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STERMAN, JOHN. 2000. Business Dynamics: Systems Thinking and Modeling for a Complex World. Irwin/McGraw-Hill, Homewood, IL. 1,008 pp. $129.25.
John Sterman's book Business Dynamics is a substantial contribution. On about a thousand pages, Sterman draws together and elucidates much of the knowledge developed in the system-dynamics community over the last four decades.
Sterman sees system dynamics as a "perspective and set of conceptual tools that enable us to understand the structure and dynamics of complex systems" (p. vii) and more than just a simulation methodology. In his discussion of diverse applications, he makes a powerful case for this view, but even readers who do not concur with this view will find plenty of interest and use in the book. Sterman finds his approach valuable for its usability in situations of dynamic complexity where understanding is hampered by limited information, inadequate mental models, and insufficient capability to infer the consequences of mental models. Sterman emphasizes the purpose and implementation focus of models intended to improve understanding. Consequently, he argues for a modeling approach, that is open to model users, and he is skeptical about very large models, that lack transparency.
Sterman stresses the necessity of quantifying those variables that are difficult to measure to understand the system. He argues that simulation is essential because closed solutions for realistic nonlinear representation of complex real-world systems do not exist and qualitative discussions of system structure alone cannot lead to a reliable understanding.
He introduces most of the technical material in the context of real-world problems. He draws these problems from a far wider domain than the title Business Dynamics might suggest: global warming, traffic congestion, the spread of infectious diseases, the cocaine epidemic, and economic phenomena (such as innovation diffusion, commodity cycles, or path dependency in the VCR industry or business problems ranging from project overruns to supply chain management). The engagingly written cases-interesting and informative in themselves-help readers to understand system dynamics models and shed...