’s Profound Knowledge. • The term “dynamics” is used in the systems or engineering sense, continuous, discrete, deterministic, stochastic. • Merge these concepts using a feedback control system framework to 1) confuse, outsmart, and overcome your opponent or 2) achieve your goal. CJMaday 2012

12. APPROACHES AND TOOLS • Decisions within decisions. Cascaded feedback system. Variation and Disturbances may be manageable. • Qualitative and Quantitative approach to problem solving. • Value Streams (Cash, Materiel, and Information) • Profound knowledge. • Intuitive (implicit) competence – small systems. • Software (explicit) competence – large systems. CJMaday 2012

13. PDCA • Deming’s Plan-Do-Check-Act. Can be enhanced by adding a 5th step, Evaluate, followed by a feedback loop to return to Plan. Chet Richards might refer to this as the PDCA “loop” with power. CJMaday 2012

14. O-O-D-A • Observe-Orient-Decide-Act • It is a loop that contains internal or cascaded feedback. • Richards calls it a “loop” with power. CJMaday 2012

15. O-O-D-A • SET THE GOAL • OBSERVEGet and absorb all the information you can by whatever means possible. This usually takes time, years even. Can we do it faster? We better! • ORIENT • This is the essence of the process and is supported by the Observe, Decide and Act contributions.. It is formed at least by genetic heritage, surrounding culture, experience and previous learning. • The mind combines all or part of this background to form the “many-sided cross-references”, implicit and explicit, which then become a new orientation. CJMaday 2012

16. O – O – D – A • ORIENT (continued) • Seek out and find data that don’t fit your conventional wisdom or biases….QUICKLY!! • Analysis and Synthesis • Axiomatic Design • System • Project • Process • Product • Optimization • Design of Experiments • Design of Components • Dynamic Programming • Linear Programming • TRIZ CJMaday 2012

17. O-O-D-A • ORIENT(continued) • System Dynamics/ TOC • Modeling • Feedback Control • Simulation • Cash Flow, Materiel Flow, Information Flow • Cynefin Framework ( Subset of OODA) • Simple • Complicated • Complex • Chaotic • Disordered • Inductive logic • Deductive logic • Abductive logic CJMaday 2012

18. O-O-D-A • ORIENT (continued) • Profound Knowledge • Heuristics • Intuition • Insight • Similar to abductive reasoning, hunches, that is CJMaday 2012

19. O-O-D-A • DECIDE • Intuitive competence or implicit decision making (aka agility) based on Observation, Orientation and Profound Knowledge. • Explicit decision making based on System Dynamics modeling and simulation, Optimality Principle or Dynamic Programming, Design of Experiments, TOC, Lean, Six Sigma, TRIZ, Monte Carlo Methods et al. This can lead to software competence. Current computational speeds provide some agility. • Set Strategy CJMaday 2012

20. O-O-D-A • ACT • Deception • Ambiguity • Generate surprise and panic • Seize the initiative and keep it • Practice, Test, and Evaluate • Equivalent to Complex and Chaotic Domains in Cynefin Framework • Implement Tactics CJMaday 2012

21. SYSTEM DYNAMICS • System Dynamics • Model the system to be controlled • Controller dynamics – feedback • Simulation • Software Competence • How does change occur? CJMaday 2012

22. OVERALL GOAL • CREATE DISORDER AND CONFUSION - OUTSMART THE COMPETITION - WINNING STRATEGY • Faster decision cycle-----air-to-air-combat, intuitive competence • Different decision cycle-----outside the box • Decision-by-wire competence (System Dynamics) CJMaday 2012

23. Feedback Diagram • This diagram is not meant to be unique. It is a guide to be used in your situation. Essential features include feedback and Implicit Guidance and Control. It is qualitative and quantitative. CJMaday 2012

24. OVERVIEW REVIEW Intuition, Feedback and Feedforward OBSERVE Current Reality STRATEGY DECIDE What to Change TACTICS ACT Implement Changes • SYSTEM • (BUSINESS) DYNAMICS • MODEL • ACTUAL • RESULTS • MODEL • ACTUAL Compare goal(s) to current reality Goal(s) What to Change to ORIENT CJMaday 2012

25. OVERVIEW • TOC, Drum-Buffer-Rope and Critical Chain Project Management use buffer management such that the buffers provide the feedback signals that allow the control processes to successfully deal with variation. • Is buffer feedback the reason for their effectiveness? IMO YES! • CONWIP is a process that combines feedback and feedforward implicitly. Total WIP is controlled explicitly. An innovative and insightful approach; clever, that is!

26. MORE OVERVIEW • Apply System Dynamics and OODA • Identify the problem, make sense of it • Use Cynefin Framework to categorize problem • Simple or Complicated = Small; Implicit or Intuitive Decision Making • Complex or Chaotic = Large; Explicit Decision Making -- aka Decision-by-Wire CJMaday 2012

27. Some Necessary Requirements • Profound Knowledge • Understand goal and context – choose form of decision analysis • System Dynamics Model • Implicit and intuitive • Explicit computer model • Feedback algorithm CJMaday 2012

28. WHAT NEXT? • How to sell Software Decision Making? • How to model the system? • HOW TO BRIDGE THE GAP BETWEEN SOFTWARE AND INTUITION ? (Many thanks to Jim Bowles for this input!) CJMaday 2012

29. References • Science, Strategy and War, F. P. B. Osinga, Routledge 2007. • Industrial Dynamics,J. W. Forrester, The MIT Press, 1961. • Business Dynamics, John Sterman, McGraw Hill 2000. • The Art of War, Sun Tzu, Filiquarian Publishing • Model-Predictive Control, A. Rizzo, PDI institute, 2010. • Kelvyn Youngman, www.dbrmfg.co.nz/ CJMaday 2012

30. References (cont) • “A Leader’s Framework for Decision Making”, David J. Snowden and Mary E. Boone, Harvard Business Review, November 2007. • Certain to Win, Chet Richards, Xlibris 2004 • Fasttransients.wordpress.com, Chet Richards • The Mind of War, Grant T. Hammond, Smithsonian Books, 2001 CJMaday 2012

31. ACKNOWLEDGEMENTS • Jim Bowles • Clarke Ching • Steve Holt • Larry Leach • Rob Newbold • Tony Rizzo • Robert Roy • Scott Weller • Kelvyn Youngman CJMaday 2012